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AV Nackawic: Start Me Up!


September 1, 2006
By Pulp & Paper Canada

There are many words in the thesaurus that are the equivalent of “happy” and just about all of them would be fitting to describe the feeling generated at the recent opening of the AV Nackawic mill in …

There are many words in the thesaurus that are the equivalent of “happy” and just about all of them would be fitting to describe the feeling generated at the recent opening of the AV Nackawic mill in New Brunswick. Although not all former St. Anne employees returned (due to restructuring), over 270 people are now in full-time employment at the mill.

The sense of optimism was in direct contrast to the mood in September 2004 when the previous owners declared bankruptcy and the news of the closure of the mill first broke.

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The former Parsons & Whittemore mill is now back in operation under the direction of the Aditya Birla Group (75%) and Tembec (25%). After months of discussions, due diligence studies, negotiations and meetings, the mill made its first pulp on January 27, 2006, which was trucked to the port of Montreal, bound for Egypt.

“The presence and support of the Birla organization as a partner in this facility was absolutely key in this change of position on how Tembec viewed the restart of the mill,” said Frank Dottori (Chairman, Board of Directors, AV Nackawic). “This accelerated ability to be able to move the mill away from the vagaries of the hardwood pulp business and into these other grades made it possible for Tembec to take another look at this opportunity.”

“The AV Nackawic start-up is a great example of government and industry working together to achieve a successful outcome,” said Peter Vinall, President and CEO, AV Group. “The restarting of the mill would not have been possible without the vision and drive from Mr. Dottori and Mr. Jain,” he added, referring to Shailendra K. Jain, Group Director, Pulp & Fibre Business, Aditya Birla Group.

Frank Dottori put emphasis on the human factor. “Our people are clearly critical in building a sustainable operation. Already we have seen what can be done when people decided to mobilize through the start-up of the mill. We must keep the same desire alive in order to succeed.”

PARTNERS

The relationship between Tembec and Aditya Birla is a natural one which grew out of positive experience and mutual respect developed while working together for over 30 years, with Tembec selling dissolving pulp to Aditya Birla. This was followed by a 50/50 partnership in AV Cell in Atholville, NB, to supply softwood and hardwood pulp, including 100,000 tpa of dissolving grade chemical pulp, to Aditya Birla’s VSF units.

As partners, Tembec and Aditya Birla make the perfect match for this parnership since Tembec is a proven industry leader with a track record of success and a strong understanding of the North American context. The Aditya Birla Group is No.1 in the world in viscose staple fibre and has approximately 27% share of the rayon market worldwide. The company has ambitious global growth plans and is keen to establish a supply of fibre to sister-based companies. AV Cell and AV Nackawic are its first Canadian investments.

AV Nackawic presently produces paper grade pulp and, upon conversion to dissolving/specialty grades, would provide the required strategic flexibility to the Aditya Birla Group’s VSF operations in securing dissolving pulp at an economic cost.

The mill is expected to produce 850 tpd of paper grade hardwood pulp and will be converted to produce 600 tpd of dissolving grade pulp.

TRANSITION

At the official opening, Peter Vinall congratulated the entire team on a job well-done and commended the management team for the leadership they demonstrated through the challenging time. Experience and knowledge proved to be a key success factor: many of the team had been involved previously in start-up situations and have noted that it was the best start-up by far that they had been associated with.

Dale Paterson (Chief Operating Officer), led the due diligence study when Tembec and Aditya Birla first became interested in the purchase of the Nackawic mill. Once the decision was made, Paterson, together with John Valley (Tembec) and S.V. Sharda (Chief Operating Officer of AV Cell) negotiated the acquisition of the property in a three-way deal between the government, the receiver and the interested party of Tembec and Aditya Birla.

“Most of the work was with the provincial government,” said Dale Paterson. “But they were really helpful since they were concerned about the negative impact that the closure of the 700 tpd mill had had on the community.” According to the company, for every one job created at the mill, another three jobs are indirectly created in the region, thus affecting both local economy and spirit.

The challenge for AV Nackawic is in three areas: to restart the mill, to bring it to optimum paper kraft tonnage and to convert the mill to dissolving pulp.

DISSOLVING PULP

The next Board meeting will prove to be an important one at AV Nackawic since the decision as to which method to use to produce dissolving pulp will be made at that time. According to Peter Vinall, research into the different methods lasted six months and the results are now being compiled to be presented to the Board. Two processes are now being evaluated for making dissolving pulp at Nackawic: a conventional chip steaming process and a more advanced process from Lenzing, an Austrian company.

Essentially the difference from a conventional process is that the Lenzing process offers greater control of the cooking process while chips are in the digester. This in turn allows for higher yields and a superior quality pulp. However, the capital cost of the Lenzing process is significantly higher than conventional. Representative samples of wood chips were sent to Austria for testing in an operating Lenzing process to identify how to optimize the process conditions and process design for the situation at AV Nackawic.

Tests have already established the optimum combination of species that are the best mix for making dissolving pulp.

While the Lenzing study was taking place, an internal team, with support from Tembec and AV Cell, was evaluating and costing the conventional steaming process.

These results will then be plugged into an extensive financial model to establish which process offers the best return. It is anticipated that the conversion to dissolving pulp will require an investment in the 30 to 40 million dollar range. Once the Board reaches its decision, the conversion to dissolving pulp is anticipated by the end of 2007.

As a major shareholder, Aditya Birla strongly believes in leveraging an integrated supply chain so that, once the mill is producing dissolving pulp, the product will go for further processing to make viscose stable fibre (VSF). VSF is a man-made, biodegradable fibre with characteristics akin to cotton. Extremely versatile and easily blended with other fibres, VSF is widely used to manufacture fabrics for both woven and knitted garments, as well as other textiles. The range of applications extends from apparel to home textiles, dress material, knitted innerwear and outerwear and non-woven fabrics.

INVESTMENT

Once the dissolving conversion is completed, this joint venture project will represent a significant investment of over $100 million. This investment is all the more impressive when you consider the number of mills shutting down and is clearly a bold step for the partners.

However, Peter Vinall made it clear that conventional thinking would not be sufficient to ensure success. “Reducing labour costs and some targeted capital improvements has given us a great start but to ensure success, we need to embrace change in a big way,” he stated. “The key to success in my mind is unlocking the full productivity and creativity of our people. It’s amazing what they can do when they are released to their potential and we are on a mission to ensure this happens.” He continued by saying that the excellent startup is a good example of this viewpoint. “We didn’t create fancy structures and impose rules etc; we simply empowered the team to get the job done. Moving fo
rward, further productivity gains will require a keen focus on developing capabilities as well as creating a healthy work environment that is conducive to developing, attracting and retaining high caliber people. Investment in people will be a key success factor.”

Approximately 80% of the cost to operate AV Nackawic is in the three key areas of fibre, energy and labour. However, first some capital investment had to take place in order to start up the mill. The procurement of equipment has been both careful and ingenious. The company has recently installed and commissioned a new wood-processing facility. In record time, a number of prefabricated plant modules were delivered and assembled including loading docks, various conveyer systems and the steel base for the de-barker. The plant was a turnkey construction project managed by Savico Ltd, from Berthierville, QC. The rotoraction debarker, with its three rotor configuration, is considered to have the highest debarking throughput while maintaining the lowest fibre loss to debarking output of any rotary or drum type debarkers. In most applications, it can equal the throughput of up to two ring-type debarkers. This new wood processing plant will have a significant impact on reducing the cost of chipping while ensuring quality chips are produced.

In an effort to mitigate equipment costs, the Aditya Birla Group acquired a former rayon plant in Tennessee that had been shut down since September 2005. Some of the equipment was dismantled and secured for Nackawic, including tools and store supplies that will help in the ongoing operation of the mill. In addition to bearings, sheaves and valves, a variety of pumps and even some larger scale equipment like the chemical storage tanks and a dregs washer were procured for the site.

EMPLOYEE INVOLVEMENT

The ingenuity and cooperation of the employees is evident in a purchase that the chemical plant employees made through eBay. One of the issues was the high cost of special fuses that are normally procured from France where the items are hand-made. The cost of these fuses is $1,100 each and the chlorate rectifier uses 144 of them at any one time.

Two of the operators on the team, Eldon Brown and Kevin Blaney, had a rather unique idea by suggesting a search on eBay for the fuses. To their surprise, they managed to find someone selling 72 of the fuses for $25 each. After checking that the fuses were the real deal and having the GE engineers and Nackawic electricians confirm that they would do the job, Eldon and Kevin closed the deal quickly and managed to purchase the entire lot of 72 for a total cost of $1,800, less than the cost of two from the supplier in France and resulting in a total savings to the company of $77,400.

ENGINEERING STUDIES

In starting the mill up and getting to steady state operations, the company used a number of engineering experts to get things right the first time. One of the experts flown in to advise the team at the mill was Jonn McFarlen who is a specialist in pulp and paper recausticizing systems. With more than 25 years of experience in the industry, he has pioneered pressure filtration, solids contact clarification and other state-of-the-art changes to the recausticizing process. One of his recent developments has been a new feedwell and bustle pipe system for green and white liquor applications which has met with excellent results in seven installations.

At Nackawic, McFarlen examined the recaust operations with a view to making some suggestions for improvement, as well as training the operators. He was asked to determine what changes would be necessary and how much pulping capacity the recaust could support given the new digester requirements. McFarlen did a material balance, calculated equipment sizes and made suggestions for the most cost-effective approach to accomplish the mill’s goals.

Sandwell engineers from Vancouver, BC, provided specialty advice on technical issues such as improving the sodium and sulphur balance in the recovery boiler. This will ultimately give better control of chemical make-up costs and better quality cooking liquor. The second study will deliver recommendations for minimizing (TRS) from the recovery boiler.

Engineers from Babcock & Wilcox were on site to participate in a study on the recovery boiler. The purpose of this study was to look at the ways that the capacity of the boiler could be increased to support increased pulp production. The objective was to determine how the boiler can increase its output by approximately 15%.

Hercules, a process engineering consulting company, led a study to help with solutions to reduce the amount of de-foamer being used by the mill. After modifying the feed stream and developing a treatment strategy, initial tests show that a 30% reduction was achieved reducing costs, de-bottlenecking production and improving quality.

HUMAN FACTOR

“We have worked closely with our joint venture partners, staff, union representatives, suppliers and government to contain costs and develop innovative and proactive strategies to deal with the challenges facing our industry,” stated Peter Vinall.

A workshop was done internally to explore the reasons that the mill shut down in September 2004 and to make sure that plans were in place to ensure that the same issues did not surface again.

After taking out the external factors of dollar fluctuations and overseas low cost competitors, the results of the study indicated that the greatest problems were a lack of direction, poor morale, overstaffing and a resistance to change by both management and union employees.

Having experienced the closure of the Prince Rupert mill, Alan Danroth (Operations Manager) has a special view on the opening of the AV Nackawic mill. “When you see a community reborn,” Danroth said, “it’s good to be a part of that because I’ve seen first hand what a closure has done to the people who depend on it.”

Learning from others and employing their tools is an important part of making sure the mill prospers going forward, he explained, saying, “Making the right decisions is key.”

Danroth has introduced a method for a decision-making matrix that has been successful in other heavy industries. This involves a logical process to go through by taking the likelihood of failure and matching it with a consequence, whether it be people, environment, reputation or assets.

“It allows us to focus on specific issues,” explained Danroth, “and decide whether we should put man-hours or resources aside to solve them.” Most of the employees in the mill have been trained to use this system and the system is proving successful. “We’re at the point now,” Danroth said, “where we can apply the matrix within five to ten minutes.”

FIBRE SUPPLY

AV Nackawic’s wood supply consists of maple, birch and aspen species. With approximately 40% of the required wood volumes coming from a Crown Allocation that is managed by the company, the remaining 60% is from external sources. At a production rate of 800 plus tonnes per day, 1.2 million cubic metres of wood is needed to service the mill. Wood supply was quite tight through start up until negotiations with a number of suppliers for round wood and chips improved the supply situation.

“In the beginning, we had to be creative to support the mill,” said Stephane LaFlamme, Wood Purchasing Manager. “Until the new wood processing plant was commissioned we used several mobile slashers and portable flail chippers to support our operations.” With new chip contracts now in place, the new wood processing facility underway and strong round wood inventories, the mill is well placed for producing going forward.

CHEMICAL PLANT

One of AV Nackawic’s competitive advantages is the on-site chemical plant. Through a simple pipeline delivery system, the plant is able to source the basic chemicals needed to run the mill, avoiding costly transport and handling costs. This allows for quick response ti
mes in servicing any changes in requirement from the mill. Essentially a “business within a business,” the plant produces a number of products, including hydrochloric acid, liquid chlorine, sodium hydroxide and sodium chlorate, with 30% of the total production being sold to third-party customers.

The chemical plant turns all of its chlorine into hydrochloric acid (HCL) which is marketed in the USA and Canada by Tembec Chemicals. All pulp production at AV Nackawic will be elemental chlorine-free (ECF).

SALES

Sales of NBHK have already been secured from over 20 countries including China, USA, Korea, Japan, France and Pakistan. With the Japanese economy rebounding after a lengthy lull, sales opportunities for high quality hardwood pulps have improved. It was quickly established that there was a relatively high demand for the Nackawic product and the mill needed to focus strongly on obtaining good production and quality to maximize the potential of current market demand.

CONCLUSION

AV Group CEO Peter Vinall reflected the mood of the audience when he expressed his pleasure at the opening ceremony on June 15. Although the mill had been running for some time, he pointed out that the official opening was an important symbolic event and the first real opportunity for mill management to formally thank all those who had been involved in making it possible.

“With the start up celebrations now behind,” he concluded, “we need to focus on making sure the mill runs well in terms of production and that the costs are kept well under control. It’s very much a case of “a new beginning.”

Kelvin Ryan is an organizational development specialist at AV Nackawic.


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