Pulp and Paper Canada

Harmac mill in Nanaimo threatened through lack of necessary capital reinvestment

January 14, 2008  By Pulp & Paper Canada

Nanaimo, BC — In a Daily News article, analysts are reported as saying that Pope & Talbot Harmac pulp mill in Nana…

Nanaimo, BC — In a Daily News article, analysts are reported as saying that Pope & Talbot Harmac pulp mill in Nanaimo, BC, won’t be seeing much of a future after it gets sold, union representatives say that the older mill’s advantages would continue to make it a viable competitor.

According to industry analyst Kevin Mason, experts believe that the mill will close by next year despite an offer from Asia Pulp and Paper to buy it for $10 million. The Indonesia-based paper giant has also offered to buy two other P&T mills in Halsey and Mackenzie, BC, for $50 million and $40 million, respectively, according to the Daily News.


“The proposal puts Harmac’s worth at $10 million but its real value is probably closer to $0,” Mason, an analyst with Equity Research Associates is quoted as saying. He added that the mill has not made necessary reinvestments into its operations in the last few years to keep it running and competitive. He suspected that APP made the bid for the mill because P&T had said it wanted to sell the pulp assets in one deal.

Gerry Tillier, president of Pulp, Paper and Woodworkers of Canada Local 8, representing Harmac’s 530 workers, disagreed with Masons assessment. He said that a $10 million to $14 million reinvestment in the mill is made on infrastructure every year, though that hasnt been the case since P&T sought creditor production.

Tiller pointed out that Harmac is also located at a deep-sea port that’s accessible by ship unlike the other P&T mills that must depend on the railway to transport it to sea. Moreover, Harmac has a 400,000 tonnes a year pulp production capacitymore than that of the Halsey and Mackenzie mills combined, said Arnold Bercov, VP of Local 8.

The pulp mill deal, which is expected to close Feb. 15, may attract other buyers, such as Nine Dragons Paper. Tiller believes that there will be interest in the mill, as China is “booming and looking for more and more natural resources.”

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