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Industry News (July 01, 2006)

MILLS

THE NAME GAME

SLAVE LAKE, AB — Tolko’s $250 million project has a name. Scheduled to open in the fall of 2007, the company’s engineered wood plant is being built southeast of Slave Lake in north central Alberta, and will be called the Athabasca Division.

“The plant and part of our forest resource lie within the Athabasca River watershed basin,” said Heinz Zierl, plant manager for the future operation. “We expect a large number of our future employees and contractors will be drawn from this region as well.”

FINANCIAL

STORA ENSO GETS TAX BREAK

PORT HAWKESBURY, NS — Stora Enso’s Port Hawkesbury mill will benefit from a municipal tax break it needs to stay in business in Cape Breton, CBC reported.

A resolution, passed by the Richmond County Council, determined the company’s municipal taxes will be scaled back from the $3 million it paid out last year, to $2.5 million. Additionally, the company will be exempt from taxes on any capital expenditure, including the biomass power plant it plans to build.

However, as the CBC further reported, the tax break is contingent upon Stora Enso reaching a settlement with workers at its Port Hawkesbury mill. The agreement will have to be signed by the company, and approved by the provincial cabinet.

Stora Enso warned that if it did not receive tax and power concessions, and settle the dispute with its workers, that it will shut down the mill altogether.

AWARD

KRUGER COMES OUT ON TOP

MONTREAL, QC — Kruger is getting a lot of pats on the back. Three of the largest publishing groups in North America singled out the company as their best newsprint supplier for 2005.

Dow Jones & Company awarded Kruger its Gold Award for the eighth consecutive year, while Knight Ridder honoured the company by announcing its Corner Brook mill is to be presented with the 2005 Knight Ridder Supplier Excellence award. Finally, Gannett Supply awarded the company with the title, ‘Supplier of the Year’ for its performance in 2005, marking the 16th time in the 25-year history of the award that Kruger has been the recipient.

SUSTAINABILITY

LEADERS SIGN SUSTAINABILITY STATEMENT

OTTAWA, ON — A total of 59 CEO’s and association presidents signed a sustainability statement at the International Council of Forest and Paper Associations (ICFPA) global CEO roundtable.

Representatives from some of the world’s largest pulp, paper and wood companies committed to the statement.

“This is a significant victory for sustainability,” Avrim Lazar, president of the Forest Products Association of Canada said. “Through this statement, ICFPA members have made a clear and strong commitment to sustainable development and to working with other stakeholders to ensure that environmental, social and economic benefits of our natural resources are available to current and future generations.”

The statement targets six pivotal areas; the worldwide promotion of sustainable forest management, combating illegal logging, fibre use and recovery, environmental management, the creation of solutions to global climate change and energy supply objectives, and the investment in workers and communities.

ASIA

ASIA INTERESTED IN CANADIAN LUMBER, NOT PAPER

TORONTO, ON — Unsure of how an ever-expanding Asian market will affect their growth plans, Canadian forestry companies are seeing demand for their lumber, but not their paper, a report by The Canadian Press confirmed.

“We’ll…put more effort into the Japanese, the Chinese, the Korean, Taiwanese, the Malaysian market place as well, and being advantaged by being a B.C. coastal producer, we will be able to supply more product into that market,” CP reported Jim Shepherd, Canfor CEO as saying. The company is also trying to capitalize on the home-building market in the southern U.S.

Cascades has witnessed shrinking demand for its products in Asia, and as CEO Alain Lemaire said, this is a phenomenon that will likely increase.

“Different corporations working in Asia are telling me that in five years they will be self-sufficient, so it means the consumption will grow so much internally that they will not be, in many cases, very strong exporters. On the paper side, that’s what we can expect.”

MILLS

PROFITS REALISTIC AT MIRAMICHI, SAYS UPM

MIRAMICHI, NB — “Everyone is focused on making the Miramichi mill the best it can be,” Bernd Eikens, UPM president for North America said of the recently restarted mill. “There is a new, shared vision and commitment at Miramichi. You can see it and feel it when you walk through the paper mill and groundwood mill. We’re optimistic.”

After a three-month shutdown, the facility resumed production the third week of May. It was at the critical juncture of the shutdown that UPM’s head office in Helsinki, Finland, told the mill it had to start making some serious changes -and a profit.

“We resumed production in May with a reduced fixed and variable cost base to make Miramichi competitive and successful,” mill manager Timo Suutarla said of his mill’s response to the challenge. “Furthermore, this plan was compiled with joint effort of all employees and the New Brunswick government. Implementation of the plan has gotten a kick start, because everyone is committed and working together to make it happen.”

UPM is saying the mill is well positioned to start turning a profit.

MILLS

AV NACKAWIC REOPENS

NACKAWIC, NB — Nearly two years after its impromptu shut down, AV Nackawic is back in business. The official opening, celebrated by leading community, government and company stakeholders, took place on Thursday, June 15, marking what joint owners Tembec and Aditya Birla Group hope will be a successful and prosperous venture.

“I…hope that we can continue to build on this spirit of collaboration to make AV Nackawic a long-term success,” said Shailendra K. Jain, group director, pulp and fibre business of Aditya Birla Group. He added that the company may need more government help to cope with the rising Canadian dollar due to the 11% increase in value since the decision to buy the mill in April last year, while costs have remained the same.

Frank Dottori, chairman of the AV Nackawic Board of Directors, said that the company must continue to address the fundamental issues of high wood and energy costs.

The mill, which closed in September of 2004, when its owners abruptly declared bankruptcy, reopened with a leaner workforce of 280 people. The facility has been converted, and will now manufacture rayon from dissolved pulp. The Aditya Birla Group of India holds 75% interest in the joint venture, while Tembec Inc. of Quebec holds the remaining 25%.

PAPERCLIPS

THE BARE BONES

For those who missed out on Biology class in high school, Bony, the life-sized paper skeleton, might provide you with an opportunity to catch up.

Originally sold to medical students, the 200-bone osteology has proved popular all across Japan. More than 20,000 have been sold so far. The structure takes roughly three days to complete, and fits together without the use of scissors or glue. Once it’s entirely assembled, Bony stands an impressive 5’11 high, and weighs 250 grams.

According to a report by Agence France-Presse, a dentistry professor and a papercraft artist created the skeleton. “Bony was used in classrooms at medical and nursing schools but we want to expand our customer base,” Agence France-Presse reported Masaaki Fukuda, head of sales at Nishimura, a medical book publisher, as saying. “Some people decorate their rooms with Bony or place him at their home entrances to scare visitors.”

At $48 each, Bony might provide a welcome alternative to drug store Halloween decorations!

GOVERNMENT

DAYS ON THE HILL

The FPAC Board (Forest Products Association of Canada) meets with the Right Honourable Stephen Harper and Trade Minister David Emerson in the Prime Minister’s Parliamentary office. The meeting with the Prime Minister provided an important and timely opportunity for the industry CEO’s to express appreciation to the Prime Minister for his leadership in support of the industry.

MILLS

SFK PULP FUND JOINS FPAC

Ottawa, ON–“We’re delighted to have SFK Pulp Fund join our ranks,” FPAC CEO Avrim Lazar said of the company’s recently approved application to the association. “SFK represents an important voice at the FPAC table.”

As the newest member company of the Forest Products Association of Canada, SFK views its membership as an opportunity to affect change, and a chance to work through challenges. “SFK is looking forward to participating in a manner that will positively impact our operations, the industry, the people who work for it, and the communities in which it operates,” Andr Bernier, president and CEO said.

Other FPAC members include:

Abitibi-Consolidated Inc.

Alberta-Pacific Forest Industries Inc.

Bowater

Canfor Corporation

Cariboo Pulp & Paper Company

Cascades Inc.

Catalyst Paper

Howe Sound Pulp and Paper Limited Partnership

Kruger Inc.

Louisiana-Pacific Canada Ltd.

Mill & Timber Products Ltd.

Papier Masson Lte

F.F. Soucy Inc

Stora Enso Port Hawkesbury Ltd.

Tembec Inc.

Tolko Industries Ltd.

UPM-Kymmene Miramichi Inc.

West Fraser Timber Ltd.

Weyerhaeuser Company