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Industry News (December 01, 2007)


December 1, 2007
By Pulp & Paper Canada

ABITIBIBOWATER CLOSES MILLS

ABITIBIBOWATER CLOSES MILLS

MONTREAL, QC — Shares went up while jobs were lost at AbitibiBowater, with the closure of four mills across Canada, including the permanent closure of Belgo (Shawinigan, QC) and Dalhousie (NB) mills, as well as the indefinite idling of the Donnacona (QC) and Mackenzie (BC) paper mills.

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In total, 2,600 jobs are affected.

Paper production capacity will be reduced by approximately a million tonnes during Q1 of 2008, synergy target was increased to $375 million and a reopening of union contracts was requested. Quebec Natural Resources Minister Claude Bchard called on the company to explain its actions and warned AbitibiBowater that it “will have to make an effort” to deal with the forestry crisis or the government might not renew the forestry-cutting rights of 7.7 million cubic metres of wood within Quebec for the next five years.

The company indicated that there would be a four-month review of its operations to further reduce costs. However, shares went up 17.60% the day the closures were announced.

PRINCE ALBERT STOPS

MONTREAL, QC — Domtar was informed today that the Saskatchewan government is not prepared to participate in the financing of the redevelopment of the Prince Albert pulp mill as set forth in a Memorandum of Understanding (MOU) signed on September 12, which included up to $99 million in direct government investment and $32.5 million in government grants.

Domtar has stated that the government’s decision to withdraw its support narrows down Domtar’s options regarding the Prince Albert facilities. Consequently, Domtar will terminate all work being done on this project.

DOMTAR’S DRYDEN OPEN

MONTREAL, QC — Domtar has confirmed that, contrary to media reports, the company did not announce the closing of its Dryden, ON, facility. The Dryden mill continues to operate according to its production schedule.

UPM NAMED TOP ENVIRONMENTAL SUPPLIER

HELSINKI, FINLAND — For the second year in a row, UPM has been named the top environmental supplier of paper to the world’s largest magazine publisher. In Time Inc.’s annual review of the environmental performance of its paper suppliers, UPM had the highest score.

Time conducts a thorough review each year using its Sustainable Development Report Card, which covers forestry practices, manufacturing, energy and waste, global issues and reporting, environmental performance indicators and people. The 2007 report card makes particular note that among Time’s paper suppliers, UPM is “efficiency focused and operationally sound.”

CANFOR ANNOUNCES CLOSURE

VANCOUVER, BC — Canfor announced that it is permanently closing its panel and fibre mill in New Westminster, BC, effective January 8th, 2008, once fibre inventories have been utilized and mill equipment decommissioned. The mill employs 126 people and manufactures specialty products including hardboard panels, erosion control wood mulch and baled fibre.

SMURFIT-STONE JOINS WBCSD

CREVE COEUR, MO./CHICAGO, IL — Smurfit-Stone Container Corporation has accepted an invitation to join the World Business Council for Sustainable Development (WBCSD), a global business organization dedicated to sustainable development through economic growth, ecological balance and social progress.

The WBCSD was formed consequent to the United Nation’s Conference on Environment and Development in 1992 in Rio de Janeiro. The council has some 200 members drawn from more than 35 countries and 20 major industrial sectors. Membership is by invitation of the WBCSD’s executive committee to companies which share a commitment to sustainable development.

INTERFOR AGREES TO ACQUIRE POPE & TALBOT SAWMILLS

VANCOUVER, BC — International Forest Products Limited has announced that it has reached agreement to acquire the Castlegar and Grand Forks, BC, and the Spearfish, SD, sawmill assets and related timber tenures of Pope & Talbot and certain affiliates. The Castlegar and Grand Forks mills are large producers of specialty and commodity grade lumber products serving markets principally in the United States and Canada.

FINNISH FOREST INDUSTRY AT TURNING POINT

HELSINKI, FINLAND — Jussi Pesonen, chairman of the Board of Directors of the Finnish Forest Industries Federation and president & CEO of UPM discussed the industry’s turning point at the Federation’s annual autumn meeting recently. “Increasing the efficiency of operations, streamlining structures and developing new businesses and products will safeguard the industry’s competitiveness and establish a strong foundation for future,” he said. “I foresee a lowering of the barriers that separate manufacturing from services as well as the adoption of networked activities between strategic partners.”

WEYERHAEUSER REPORTEDLY SEEKS BUYER

LOS ANGELES, CA — Weyerhaeuser has started discussions on the sale of its containerboard and building materials businesses and has sent books out to prospective buyers, according to a report from dealReporter and ForestWeb. Five to seven parties have signed confidentiality agreements to see the books, interested either in one or both businesses, but there were no ongoing auctions or set deadlines yet.

Smurfit-Stone Container Corp and Georgia Pacific were interested, dealReporter said the transaction could be worth between $5.3 billion and $5.5 billion. An unnamed industry banker said he doubted there was a “mandate to sell” as he believed Weyerhaeuser was responding to shareholder pressure.

POPE & TALBOT GO TO COURT

VANCOUVER, BC — Pope & Talbot’s bankruptcy case will be moving from Ontario to British Columbia, according to a recent report by the Canadian Press. The province of BC had moved to transfer the bankruptcy protection proceedings to the BC Supreme Court, noting that the company has substantial connection to British Columbia, employing more than 1,700 employees and holding significant assets, and is in a complex resource industry, subject to numerous provincial laws and regulations covering the environment, water, forests, pensions, workers compensation, employment standards and labour relations. The Ontario court has agreed.

The subsidiary, Pope & Talbot Pulp Sales Europe, LLC, has filed an application for relief under Belgian bankruptcy laws in the commercial court in Brussels. If the Belgian court grants the company’s application, it is expected that the Pope & Talbot Pulp Sales Europe, LLC will be liquidated through the bankruptcy proceeding.

NORSKE SKOG-CANADIAN TAX ISSUE

OXENOEN, NORWAY — Norske Skog and the Canadian tax authorities have reached agreement regarding an issue relating to a subsidiary of the company Fletcher Challenge, which was acquired in year 2000. According to the agreement, Norske Skog will pay approximately CAD 42.5 million as the final settlement. The amount will be booked as tax cost in the accounts for the fourth quarter of 2007.

J.D. IRVING SPLITS

ST. JOHN, NB — J.D. Irving Ltd., the $6 billion family conglomerate with operations in energy, forestry, paper products and media, may be facing a split, according to a recent report by the Globe and Mail. At issue is succession and the strategic planning, note sources close to the family.

An international team of lawyers and financial specialists were reportedly working on the restructuring, which would involve several jurisdictions, tax rulings and other court approvals under Canadian, US and Bermuda law.

J.K. Irving, one of the ruling trio of grandsons of the original founder, told the Globe and Mail that the company plans to stay flexible and keep investing in its mills.

FPAC APPLAUDS BOREAL PROTECTION

OTTAWA, ON — The Forest Products Association of Canada has expressed strong support for the Government of Canada’s a
nnouncement to protect over 10 million hectares of land in the boreal forest, one of the largest land conservation initiatives in Canadian history. The industry also commends the federal government, the GNWT and communities for having co-operated so constructively on this important commitment.

DOMTAR WINS SUPREME COURT DECISION

MONTREAL, QC — Domtar has won a multi-million dollar judgment by the Supreme Court of Canada in a claim against ABB and Alstom Canada.

In a unanimous decision rendered on November 22, 2007, the Court ordered ABB and Alstom Canada to pay Domtar approximately $38.7 million in damages and interests relative to a 1989 lawsuit on matters regarding manufacturers’ liability, latent defects and disclosure responsibility involving the installation of a recovery boiler at the Windsor, QC, facility.

CASCADES TO BE RECLASSIFIED

KINGSEY FALLS, QC — Cascades has announced that it has been reclassified from the Paper & Forest Products industry to the Containers & Packaging industry by S&P/TSX and Morgan Stanley Capital International. The company will remain in the Materials Sector.

SUSTAINABLE DEVELOPMENT

The World Business Council for Sustainable Development (WBCSD) is a global business organization dedicated to sustainable development through economic growth, ecological balance and social progress. It was formed consequent to the United Nation’s Conference on Environment and Development in 1992 in Rio de Janeiro. Today, the council has some 200 members drawn from more than 35 countries and 20 major industrial sectors. Membership is by invitation of the WBCSD’s Executive Committee to companies which share a commitment to sustainable development. Recently, Smurfit-Stone was invited to join the ranks of a company which already included other forestry members such as (to list a few) IP, MeadWestvaco, Norske Skog, Oji Paper, SAPPI, Stora Enso, Weyerhaeuser, Kimberly-Clark, Procter & Gamble, Time Inc., Eka Chemicals and UPM.

PINE BEETLE LOGGING TAKES MOSTLY PINE

VICTORIA, BC — All additional harvesting allowed by the Ministry of Forests and Range to deal with the current mountain pine beetle infestation has been directed at pine, according to a Forest Practices Board report recently released.

“The increase in the allowable annual cut to deal with the mountain pine beetle epidemic has raised concerns about whether non-pine species of trees were also being harvested,” said board chair Bruce Fraser. “We found that all of the new allowable harvest consists of pine, and that industry has not increased its harvest of other species.”

A board investigation into species composition of MPB harvest in BC’s Interior was prompted by a 36% increase in the allowable annual cut. The increased harvest is helping to try to control the outbreak and salvage beetle-killed wood before it loses its value. Other species continue to be logged to make wood products for which pine is not suitable, or when clear-cutting mixed-species stands.

If uses for the dead pine — such as for bio-energy or for non-lumber wood products — turn out to be viable, more pure pine may well be harvested and those sites replanted for the future, reducing the long-term concern.


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