Pulp and Paper Canada

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Industry News (July 01, 2007)


July 1, 2007
By Pulp & Paper Canada

FUNDING

GRANTING OPPORTUNITY

THUNDER BAY, ON–A one-time grant from the Ontario government will help Lakehead University establish a centre for research into biomass technologies.

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“Students, faculty and researchers at Lakehead University are helping make Ontario the place to be when it comes to research and innovation,” Premier McGuinty said. “We’re proud to work with them to find new ways to make our vital forestry industry more competitive and sustainable.”

The province is providing a total of $6 million to the school.

MILLS

CANFOR TAKES PRODUCTION HOLIDAY

VANCOUVER, BC–Canfor is taking a series of curtailments at several of its sawmills, and at its PolarBoard oriented strand board mill and Tackama plywood plant. Poor market conditions spurred the decision to implement the scaling back.

The curtailments represent roughly 66.2 million board feet of lumber production, 14 million square feet of OSB, and 8.5 million square feet of plywood.

The curtailment schedule came into effect on June 29, and mill downtime will be scattered through to the second week of August, so the company will be able to maintain customer service and program requirements. Employees were encouraged to take summer vacation during the downtime.

MILLS

ABITIBI CURTAILS

SAN DIEGO, CA–Abitibi Consolidated is also taking short-term curtailments at nine of its Quebec softwood mills in July and August.

According to a recent report by Forestweb, the company confirmed that its facilities in Comtois and Senneterre will close for two weeks between early July and mid-August. The Chibougamau, Girardville-Normandin, La Dore, Roberval and Saint-Thomas sawmills are also scheduled to close for that period.

The La Tuque sawmill closed from July 15-29, and temporary downtime at the Pointes-aux-Outardes sawmill has been extended for an additional four weeks, up from the originally planned four-week hiatus.

MILLS

MACKENZIE TO CLOSE

VANCOUVER, BC–In other Canfor news, the company is closing its Mackenzie sawmill indefinitely. Once the remaining log inventory has been processed, the facility will close.

“Canfor’s board has directed me to implement a program to reduce costs and position the company to weather this market downturn, which is the worst the industry has seen in decades,” said Canfor’s interim president and CEO, James Shepard. “The scope of this cost reduction strategy is not limited to our operations but also includes a review of how we, as a company, spend money and puts in place a process to indentify additional cost savings.”

The mill has a capacity of 500 million board feet and provides jobs for approximately 450 people.

MILLS

NEENAH CLOSES PAPER MILL

ALPHARETTA, GA–Mill closures aren’t being relegated North of the border, as Neenah Paper confirms plans to close its paper mill in Urbana, OH. The facility, with a capacity of roughly 39,000 tons per year, was acquired in March 2007, along with the purchase of Fox River Paper. Operations at the mill will be phased out over the next 12 months.

“This decision follows a thorough analysis of how best to optimize our manufacturing footprint following the Fox River purchase,” said Sean Erwin, chairman and CEO. “Closing the Urbana mill allows us to further improve costs and the timeline will ensure we seamlessly continue to serve the needs of our customers. We realize this will result in hardship for our employees at Urbana and their local community and will be working to assist them through this difficult transition.”

FINANCIAL

‘WORST IS OVER’ FOR NA PAPER AND FOREST PRODUCTS INDUSTRY: FITCH RATINGS

CHICAGO, IL–A recent report issued by Fitch Ratings points to positive movement for the North American paper and forest products industry.

While trends are pointing to modestly weakening financial metrics in 2007, the report highlights the industry’s preparedness and willingness to take out excess capacities as opposed to subsidizing high cost facilities.

The report further notes that “export markets will not be able to compensate for a slowdown in North American demand, which is widely predicted for the second half of 2007. Second quarter paper and packaging earnings should look good and relatively better for lumber and panel producers. Beyond that, probabilities are that third and fourth quarter earnings will at best match those of last year. Lumber and panel producers should do better than last year’s second half, having adjusted more quickly to a soft housing market. As the year unfolds, additional capacity adjustments are expected, which will support prices and auger a better 2008.

“The first quarter of 2007 was not completely negative for the North American paper and forest products industry, and earnings in succeeding quarters will likely be better. The depressed value of the U.S. dollar is stimulating exports (pulp, linerboard, paperboard and newsprint) but injuring Canadian based manufacturers.”

The full report, entitled ‘Paper and Forest Products: Spring 2007 – The Worst Is Past, can be found at www.fitchratings.com

MILLS

MIRAMICHI GROUNDS TO A HALT

HELSINKI, FINLAND–UPM is closing its Miramichi mill for one year. In late August, the paper mill is scheduled to shut down for nine to 12 months. The nearby groundwood mill is also closing. Approximately 600 people will be put out of work due to the shutdowns.

“UPM’s target is to improve the long-term profitability of the coated paper business. With today’s decision, UPM leaves all options open for Miramichi. We will continue to explore solutions for Miramichi during the shutdown but realize that there needs to be material changes in the business environment for the mill to start up again,” Jyri Ovaska, president of the company’s magazine paper division said. “The Miramichi management and employees have succeeded in steadily improving the efficiency of the mill,” he continued, “unfortunately, their efforts could not overcome the challenges in the business environment.”

The facility has two machines which produce lightweight coated paper, with an annual capacity of 450,000 tonnes. A combination of a high Canadian dollar, decreasing prices for coated magazine paper in North American and overcapacity created an unsustainable situation for the facility, and prompted the company’s decision to close it.

MILLS

ST. MARYS INVESTORS GET GO-AHEAD

SAULT STE. MARIE, ON–The future is looking bright for St. Marys Paper.

A group of local investors who had submitted a bid to purchase and operate the facility have reached an agreement with the Receiver, RSM Richter.

The local group now makes up the shareholders in a newly incorporate company, ‘St. Marys Paper Corp.’

“We have worked diligently with the union to negotiate a labour agreement, and then with the province to obtain a comfort letter addressing the needs of the mill,” said Gord Acton on behalf of the investors group. “Concurrently, we have successfully obtained the financing necessary for the transaction. During the process, we have worked cooperatively with the Receiver and have now come to an agreement which we are confident will receive the approval of the court.”

Acton is concerned about the possibility of securing a bio-mass cogeneration facility, something he views as critical to ensuring the stability of the mill. “We are continuing to work with the Federal government for their support of innovative technology implementation,” he said. “Finally, but importantly, we will need the bio-mass cogeneration facility in order to ensure long-term financial stability and jobs at the mill. The quicker we can get a bio-mass cogeneration facility built t
he more assured our long-term survival will be and plans are already underway to restart the mill and client of the super calendar paper produced by the mill have been contacted to elicit orders. We are planning to make paper within weeks after purchase of the mill,” he confirmed.

ENVIRONMENT

LIKE A ROLLING STONE

VANCOUVER, BC–In the latest step towards environmental sustainability, Rolling Stone is the first mass-marketed magazine to publish on carbon neutral paper. Starting with the June 28, 2007 issue, the publication will be printed on Catalyst Cooled paper.

“Rolling Stone has provided a unique window on national affairs for 40 years,” said Rolling Stone managing editor Will Dana. “Today, climate change is the biggest issue facing our planet and printing our magazine on carbon-neutral paper is one step that makes business and ecological sense. Rolling Stone offers cutting edge social commentary on issues that matter and acts on those where we can make a difference so to be the first magazine to print on carbon neutral paper is a natural fit for us.”

Catalyst Cooled paper has lighter basis weights that take less energy and raw materials to manufacture and transport, elemental chlorine-free production and the option of 100% certified fibre.

“Advertisers and consumers support, more and more, paper products that are produced with minimal harm to the environment and with Catalyst Cooled for Rolling Stone we’re able to show that our products are among the most environmentally responsible in the world,” said Richard Garneau, president and CEO of Catalyst Paper.

MILLS

CATALYST LOOKING AT ABITIBIBOWATER CASTOFFS: FINANCIAL TIMES

VANCOUVER, BC–Catalyst is possibly looking to pick up divestitures from the AbitibiBowater merger, FT.com has reported.

The company is in the process of marketing US$200 million of new senior notes through Deutsche Bank and Merrill Lynch. The report confirmed that Catalyst intends to use proceeds for ‘general corporate purposes including potential acquisitions.’

FT.com further reported that although no concrete information concerning prices has been released, that the move would be a strategic one on behalf of Catalyst. ‘The timing of the deal is advantageous to the company despite its decision not to reveal any specific target opportunities under consideration, according to one of the buysiders,’ the story said. “This is a got time for them to get this money now before we see a turn in the market. They’re getting the money now when they can get it, not later when they need it,” FT.com quoted a buysider as saying.

MILLS

FRASER REBUILD AND CLOSURE

TORONTO, ON–Fraser Papers has completed the upgrade of its recovery boiler at its Edmunston, NB sulphite pulp mill. The rebuild was completed during a recent three week outage and the company expects an increased production capacity of more than 50 tons of pulp a day, or 18,000 tons a year. This higher internal pulp production will allow the company to save roughly $3 million a year.

Fraser made an additional announcement involving its paper mill in Madawaska, ME. The company will move its specialty paper business to its larger machines, and permanently close PM1 and 2 at the mill, as of August 26, 2007.


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