Pulp and Paper Canada

Industry News (January 01, 2008)

January 1, 2008  By Pulp & Paper Canada

Facilitating retrofit loans at Thunder Bay

Facilitating retrofit loans at Thunder Bay

THUNDER BAY, ON — Superior Packaging reached a long-term collective agreement with the Communication, Energy, and Paperworkers Union of Canada (CEP) that is expected to help revive the idled Fort William Mill in Thunder Bay, ON, according to Thunder Bay’s The Source on December 20.


Superior Packaging hopes to buy the former newsprint mill from Montreal, QC-based AbitibiBowater and convert it to produce a corrugated paper product the company says is unique to North America.

The signing of the long-term deal with the CEP could be a positive step toward acquiring the $50-60 million in capital needed to finance the mill’s conversion.

Pope & Talbot wants taxes cut for Harmac

NANAIMO, BC — The financially troubled Harmac pulp mill wants city council to consider reducing 2008 property taxes at the Pope & Talbot-owned facility by up to 50%.

Mayor Gary Korpan said the city is legally unable to give a special tax rate to individual properties.

Rick Thurmeier, past-president of the Greater Nanaimo Chamber of Commerce, noted that Harmac affects much of mid-Vancouver Island. He believes that the provincial and federal governments should be more involved with financial relief for Harmac. Harmac is part of a pulp and paper task force asking for a 50% reduction in property taxes across the board in BC.

Asset sale of Papiers Gaspsia

CHANDLER, QC — The intense efforts of the past few years to relaunch Papiers Gaspsia have been in vain as no takers were found to re-open the mill. As a result, Socit de dveloppement conomique et industriel de Chandler (SDEIC) and its partners have accepted Vantek Incorporated’s offer to purchase.

Valued at US$40 million, this transaction will allow Vantek to purchase the Papiers Gaspsia mill and all its equipment. In the coming months Vantek plans to sell the main equipment and dismantle the buildings on the main site, while the city of Chandler gets to keep the land.

FPAC calls for Parliamentary forestry study

OTTAWA, ON — The head of FPAC has called on MPs to follow the lead set by the House of Commons Standing Committee on Industry, Science and Technology and launch an intensive study that focuses on the unique opportunities and challenges facing the forest products industry. Avrim Lazar said that though global demand for forest products is strong and Canada has the resources to meet this need, Canadians are losing out as mills shut down in the face of unprecedented competitive stresses for the forestry industry.

Forecast on forestry

OTTAWA, ON — In its Fall 2007 Global Export Forecast, the Export Development Corporation forecast an 8.3% decline in exports for 2007, noting that the high Canadian dollar, increased energy costs and a weaker US economy contribute to this decline. However, the outlook for 2008 is more positive, with a 3.5% growth in forestry exports, based largely on higher prices in the pulp and paper sector.

Dalhousie mill closure agreement

FREDERICTON, NB — NB government and AbitibiBowater have discussed the next steps related to the recent announcement of the permanent closure of the Dalhousie mill. The parties have agreed on a number of key points to help ensure the viability of the town of Dalhousie and to help secure future employment prospects for mill workers.

AbitibiBowater has also agreed to continue to heat the mill through the winter months and to not start the dismantling process of the facility before September 2008, with the exception of the paper-making equipment. The province and the company will work together to look for a suitable buyer for the industrial mill, recognizing that the production of paper is no longer an option.

Domtar keen on going green

KAMLOOPS, BC — Domtar’s Kamloops pulp mill expects to gain an edge on competitors by encouraging its employees to conserve energy, according to Kamloops This Week.

“We believe that through energy-conservation initiatives, we can proactively improve our cost-competitiveness — so absolutely, we hope to see a positive impact on the bottom line,” said Kristen Dangelmaier, the mill’s environmental manager, is quoted as saying.

Time is running out for Prince Albert

PRINCE ALBERT, SK — The Communications, Energy and Paperworkers (CEP) union says time is running out for plans to reopen Domtar’s Prince Albert pulp mill.

According to a ForestWeb report, union local president Ron Rucks said Domtar had indicated that a 2008 reopening would be its “only shot” to get the mill up and running for good.

The Leader-Post (Regina) reported that Rucks said there are critical timelines that must be met and a minimum of 28 weeks of work that needs to be done before the mill reopens, including recalling workers, hiring contractors, maintaining the biological effluent system and beginning to harvest trees.

Rucks noted that the former government’s forestry task force has identified the mill as the lynchpin for the forestry industry in northern Saskatchewan.

New Brunswick helps Edmundston mill

EDMUNDSTON, NB — The NB government has announced it is preparing to invest millions of dollars to keep Fraser Paper’s troubled pulp mill in Edmundston in operation, the CBC reported recently. The government will partner with the company to invest in the infrastructure in the Edmundston and Plaster Rock mills. The investment amount has not been detailed as of yet.

BC’s Pulp & Paper Task Force reports

VANCOUVER, BC — The BC Pulp & Paper Task Force has released the first in a series of economic competitiveness reports. The task force, which includes representatives from all 20 pulp and paper mills in BC, commissioned PricewaterhouseCoopers LLP to conduct an economic impact study to clarify the importance of the sector to BC.

According to the study, pulp and paper provides $4 billion in economic benefits to BC, and contributes more than $600 million in revenues each year to all three levels of government. The industry employs more than 10,000 in BC and indirectly provides employment for another 20,000. With an annual industry payroll of $1 billion, it is the second highest paying industry in the province.

The report also found that BC’s pulp and paper industry have been leaders in environmental sustainability, and notes that since 1990, the province’s pulp and paper facilities have reduced their greenhouse gas emissions by 62%, while increasing production volumes. This reduction is equivalent to removing 600,000 vehicles from our roads.

Aditya Birla invests in AV Cell

ATHOLVILLE, NB — Aditya Birla is investing $15 million of added capitalization into AV Cell and will increase its share holdings from 50% to 75% as part of its production capacity expansion plans. The announcement was made in conjunction with the government of New Brunswick who pledged a term loan of $17.3 million to assist with facility upgrades.

Peter Vinall, president and CEO, AV Group, said, “AV Cell has excellent long-term potential and today’s announcements will allow us to invest in the necessary upgrades and efficiencies to succeed and prosper in the years to come.”

Major recap at Tembec

MONTREAL, QC — Tembec announced a proposed recapitalization transaction that would reduce its $1.4 billion debt by $1.2 billion, but see existing shareholders immediately lose 95% of their stake. According to Tembec, the proposed restructuring would not affect their customers, suppliers or workforce.

In a statement issued before markets opened on December 19, CEO James Lopez described the recapitalization transaction as “a significant and positive development for Tembec and its stakeholders.”

Executive members of Communications, Energy and Paperworkers Union of Canada (CEP) Local 233 stated their suppo
rt for the Tembec recapitalization plan. Since Tembec’s announcement, more noteholders have executed support agreements with Tembec whereby they have agreed to vote in favour of and support the Recapitalization.

UPM removes significant capacity

HELSINKI, FINLAND — UPM has announced the permanent closure of its Miramichi paper mill in New Brunswick, removing 450,000 tonnes of magazine paper capacity. This mill has been temporarily shut down since August 2007.

The record strong Canadian dollar has made the export of Miramichi paper to the United States market unprofitable. The increasing cost of essential raw materials such as wood and chemicals has offset the benefit of price increase for magazine paper. Demand for magazine paper grades in North America has been stable, but globally, there continues to be overcapacity in magazine papers. UPM has permanently ceased production of 980,000 tonnes of coated magazine paper in 2006-07 to reduce the structural overcapacity and improve profitability of the business.

Tolko receives Energy Conservation Award

VANCOUVER, BC — Tolko Industries has been awarded a Canadian Industry Program for Energy Conservation (CIPEC) Leadership Award for switching from natural gas to clean burning synthesis gas produced by Nexterra’s biomass gasification system at Tolko’s Heffley Creek plywood mill in Kamloops, BC.

In 2005, Tolko partnered with Nexterra Energy to design and build a gasification system that converts low value wood waste into “syngas” which is used as a fuel to replace natural gas at the Heffley Creek mill. The new system, which has logged over 10,000 hours of operation since it opened in 2006, reduces greenhouse gas emissions at the plant by 12,000 tonnes annually and displaced $1.5 million in natural gas this year.

NewPage acquisition is completed

MIAMISBURG, OH — NewPage Corporation announced the completion of the previously-announced acquisition of Stora Enso Oyj’s North American paper manufacturing operations.

“NewPage, majority owned by Cerberus Capital Management, completed the $2.556 billion financing arranged by Goldman Sachs in one of the most difficult credit markets in memory,” said Mark A. Suwyn, NewPage Chairman and CEO. The combined product portfolio is the broadest in North America.

NewPage operates 12 paper mills with 26 paper machines located in Nova Scotia, Kentucky, Maine, Maryland, Michigan, Minnesota and Wisconsin. These mills have a total annual production capacity of approximately 5.5 million tons of paper, which includes 4.3 million tons of coated paper, 920,000 tons of uncoated paper, 300,000 tons of specialty paper, as well as 3.2 million tons of pulp. NewPage is now the largest manufacturer of coated paper in North America, based on capacity.

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