Pulp and Paper Canada

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News (February 01, 2004)


February 1, 2004
By Pulp & Paper Canada

OUTLOOK2004 WILL BE BETTERMONTREAL, QC — The Pulp and Paper Products Council says the macroeconomic environment looks positive for the industry in 2004.The U.S. economy should expand by close to 5% t…

OUTLOOK

2004 WILL BE BETTER

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MONTREAL, QC — The Pulp and Paper Products Council says the macroeconomic environment looks positive for the industry in 2004.

The U.S. economy should expand by close to 5% this year, which should finally lead to a real recovery in ad spending and paper demand.

In Western Europe, the economic pick-up will be more modest, but should still result in stronger domestic demand for paper. Excluding Japan, substantial growth will be seen in Asia, particularly China.

As a result, Canadian shipments of pulp and paper will strengthen particularly in the second half of the year.

Overall, shipments are expected to grow 3%, which would life the average operating rate in the industry by 2 points, to 94%.

BIOMASS

COGENERATION AT KRUGER BROMPTON

SHERBROOKE, QC — Kruger Inc. confirmed that Hydro-Qubec has retained the 16 MW biomass cogeneration project of the Brompton Mill following the call for tenders issued by Hydro-Qubec for the supply of 100 MW of electricity produced from biomass.

The green energy production project consists of installing a boiler to burn biomass residue for the production of steam. The steam will then be sent to a new power-generating turbine. An investment of over $60 million is required to complete the project.

Using biomass will reduce the Brompton mill’s annual consumption of fossil fuel by 25-million-liters. This change will contribute an annual reduction in greenhouse gas equivalent to 80,000 tonnes of carbon dioxide (CO2 e).

Kruger Inc. will take all the necessary steps to obtain the required authorizations over the next few months. Construction work could begin as soon as all government authorizations are received.

ENVIRONMENT

CCHREI SETS WATER AND WASTEWATER STANDARDS

MONTREAL, QC — The Canadian Council for Human Resources in the Environment Industry (CCHREI) announced it has entered the final validation stage for a draft of the National Occupational Standards (NOS) for Canadian Water and Wastewater Operators.

CCHREI also launches an on-line validation tool and a series of national focus groups in order to gather comments and feedback about the standards from water and wastewater practitioners.

It will examine water and wastewater operators’ skill that must meet the industry’s standards.

CLOSURE

TEMBEC SHUTS KAPUSKASING, RAISES PRICES

TEMISCAMING, QC — Blaming historically low newsprint prices, the strengthening Canadian dollar and high energy and fiber costs in the province of Ontario, Tembec decided to shut down one of its paper machines at its newsprint facility in Kapuskasing, ON, indefinitely. The shutdown will remove an estimated 75,000 tonnes annually from the marketplace, and will result in a work force reduction of approximately 65 people.

Tembec also announced that it will be raising newsprint prices in the United States by US$50/tonne, effective February 1, 2004.

REVIEW

CANADIAN P&P LOST $175M IN 2003

MONTREAL, QC — The Pulp and Paper Products Council’s year-end industry review reported that based on preliminary data, it is estimated the industry lost $175 million on its pulp and paper operations, excluding unusual items.

The soaring loonie and higher transportation costs contributed to a further deterioration in the industry’s financial performance.

Canadian pulp and paper shipments increased 0.4% in 2003, to 30.7 million tonnes, but domestic sales fell 2% compared to 2002.

Increased sales offshore helped compensate for the declines in North America. Shipments overseas rose 4.3%, supported by a recovery in newsprint shipments to Asia and a 39% increase in market pulp shipments to China.

In spite of the slightly higher volumes, the industry’s financial performance weakened due to the rising loonie.

Shipments to the U.S. dropped 1% due to weak demand and an increase in paper imports from offshore. The only gains in the North American market were in shipments of mechanical printing papers to the U.S.

Capacity to manufacture pulp and paper increased 0.5% in 2003, with machine closures largely offsetting efficiency gains and incremental additions.

Pricing marginally improved. The average U.S. dollar product price increased by 6%, but was more than offset by a 12.4% increase in the average value of the Canadian dollar.

Capital employed in the pulp and paper sector totaled approximately $32 billion in 2003.

CLOSURE

DOMTAR SHUTS VANCOUVER

MONTREAL, QC — Domtar Inc. will shut down one of the Vancouver mill’s two paper machines and restructure the activities of the second. The move will affect 80 employees and will result to a 45,000-ton reduction of production capacity of the Domtar Luna coated paper.

Domtar will relocate some employees to other Domtar establishments while those who will permanently lose their jobs will be eligible for financial assistance as well as re-employment programs.

TAX REDUCED

NORSKECANADA GETS TAX BREAK

VANCOUVER, BC — The Powell River municipal council reduced NorskeCanada’s property taxes by $200,000 annually for the next five years, with a total reduction of $1 million per year. The Council also established a five-year economic revitalization rate of zero on capital upgrades as a way to encourage significant investments by heavy industry.

MILL

GASPESIA SUSPENDS WORK

QUEBEC CITY, QC — Construction work at the Chandler paper mill halted after Papiers Gaspsia announced it has asked for court protection from its creditors in the absence of an agreement among its three shareholders on a $200-million refinancing package.

Installation is taking longer than expected and the costs continue to soar. The total cost of the mill is now estimated at $700 million. So far, $300 million has been spent out of the original $500 million budget.

On Feb. 2, around 650 construction workers stopped working on the project to convert the former newsprint mill to produce quality coated paper.

Tembec holds a 25% stake in the mill, while SGF, the Quebec government’s investment arm, owns 25%. The Quebec Federation of Labour’s Solidarity Fund owns the remaining 50% stake.

SGF agreed to add $50 million and refused to go beyond that amount. The Solidarity Fund agreed to add $65 million out of the $100 million that the Quebec government demanded. Tembec is not commenting while negotiations are still on-going.

PAPERCLIPS

PAPER TRAIL: A bit of history

When the Chinese were defeated by their Arabian conquerors in the battle of Samarcande in AD 75, they were forced to reveal the secrets of paper manufacturing.

The technique found its way to Spain, in Andalusia, paving the way for the first European paper mills, constructed near Cordoba, and later Seville. It traveled to Italy, near Fabriano, where mills were constructed around 1250.

France was the next destination and, in the14th century, the first French paper mills were constructed, in Troyes (1348) and Essones (1354). On January 18, 1799, Louis-Nicolas Robert (1761-1828), young inspector of the Essonnes mill, obtained a patent for his invention: the first machine to produce paper continuously, which allowed faster production at lower prices.

In 1803, Didot Saint Lger, Bryan Donkin and the Fourdrinier brothers constructed the first English paper machine in Frogmore (Kent).

In 1850 appeared the first machine to produce multi-layered cardboard. There were 300 paper machines in England and 250 in France.

Source: French Confederation of the Paper, Cardboard and Cellulose Industries (www.copacel.fr)


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