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Tembec B.C. pulp mill to be idled; U.S. black liquor tax credit a factor

Tembec today announced that its pulp mill located in Skookumchuck, B.C., will take at least two weeks of market rel…

Tembec today announced that its pulp mill located in Skookumchuck, B.C., will take at least two weeks of market related downtime beginning the week of June 29.

Tembec attributed this action to a range of considerations including the ongoing challenging market conditions for pulp and pulp consuming products, the rapid and significant strengthening of the Canadian dollar and the lack of economically viable fibre. The company also indicated that the black liquor tax credit available to U.S. chemical pulp producers has added to these other issues and was a determining factor in this decision.

“The black liquor tax credit available to U.S. producers was absolutely a factor in this decision. It has allowed chemical pulp capacity that would otherwise be uneconomic to either remain in operation or be brought back into production, resulting in a material distortion in the pulp market in terms of both the supply/demand balance and pricing,” said James Lopez, Tembec’s president and CEO. “In the absence of an offsetting measure to allow Canadian producers to level the playing field, our industry and its employees will continue to pay the price through mill idlings and closures. This inequity must be addressed.”

Tembec is a large, diversified and integrated forest products company, with operations in Canada and France.