the smell of money

Sale possible for pulp mill


By MARKUS ERMISCH
Staff reporter
Aug 04 2006


As Weyerhaeuser considers the sale of its white-paper business, the industry giant's Kamloops pulp mill may be thrown into the fold, according to one industry analyst.

A shutdown, however, is unlikely.

"I assume that it's a mill that's probably one of the few that's a keeper," said Kevin Mason, managing director of paper and forest products with Equity Research Associates.

"From all the things that I've seen on it, it's still regarded as a fairly decent mill, although to really make it efficient, you want to do some upgrades. But it's definitely in far better shape than a lot of the other mills out there."

Selling the mill - Mason speculated it may be sold to Domtar Inc., Boise Cascade or a combination of both - would make sense for Weyerhaeuser.

If the Washington state-based company does sell its white-paper division, a few of its pulp mills will be part of the deal, said Mason, thus ensuring that the potential buyer is not left short of pulp.

But to survive, the mill needs to be upgraded to make it run more efficiently, said Mason.

Local Weyerhaeuser management, despite the uncertainty surrounding the Kamloops mill, is toying with the idea of introducing gasification technology to reduce its reliance on expensive natural gas. It has signed a tentative deal with Nexterra Energy Corp., a company that has sold the technology to Tolko Industries Ltd. for the company's mill in Heffley Creek.

The fact that Weyerhaeuser is considering this technology, however, is not necessarily an indication of what Weyco headquarters has in mind for the Kamloops mill.

"We're moving forward until we know something, and part of moving forward includes that project," said Bob Taylor, general manager for Weyerhaeuser's B.C. operations.

"We think it's a good project that makes sense for the mill."

Taylor said he does not know when head office will decide the fate of the Kamloops mill.

One of the first people to hear the news of any change will be Rene Pellerin, president of the Communications, Energy and Paperworkers Union of Canada, Local 10B.

The union represents about 370 workers at the Mission Flats site.

"We've been hoping for an announcement for a long time," he said.

"It would be easier on all of us if we knew where we sat.

"But again - it's a waiting game, and we've been in this waiting game for a while."

Meanwhile, Canada's position as the world's largest producer of pulp continues to slip as the country is being overtaken by Brazil.

As a result, the entire pulp industry is undergoing a dramatic change.

The Weyerhaeuser mill closure in Prince Albert, Sask., is but one example.

However, mills in British Columbia's Interior are, for the most part, not likely to suffer a similar fate.

According to Mason, they are low-cost pulp producers compared to mills in central and eastern Canada.

Fibre costs in B.C., said Mason, are about half of what mills in eastern Canada pay, while energy is cheaper on the West Coast.


© Copyright 2006 Kamloops This Week
v