Asian forestry giant takes second look at Mackenzie pulp mill

Rising commodity prices are spurring new interest by Asian forestry giant Sinar Mas in the shuttered Mackenzie pulp mill.

Tanner Elton head of the Mackenzie Pulp Mill Development Corp., said Wednesday that talks are taking place with Sinar Mas, the parent company of Asia Pulp & Paper, to purchase the pulp mill.

Elton said there is no deal at this point and that a number of obstacles have yet to be resolved, primarily long-term access to fibre, but that better prices for both pulp and lumber are attracting investor interest in the mill.

“Until the deal is done, it ain’t done,” he said in an interview. “But there have been a number of positives in the industry that would suggest (a deal) is more likely than not.”

He said those positives are the price of pulp and lumber.

Lumber prices are now hovering around $290 US a thousand board feet, up $80 from a year ago when they averaged $210 US. Pulp has also climbed from $675 US a tonne last March to $870 US.

However, there is little optimism among workers that a deal is in the works for the mill, abandoned last year by its owner, Worthington Mackenzie, which purchased it out of bankruptcy from Pope & Talbot and then failed to re-start it. The mill has been shuttered since June 2008, a casualty of the Pope & Talbot bankruptcy.

“I’ve been down this road so many times that I won’t believe there is a deal until the mill starts up,” said Carl Bernasky, president of CEP Local 1092, which represents the mill workers.

He said he does not want workers who have found jobs elsewhere to quit them and return to Mackenzie based on such sketchy optimism.

It’s not the first time Sinar Mas has been interested in the mill. In 2008, the company was negotiating the purchase three pulp mills and a sawmill from bankrupt Pope & Talbot, That deal, for $225 million, fell apart.

The Mackenzie Pulp Mill Development Corp. stepped into the picture last fall taking over maintenance of the mill site from the provincial government, which had been maintaining it until it could dispose of toxic chemicals on the site.

The consortium has spent $1 million keeping a skeleton crew at the mill to ensure it does not freeze over the winter.

The development group has signed an agreement with Worthington Mackenzie which gives it control of the mill and an option to purchase it. Elton said, however, that the consortium is not going to re-start it,

“Our group has no intention of operating the pulp mill. It is to preserve the opportunity for the pulp mill to operate,” Elton said.

The consortium includes regional logging companies, including the Duz Cho Logging Co. operated by the McLeod Lake Indian Band.

Obtaining a consistent fibre supply for the mill is key to getting it operating again, Elton said.

Beyond that, the consortium wants a new collective agreement with the union representing mill workers.

“And all sorts of debt issues have to be resolved,” Elton said.