The dormant Pope & Talbot mill in Mackenzie, B.C.JOHN LEHMANN
A unit of Indonesia's Sinar Mas will buy the Mackenzie, B.C., pulp mill in a plan that could see it resume production from the Canadian plant for Asian markets by fall, officials said Friday.
The mill and the town of Mackenzie in northern British Columbia have become symbols of the economic woes that have dogged Canada's forestry industry over the past three years with plant closures and job losses in rural communities.
Provincial Forest Minister Pat Bell even struggled to hold back tears as he announced the complex deal to reopen the facility that was shuttered in 2008 by the bankruptcy of North American forestry firm Pope & Talbot.
"It tore my heart out to see that town go down ... For me, Mackenzie is back and it deserves to be back," Mr. Bell told a news conference about the town that saw all of its lumber, pulp and paper mills closed in the economic crisis.
Sinar Mas's Netherlands-based unit, Paper Excellence BV, will pay $20-million for the mill, and invest between $30-million and $40-million to restart it, plus additional costs, officials said.
The mill's union has signed a contract for the more than 240 workers, and the McLeod Lake Indian Band, which holds resource rights in the area, says it will ensure the facility receives sufficient fibre supplies.
Sinar Mas plans to market about 80 per cent of the mill's NBSK pulp production in Asia, said Peter Wardhana, a director of Paper Excellence.
Mr. Wardhana said the company, which already owns a mechanical pulp mill in Meadow Lake, Sask., is interested in more acquisitions in Canada. It is in final talks with Tembec Inc. to buy two of the Canadian firm's pulp mills in France.
Sinar Mas tried to buy the Mackenzie mill in 2008, but the deal fell through partly because of the international credit crunch. That proposed transaction had also included two other Pope & Talbot mills.
"This is a completely separate deal," Mr. Wardhana said.
The original deal's collapse launched an almost bizarre chain of events that saw an Alberta businessman buy the then-closed mill, only to abandon it when it became clear he had no financial backing.
Workers found themselves manning the plant for weeks without pay to ensure hazardous chemicals stored there would not leak out into the community. Eventually, the province took control of the property.
The $20-million purchase price will pay off the debt built up during what a local official described on Friday as "that misadventure."
Green groups and some in the forest industry have expressed fear that Sinar Mas will mix pulp from Canada with fibre produced by destructive logging practices in Asia in a bid to label the product as more environmentally friendly.
Mr. Bell said he has discussed the deal with Greenpeace and other groups and said the province and the McLeod Indian Band are satisfied with the company's environmental practices at its Saskatchewan mill.