Nova Scotia Paper Mill Calls Back Employees, Reaches Deal to Reopen This Week

By Richardson, Whit | Bangor Daily News (Bangor, ME), September 24, 2012 | Go to article overview

Nova Scotia Paper Mill Calls Back Employees, Reaches Deal to Reopen This Week


Richardson, Whit, Bangor Daily News (Bangor, ME)


POINT TUPPER, Nova Scotia -- Employees of the Port Hawkesbury paper mill are returning to work this week, the result of an eleventh-hour government rescue that will allow the mill to start producing paper again as early as next week. The reopening of the mill, which closed in September 2011, has the potential to seriously impact Maine mills that produce similar grades of paper.

The Port Hawkesbury mill has the capacity to produce nearly 400,000 tons of supercalendered, or SC, paper -- the kind used to produce magazines, catalogs and newspaper inserts. That amount of SC paper makes up between 25 percent and 30 percent of the entire market for that type of paper, according to David Elstone, an analyst who follows the paper industry for ERA Forest Products Research in Gibsons, British Columbia.

Given the size of the Port Hawkesbury mill, its restart will put "downward pressure on prices until the market adjusts," Elstone said, "and the market adjusts by removing supply."

In other words, "removing supply" would mean mills with high costs would be forced to cut production or shut down completely. "Maybe there's a mill in Maine that might be in that category of being at risk of closure," Elstone said.

One mill in Maine produces the exact grade of SC paper that the Port Hawkesbury mill does. That's the paper mill in Madison, which is co-owned by Finnish giant UPM and the New York Times Co.

Verle Sutton, owner of Sutton Paper Strategies, told the Chronicle Herald in Halifax that a repercussion of reopening the Port Hawkesbury mill "will definitely be closures of SCA machines in the U.S.," adding that the UPM paper mill in Madison could be among the first on the chopping block.

North American mills, including the Madison and Port Hawkesbury mills, produced approximately 1.1 million short tons of the highest grade of SC paper, known as SCA, according to John Maine, vice president of Graphic Paper at Resource Information Systems Inc.

The Verso mills in Jay and Bucksport produce a small amount of a similar type of paper and also could be affected, according to Maine. "They would be impacted tangentially as the coated papers they produce are sometimes used in the same end-use as SC," he wrote in an email.

Russ Drechsel, manager of the Madison paper mill, which produces 220,000 tons of paper a year and employs about 240 people, said the demand for the high grade of SC paper the Madison mill produces has been in relative balance since NewPage shut down the Port Hawkesbury mill a year ago. Reopening it with subsidies from the government will throw the market out of whack, he said. Drechsel said it's too early to tell how exactly it will affect the Madison mill.

Drechsel said he and his mill employees have been watching the "roller coaster" that has been the negotiations to reopen the Port Hawkesbury mill very closely.

The reopening of the Port Hawkesbury mill has been the subject of intense negotiations over the past month. Last month, the provincial government announced a $124.5 million aid package to help Pacific West Commercial Corp. buy the mill from NewPage and reopen it. Pacific West was confident the mill would be opened by the end of September. However, after a setback two weeks ago involving a negative tax ruling from the federal Canada Revenue Agency, the provincial government and Pacific West walked away from the table on Friday evening and announced the deal had been scrapped and the mill would not reopen. …

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