Roadblocks thrown in the pulp mill's way

Tyler
Tyler Clarke
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UPDATE: Weyerhaeuser sold the Prince Albert Pulp Mill to Domtar in 2007, which in turn sold the mill to Paper Excellence in 2011.
Saturday’s Daily Herald included a report about Paper Excellence vice president of operations Dale Paterson’s speech during the Prince Albert and District Chamber of Commerce’s March 29 luncheon.
During this luncheon, Paterson discussed pulp product restrictions being imposed by a competitor. This competitor is not Weyerhaeuser, company media spokesperson Wayne Roznowsky clarified on Monday. 

Paper Excellence vice president of operations Dale Paterson hobnobs with a local crowd after delivering a presentation on the mill’s current challenges and hopeful future during a Prince Albert and District Chamber of Commerce luncheon at the Prince Albert Inn on Thursday. 

Frank in sharing the challenges that impede the Prince Albert Pulp Mill’s re-opening, Dale Paterson provided a local audience with a combination of good and bad news.

On the bad news front, although they’d initially planned on having the mill fully operational by this fall, the new projection is between 12 and 18 months away, minimum.

“Can I give a date today? No, I can’t. Can I tell you we’re working as hard and fast as we can? Yes, we are,” the Paper Excellence vice president of operations told a local crowd during Thursday’s Prince Albert and District Chamber of Commerce luncheon.

“It’s not a matter of will it operate, it’s a matter of what day, and I can’t tell you that today.”

One barrier is the mill’s dilapidated state after having been vacant in the six years between Weyerhaeuser shut it down and Paper Excellence’s purchase of it in 2011.

Although they faced a higher level of equipment failure than expected and must spend $75 million in addition to the millions already spent on bringing the plant back to snuff, Paterson said that things could have been worse.

“I have to give credit to the people who shut the place down, because they did an incredible job to ensure the equipment was well-preserved,” he said.

Another delay has come with their anticipation of new technology being developed in Saskatoon, which they are waiting on.

The capital expenditure on this new technology is expected to be between $85-$90 million less than they’d previously anticipated, Paterson said, noting that this is “a pretty attractive amount to keep working with.”

Another attractive component with this new technology is its ability to produce both traditional and dissolved pulp products.

This ties into another roadblock, in that a “competitor in the industry” only allows them to produce a certain type of pulp, Paterson explained to the audience.

Although they’d initially planned on only producing dissolved pulp products, which are allowed under their agreement, market prices have dropped significantly, pushing them to look at the production of market grade pulp products.

Paterson said that they are dealing with their “competitor” to make sure they’re able to proceed.

On the good news front, the mill’s green power plant is currently exporting nine to 9.5 MWH to Sask. Power, and is currently employing 24 people. 

An application has been sent to Sask. Power requesting the ability to increase power export to 12.5 MWH.

Can I give a date today? No, I can’t. Can I tell you we’re working as hard and fast as we can? Yes, we are. Paper Excellence vice president of operations Dale Paterson

In addition to producing electricity, this effort will pare down the amount of waste at the municipal landfill site.

“We have an issue with wood pallets all over our city and filling our landfill with wood that they can now chip and take out to the mill and burn as energy, so it’s great for our community,” Mayor Greg Dionne said.

A fabrication and engineering company named Lyinisiw Engineering was formed on March 1 to rebuild equipment for Paper Excellence and provide additional manpower for mill shutdowns and o do capital work in Paper Excellence mills.

Currently totaling eight trades people, an additional 25 are being searched for immediate employment.

Although eight Chinese workers will supplement the crew, Paterson said that when it comes to hiring, “our immediate focus is Prince Albert and the immediate area.”

A handful of other efforts are currently taking place, including a mill preservation project, which has a staff of 18 working at preserving and developing the mill site, at a cost of about $1 million per month.

In total, the mill is currently employing 113 people and spending about $1.8 million per month between personnel and materials, the majority of which goes directly back into the local economy, Paterson said.

“The people who are working at the mill are from the community, the services that we are using are from the community,” he explained.

From Dionne’s perspective, things appear to be shaping up in a positive direction.

“I go out to the mill the first Monday of every month, and every time I go out there, there are more and more people working,” he said. “That’s a positive.”

The goal now is overcoming their roadblocks and to begin producing pulp products as soon as possible, Paterson said, noting that their goal is still to employ about 250 people once it’s fully operational.

“We do want to operate the mill, we do want to bring it up to production, we don’t have a problem spending the money to do it, but we do have a major issue to take on, and we’re going to do that,” he said.

“We want to make sure we do it right. We’re interested not in the next two or three years, we’re interested in an extremely long-term operation.”

Organizations: Prince Albert, Weyerhaeuser, Prince Albert and District Chamber of Commerce CEO Merle Lacert

Geographic location: Chamber of Commerce, Saskatoon, Sask.

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  • Marc de Piolenc
    May 31, 2013 - 22:56

    I'm a bit confused about the power being exported. The unit used is MWH - megawatt-hours - which is of course is a unit of energy, not power. Is this figure for megawatt-hours per day sent to the grid, or is it a simple misprint for megawatts?

  • Richard Bassett
    April 01, 2013 - 17:07

    I restarted the Port Alice dissolving wood pulp mill in BC mill which I renamed Neucel in 2005 after buying it from the bankruptcy trustee. I also purchased and restarted the Cosmopolis, Washington dissolving wood pulp milll from Weyerhaeuser in 2010. It is staggeringly obvious that Paper Excellence don't understand the dissolving wood pulp market and its unlikely that they have the right personnel to address the engineering challenges which are not the same as those found in NBSK or other commodity grades. They don't have the people and they will struggle to recruit people who know what they are doing because they are scarce. Their economics of getting even viscose grade dissolving wood pulp to the Chinese or other Asian markets are very poor and their capital costs will be rising appreciably the longer the mill is down. After 6 years of being down, it is improbable that it will ever be a reliable producer of anything, let alone dissolving wood pulp. An incremental $75 million is not nearly enough. Lastly, for those who haven't noticed. There is a pending trade action against dissolving wood pulp producers in Canada, Brazil and the US. Any ruling on counter-vail duties against Canadian companies will be applied to Paper Excellence if it ever started up. Based on the documents filed to date, this would be an added cost burden of up to $400 per tonne for the Prince Albert mill. I have not discussed this with anyone at Weyerhaeuser and I have no axe to grind on their behalf but to suggest that somehow they are part of the problem is ridiculous. The problem is that Paper Excellence don't know what they are doing and realistically have a zero probability of succeeding in this market. If Paper Excellence was really being frank they would admit that this is a mistake, the mill will never run again and all of the people being kept waiting for a restart that will never come will be told so that they get on with their lives. Anything less is cruel.

  • Michael Scott
    April 01, 2013 - 11:55

    A question about Lyinisiw. The Chinese workers described, are they being used under the Temporary Foreign Workers Program?