Pulp mill faces another roadblock

Tyler
Tyler Clarke
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The Prince Albert Pulp Mill churns out smoke as it generates 10 megawatts of power for the SaskPower grid. 

It may have found new rails, but the Prince Albert Pulp Mill is still on track.

 

“We are making a very strong statement that we expect to have that mill up and running within 18 months,” said Dale Paterson, Paper Excellence vice president of operations.

This is the same estimation Paterson provided during a Chamber of Commerce luncheon about nine months ago, unadjusted for time.

The delay comes from Paper Excellence going back to the drawing board, Paterson explained over the phone on Monday.

The sea change began about three weeks ago, when China announced new countervailing duties on dissolved pulp products, ranging from zero to 50 per cent.

The Prince Albert Pulp Mill was hit with the maximum 50 per cent, which Paterson said effectively killed the mill’s viability as a dissolving pulp manufacturer.

“That totally destroys the work that we’ve been doing,” Paterson said. “There is no 50 per cent margin in making pulp.”

“We’re a really, really disappointed,” he said, pausing for a moment when considering the use of the word “disappointed.”

“That’s probably a mild word, because we have put two years of effort from our company into producing what we were going to produce, of a very high quality dissolved pulp.”

The Prince Albert Pulp mill met the full brunt of China’s countervailing duties because it’s a new operation, Paterson explained, noting that the duty is intended to limit competition and therefore protect Chinese industry.

“It’s scary, not only for pulp but for other resources in the world, when someone introduced countervailing duties on what we’d call a one–off basis,” he said.

“What it does for Prince Albert is take it off the map for a dissolving pulp mill.”

Forced to change course, Paper Excellence is now focusing on producing fluff pulp -- a pulp product used most notably in incontinence products -- a product being used increasingly in North America, Europe and Asia, Paterson said.

This puts up another potential road block, since Paper Excellence signed a non-competitive agreement with Domtar when they purchased the mill in 2011.

“We are going to knock heads with some people, and that’s Domtar’s biggest growth area, so we’re going to challenge Domtar in that area of growth,” Paterson said.

The non-compete agreement will be reviewed very carefully, Paterson said, reiterating Paper Excellence’s dedication to fluff pulp.

Paper Excellence has already confirmed that Prince Albert area trees are ideal for producing fluff pulp product, Paterson said.

“The first thing you do is make sure the wood you have will make the product that you want to make -- and we’re good,” he said. “We took the wood and we cooked it in our research centre to ensure that the quality of the fibre is good.”

The switch from dissolved pulp product to fluff pulp will mean the purchase of different equipment, although Paterson said that both the expense and the estimated job creation figures are about on par.

The same as with dissolved pulp product, the conversion of the Prince Albert Pulp Mill to accommodate the creation of fluff pulp will cost between $75 million and $90 million, and will require the hiring of about 200 people, Paterson said.

We are making a very strong statement that we expect to have that mill up and running within 18 months. Dale Paterson

“When we make a product we’ll make a quality product in our operation -- there’s no question,” Paterson said of the 18 months he anticipates it will take crews to set up for fluff pulp. “We want a quality product.”

 

Power plant

 

While Paper Excellence gears up to take on fluff pulp, they’re also hoping to step up power production.

Powered by waste wood, their current “green energy” facility supplies about 10 megawatts to the provincial power grid.

“We are investigating, today, quotations for another turbine to install,” Paterson said. “It would take another year and a half, but we are working with SaskPower to push that up to 30 megawatts of export.”

The power generation component is currently employing about 45 people.

Although power generation has proven a more fruitful endeavour than pulp production so far, it has also faced some difficulties.

Having burned through 800,000 tons of old waste wood material that was left over on the Prince Albert Pulp Mill property, they’re left looking for more waste wood.

A new wood shredder arrived on site last week, Paterson said -- a piece of equipment that opens the doors to visiting the properties of people with excess wood piles they want to get rid of.

“We’d be more than willing to come out to someone’s field and crunch all their excess wood,” Paterson said, adding that this offer comes free of charge.

Waste wood also applies to things like wood pallets.

 

Economic impact

 

Anticipating 250 jobs at the Prince Albert Pulp Mill, Coun. Rick Orr said that the mill’s re-opening might open the doors to the more forestry-centred industry in the area.

By exemplifying a viable forestry-centred industry, the mill might encourage others to open up shop north of the North Saskatchewan River.

“We can accommodate heavy industry, we can accommodate light industry,” the chair of the city’s economic committee said. “We have an asset that most cities, towns don’t have these days, which is an operating railroad right to the mill.”

The city owns a swath of land north of the river up to Pulp Haul Road, and is open to working with surrounding RMs to accommodate industrial growth in the surrounding areas, Orr said.

As reported in September, Omnitrax president Darcy Brede notes that the pulp mill’s re-opening might drastically increase rail traffic in the Prince Albert area.

Currently transporting about 2,000 carloads per year, Brede anticipated an annual load of 3,000 as soon as Paper Excellence re-opens the mill.

"For the railway, we would see a positive economic impact with the recall of up to six to 10 additional employees once we hit the 3,000 carload volumes,” Brede said.

“This would include train service, maintenance of track and mechanical repair service associates and would be based on the services that the mill operator would require.”

Organizations: Prince Albert, Domtar, Chamber of Commerce SaskPower

Geographic location: China, North America, Europe Asia North Saskatchewan River Pulp Haul Road

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  • Richard Bassett
    December 18, 2013 - 02:39

    Could it be any more obvious that the people from Paper Excellence and particularly Dale Paterson are flakes? They didn't know anything about dissolving pulp and the mill was destined to fail with or without any duties. The duties just made the decision for them not to proceed. They don't know anything about fluff and they have an agreement with Domtar that Domtar aren't going to release them from. It is cruel and deceptive to pretend that this will move forward instead of being honest and telling people that they need to get on with their lives and not wait any longer for the tooth fairy.