When announcing the permanent closure the paper and TMP operations at the Howe Sound mill. Paper Excellence explained that the company had gone through an extensive product review process and concluded the company’s future does not lie with paper products.
“The future of our mill lies with our strong pulp and green energy opportunities that will continue to grow,” Steve Bird, general manager of Howe Sound Pulp & Paper. “In light of the extreme drought conditions experienced since May, the decision to cease paper operations was advanced to help conserve water supply.”
With newsprint and value-added newsprint prices declining, combined with a shrinking market that is expected to continue, HSPP undertook an extensive review process to look at other product options. The company found that its equipment and furnish was not suitable nor could it be easily and economically modified.
HSPP says a final plan has not yet been completed for the paper mill assets however, potential for other uses for the site or its equipment are being considered. The paper machine dates from the early ‘90s.
“While this has been a difficult decision to make, the kraft pulp mill and power generating businesses at the Howe Sound mill will now become stronger and more sustainable,” says David Kerr, vice-president, Paper Excellence Canada.
The Howe Sound mill began operations in 1909. In late 1987, Oji Paper and Canfor made a $635-million dollar deal to become co-owners of a company called Howe Sound Pulp and Paper Ltd. The mill began an extensive four-year modernization and expansion program. By 1991, a newsprint division had been added, the kraft pulp division had undergone major upgrades, and more than $100 million had been spent in the installation of the best proven environmental protection technology available.
There has been a steady annual decline in the newsprint market, and newsprint prices are expected to continue to decline due to a shrinking market (newsprint) and overcapacity, states Paper Excellence.
The company notes that increasing variable costs, which include electricity and wood, add to the financial losses currently experienced by Howe Sound Pulp and Paper.
Howe Sound Pulp and Paper undertook a major economic initiative study by Poyry to look at value-added product options and alternatives. This study found that the market demand in alternative products such as High Brite is also in decline.