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First Nation finalizing plans for $80M mill (07/04)

The search continues for a private partner for a First Nation-run $80-million plywood veneer mill proposed for Lake Huron’s North Shore.

The search continues for a private partner for a First Nation-run $80-million plywood veneer mill proposed for Lake Huron’s North Shore.

Jukka Heikurinen, the acting project manager for Algoma Mill Works, says the mill development has moved into a “transition-construction” phase which involves selecting a site, updating a marketing study and putting final business arrangements together.

“We’re looking for an operating partner and some investment that can help us get the project off the ground,” says Heikurinen, a forester with the North Shore Tribal Council, the project’s co-ordinating body in Blind River.

Last year, the assets of Algoma Mill Works were purchased from some Blind River entrepreneurs by four First Nation bands (Thessalon, Mississauga, Serpent River and Sagamok Anishnawbek), along with the Batchewana Band Industries and the Mitigaawaaki Marketing Co-operative.

The deal, which was finalized in September, is being heralded as a major economic development opportunity for North Shore and Aboriginal communities.

Funds allocated for mill project, industrial park

In April, FedNor committed $499,329 to the development of the mill and a future industrial park project with possible value-added opportunities.

Heikurinen says Algoma Mill Works has “soft commitments” from various funding agencies, but admits there have been snags securing additional money from regional development agencies, since there is no private partner on board.

“There are potential partners that we’ve had (discussions with) for some time...but we’re also looking at a number of factors with fluctuating markets in plywood and the strengthening Canadian dollar all having an impact.”

Plans still call for the mill to produce primarily a birch plywood veneer product, but the biggest challenge is anticipating market conditions over the next 18 months to two years. A more updated marketing study should identify product and play into the design of the mill and the equipment needed.

Algoma Mill Works has shortlisted some potential Highway 17-accessible sites between Thessalon and Massey, offering close proximity to Crown forest wood supply. Some preliminary pre-engineering work has been done on one site and more intensive study is starting on their “top-ranked site.”

“We’re really crunching numbers in re-evaluating the business aspects,” says Heikurinen. “The engineering and marketing study should get us to the point where we can proceed with it.”

The mill, which will employ about 150, will use state-of-the-art equipment from Finland, geared to handle small-diameter wood, but equipment will not be ordered until certain specialty wood markets are identified.

Spinoffs expected

As a high-tech mill, there will be ample spin-off opportunities for service industry companies skilled in robotics and automated systems, as well as for freight carriers. An estimated 12 to 13 trucks will move daily, making 5,000 trips a year, moving 150,000 to 200,000 cubic metres of raw birch wood material into the plant and hauling 40,000 cubic metres of plywood out.

Heikurinen says the mill will offer some value-added manufacturing possibilities, such as kitchen cabinets, furniture components and other structural components.

Construction could start within a year, with preliminary site preparation possible by this fall, depending on the results of the engineering and marketing studies.

“It’s a high-grade plywood we plan on building, and to get the money for the kind of revenues we expect, you have to find niche markets.”

He would not release any information on anticipated annual revenues from the mill.

Heikurinen says the white birch wood supply agreement with the Ministry of Natural Resources originally awarded to Algoma Mill Works in spring 2001 remain secure.

“We’ve had discussions with them and they’re satisfied with what we’re doing. We’re making progress.”