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Forest industry analyst expects 'some good bids' for Resolute's Thunder Bay mill

John Duncanson of Corton Capital predicts 'a lot of people' will be very interested in acquiring the operation
Resolute Forest Products Thunder Bay 3

THUNDER BAY — A long-time forest industry analyst and consultant feels there's no need for people in Thunder Bay to be concerned about the future of the Resolute pulp and paper mill.

"I wouldn't worry about that mill shutting down. There will be a lineup of buyers," said John Duncanson, currently vice-president and timber analyst at Corton Capital.

Resolute Forest Products and Paper Excellence Group announced last week the mill will be sold "to further facilitate the regulatory review process" of the federal government.

In July, Paper Excellence Group — a global diversified manufacturer of pulp and specialty papers — announced it was acquiring Resolute in a US$2.7-billion deal.

On Monday, Resolute shareholders voted to accept the offer, but completion of the transaction remains dependent on regulatory approval.

Duncanson on Tuesday said because Paper Excellence already has extensive holdings in the industry, the Competition Bureau would be concerned about it becoming too dominant.

Among its other acquisitions, Paper Excellence last year took control of Domtar, which operates the pulp mill at Dryden.

Duncanson said one likely prerequisite for the Competition Bureau's approval of the purchase of Resolute is that it divest itself of one or two mills.

They'll have a lot of people very interested in the Thunder Bay facility, he said, noting he's familiar with the mill and that it comes with numerous strengths, including access to excellent fibre, a good location, and a strong workforce.

"The pulp mill is producing probably the very best quality pulp in the midwest. It's probably going to be there forever."

Duncanson added that he wouldn't be surprised to see potential purchasers come forward from Europe.

Thunder Bay mill manager Kent Ramsay has said he understands that the announcement that the operation will be sold has "rattled some chains."

But at a public event on the weekend, Ramsay said he's told mill workers not to be worried.

"It's a money generator. You can't make two-by-fours without somebody consuming the chips and the biomass to make green energy. We make pulp. We make paper. We make tall oil [a byproduct of the kraft process]. We make turpentine. That facility is a strong asset," Ramsay said.

He said he expects the nearly 100-year-old mill, which has had numerous owners over the decades, will continue operating for many years to come.

Resolute's vice-president/communications, Seth Kursman, has also suggested that the mill "will attract a great deal of interest from a number of buyers," citing in part its on-site power generation and the fact that it is "a fine example of the circular bio-economy in action."

— TBNewswatch