The long-awaited plan to re-start the shuttered Cascades mill in Thunder Bay under new ownership has been finalized. 
Andre Nicol, the new president of Thunder Bay Fine Papers, could finally exhale last month after a two-year search for financing that endured many setbacks.
Things looked bleak last fall as some private investors were losing faith and withdrawing their support.
“The Ontario government came to the rescue again because they don’t want it to fail,” said Nicol.
Thunder Bay MPP and the new Northern Development and Mines Minister Michael Gravelle delivered a $1.5 million loan on Jan. 7 on top of a previous pledge of a $1.5 million grant along with a conditional loan guarantee of $12.7 million through the province’s Forest Sector Prosperity Fund.
“The timing was critical because we were almost out of gas,” said Nicol.
In announcing the sale of its mill to the purchasers, Cascades kicked in $4.5 million to support the $42.7 million start-up. The title had transferred over from Cascades, Dec. 21.
The Kingsley Falls, Que. paper-maker closed the mill in early 2006 citing unfavourable market conditions.
But it’s been mostly local investment from Thunder Bay with some U.S. money involved, said Nicol.
The plant will provide 340 mill positions and overall about 500 jobs in the region in harvesting and trucking.
Nicol says it was a difficult sell to convince outside investors, equity firms and banks that forestry mills can make a profit despite an unfavourable currency exchange rate.
Instead, they choose to raise capital funds locally combined with Ontario government loan guarantees.
“We had a good (business) plan that showed we could operate the mill efficiently and make money with the dollar at par,” said Nicol.
Once the mill is cleaned up and heat restored, start-up of the three paper machines will be gradual over the spring, summer and late fall.
Management is committed to producing 200,000 annual tonnes of Grade 2, 3, 4 coated paper used in magazines and catalogues, about 89 per cent of capacity.
Some grades will be unique, said Nicol, by using bleached aspen ground wood, available in bulk and at low cost, which offsets the high cost of kraft and pulp.
“It allows us to make certain (paper) grades better,” including coated reply-cards in publications. “We can make it in specs lighter than any competitor with the same stiffness because of the ground wood content.”
AbitibiBowater and other regional pulp mills will supply their fibre needs.
The plant will also produce wallpaper stock, which is still in demand, since many mills have stopped making it, said Nicol.
Most of the product is U.S.-bound to customers within a day’s haul including Minneapolis-St. Paul, Chicago, Milwaukee and possibly Kansas City, St. Louis and Indianapolis.
Much work needs to be done to make the mill more energy efficient including replacing natural gas with a co-generation plant.
Though currently in the feasibility stage, the co-gen should be a project of 40-megawatts or greater.
Nicol, who has a newsprint sales background, assembled his team in late 2005 prior to the mill’s closure.
Surrounding him on the management team are COO John Hitchman, CFO John Arnold, Human Resources vice-president Frank Wirtz with Phil Poling as controller.
Across town, the former Abitibi Consolidated Mission Mill appeared closer to re-opening under a potential new ownership group headed by Montreal businessman Jay Grandiano. The mill closed last February with the loss of 350 mill and woodlands jobs.
The new company will be called Superior Packaging Ltd. The mill will be retrofitted to produce corrugated paper.
Prior to Christmas, the Communication, Energy and Paperworkers (CEP) union agreed on a new contract for the 60 unionized jobs to be offered in an operation that would use recycled material instead of raw fibre.
Labour support was needed to allow the Grandiano group to secure financing to purchase the mill.
Marvin Pupeza, CEP national representative in Thunder Bay, said the pay scale of the new contract will be lower than what newsprint workers made previously at the Mission Mill operation.
“The place, once it fires up, will have to be competitive within that industry, and we’ve put in place a collective agreement that reflects that.”
He expects the new company could take control by March with the mill undergoing a six to nine month conversion.
Pupeza has worked with Grandiano on previous mill re-starts. “He instills confidence in me. If anybody can do it, Jay can.”
The prospects of new ownership groups to re-start two mills is positive news for Thunder Bay, said Pupeza, but it remains to be seen how successful these new projects will be.
“There’s still a lot of pressure on Thunder Bay and communities in northwestern Ontario” said Pupeza, with 3,000 forestry jobs lost in the northwest and little government support forthcoming for the barely-breathing sawmilling sector.
