Sinar Mas unit to buy Canada's Mackenzie pulp mill

Fri Apr 16, 2010 8:37pm EDT
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By Allan Dowd

VANCOUVER (Reuters) - A unit of Indonesia's Sinar Mas will buy a idled pulp mill in Mackenzie, British Columbia, with plans to resume production from the Canadian plant for Asian markets by fall, officials said on Friday.

The mill and town in northern British Columbia have become symbols of the economic woes that have dogged Canada's forestry industry over the past three years with plant closures and job losses in rural communities.

British Columbia forestry minister Pat Bell even struggled to hold back tears as he announced the complex deal to reopen the facility that was shuttered in the 2008 collapse of North American forestry firm Pope & Talbot.

"It tore my heart out to see that town go down ... For me, Mackenzie is back and it deserves to be back," Bell told a news conference about the town of 5,000 people that saw all of its lumber, pulp and paper mills all close in the economic crisis.

Sinar Mas's Netherlands-based unit, Paper Excellence BV, will pay C$20 million ($19.8 million) for the mill, and invest between C$30 million and C$40 million to restart it, plus additional costs, officials said.

The mill's union has signed a contract for the more than 240 workers, and the McLeod Lake Indian Band, which holds resource rights in the area, says it will ensure the facility receives sufficient fiber supplies.

Sinar Mas plans to market about 80 percent of the mill's NBSK pulp production in Asia, said Peter Wardhana, a director of Paper Excellence.

Wardhana said the company, which already owns a mechanical pulp mill in Meadow Lake, Saskatchewan, is interested in more acquisitions in Canada. It is in final talks with Tembec to buy two of the Canadian firm's pulp mills in France.   Continued...