Domtar mill said not viable in current configuration

Domtar Inc's local hardwood mill has been unprofitable for some time and its closing was not unexpected, says the president and chief executive officer of the Sault Ste. Marie Economic Development Corp.

"The mill has suffered from a lack of capital investment in the technology to make it competitive and it is not viable in its current configuration," says Bruce Strapp in briefing notes presented to City Council last night.

Council voted to ask Ontario Natural Resources Minister Jerry Ouellette to ensure that the wood supply used by Domtar's local hardwood operation be made available only to processing facilities here in the Sault.

As SooToday.com reported late last month, the company has announced it's closing its Sault sawmill on January 31, throwing as many as 130 employees out of work. Background.

Last night, councillors also called on Domtar to continue the hardwood harvesting operations currently in progress as a new user for the wood supply is sought.

Closing was not unexpected

The following are excerpts from Strapp's briefing notes:

"The closure was not unexpected since the mill, over time, through a series of owners has been unprofitable.

"The mill has suffered from a lack of capital investment in the technology to make it competitive and it is not viable in its current configuration.

"When mills close, the Minister of Natural Resources is empowered under the Crown Forest Sustainability Act to assign the wood to a new owner.

Domtar's local harvest employs more than 60

"Domtar has harvesting operations underway, which employ more than 60 people in the Algoma District to supply hardwood pulp logs to their mills in Espanola and Wisconsin.

"80 percent of the wood harvested in the Algoma Forest is low quality pulpwood

"The saw logs needed for the Sault Ste. Marie sawmill are only 20 percent of the harvest and are a byproduct of the pulp wood operations

Without pulp, sawmill harvest not viable

"Without the pulp operations, a harvest for the sawmill would not be economically feasible or permitted under Sustainable Forestry rules

"The Sault Ste. Marie Economic Development Corp. is at present implementing a campaign to attract value-added wood products businesses as part of Sault Ste. Marie's Industrial Marketing Strategy.

"Bob Giroux of Soanbert Corp. has been engaged to locate and assist companies in the forest products sector that wish to locate or expand in Sault Ste. Marie.

"He is also available to assist any prospective buyers of the existing mill who have letters of intent with Domtar.

Domtar closure creates opportunity

"To date, incentives to attract these businesses have been limited to federal human resources programs and possible infrastructure, feasibility and marketing assistance.

"The closure of the Domtar mill offers the opportunity to offer the incentive of a secure Crown wood supply.

"This is an asset treasured by the forest industry [and] will immeasurably strengthen our development opportunity package.

"A task team from the EDC is working with Domtar and MNR to define the many complex elements of arranging for the disposition of the wood supply and to facilitiate this crucial aspect for prospective mill proponents."