Harmac plans to expand operations as others shut down

By Robert Barron, Canwest News Service
March 20, 2009

There are plans for Nanaimo's Harmac pulp mill to begin a second line of operation within two to four months, resulting in the return of 40 former employees.

Levi Sampson, a spokesman for Harmac's owner Nanaimo Forest Products, said the mill is also moving forward with its long- anticipated plan to set up a chipping operation at the site. That would help reduce Harmac's reliance on increasingly troubled sawmills for its fibre supply. NFP is the firm created by employee representatives, a local management group and three equity partners who purchased Harmac in July, 2008 when the pulp mill was put up for auction by U.S-based Pope & Talbot.

Sampson added that Harmac is also having discussions with the city of Nanaimo for joint use of the mill's extensive water supply and sewage treatment systems.

"It's looking very positive for the workers at the mill and the company," said Don Storey, a 36-year Harmac veteran. "We all understand the poor economic climate that we're working in right now, but we're looking ahead long-term and want to be well-situated when the industry recovers, which we fully expect it will."

Sampson said NFP is considering the second pulp line due to slight price increases for pulp in the European and Chinese markets.

He said that the closure of other pulp mills -- including ones in Crofton and Elk Falls -- has taken a significant amount of pulp out of international markets, meaning less competition for mills that remain open.

"The decision to start a second line is largely dictated by the markets and we're finally seeing some positive signs in the last two weeks," Sampson said.

Sampson said work has already begun to prepare a wood-chipping operation on the Harmac site, a welcome and necessary addition to the operation especially with the growing number of sawmill closures. Harmac has traditionally acquired much of its wood fibre for its pulp products from sawmills.

He said Pioneer Log Homes and Totzauer Holdings, two of the four partners in NFP, intend to combine resources to create the chipping facility.

Pioneer has access to logs with its timber falling licence and Totzauer will provide the chipping facility. "This project will tighten up our fibre supply, allow us significant cost savings every month and provide us with the opportunity to ship chips to other operations, including pulp mills, that will give us another source of revenue," Sampson said.

Sampson said talks with city officials are ongoing over joint use of Harmac's water systems and water licence that far exceeds the pulp mill's needs. The facility has its own dam, piping and water reserves from Fourth Lake.

The city is also interested in sharing use of the mill's modern effluent-treatment plant that could be used to treat sewage from nearby developments.

"The city would save tens of millions of dollars in infrastructure money and we'd have another source of revenue, so we see it as a win-win situation for everyone," Sampson said.

Sampson said Harmac is not dependent on hard-to-get credit from financial institutions to move forward with any of the planned projects.