Harmac attracts interest from China
Company has orders carrying through June

By Robert Barron, Daily News
May 09, 2009

In China, the highly regarded pulp produced by Nanaimo's Harmac pulp mill is known as "mapai," Chinese for horse. It's a moniker that could be seen as good luck for the small operation that has achieved success despite a brutal global economic turndown.

That's because in China, where symbols are valued, the horse is seen as strong and confident. The worker-owned mill has displayed strength in China, which buys almost half of the 20,000 tonnes of northern bleached softwood kraft pulp Harmac produces each month.

According to Johnny He, Harmac's main salesman in China, demand for Harmac's pulp -- used for everything from writing paper to tissues and surgical gowns -- is so high that he's having trouble keeping the market supplied.

In fact, Harmac president Levi Sampson said the mill, which most analysts predicted last summer was doomed to fail, has pre-sold all of its pulp products until the end of June.

"With other coastal pulp mills, like Crofton, either closed or curtailed as pulp prices tumbled, there's an imbalance in supply and demand in the industry for our pulp that we're more than happy to try and fill," Sampson said.

"With the price of a tonne of pulp dropping from $760 to about $520 over the course of the last year, I can understand why other pulp mills are shutting down," he continued.

"Harmac's unique operating model has allowed us to shave off about $100 in production costs per tonne and keep us in operation during these hard times."

Nanaimo Forest Products, a four-way partnership that includes Harmac's workers and three private partners, bought the 60-year-old mill last summer for $13.2 million after its previous owner, Oregon-based Pope & Talbot, went bankrupt. The operation has been defying predictions of imminent demise ever since.

Keith Melvin, managing director of Coastal Pulp & Paper, has been Harmac's international marketing agent since 1991 when the mill was owned by McMillan Bloedel. He said Harmac's rebirth and unexpected success under its new and unique ownership has captured the interest of the international pulp and paper industry.

"We're seen as a type of David and Goliath situation in that we are succeeding against all the odds, but it's fact that our NBSK product (which also sells in Europe and North America) is highly valued around the world," Melvin said.

Sampson said an added attraction for international buyers is the fact that the mill's workers, members of the Pulp, Paper and Woodworkers of Canada, Local 8, made an unprecedented agreement to maintain labour peace for 11 years.

"Our buyers have no fears that there will be any strikes or lockouts to disrupt our pulp production so they feel confident in signing five-year contracts with us, which is another advantage we have over other pulp mills," he said. Sampson said there are still plans to start up a second line at the mill to increase production within the next four to six months, but the price of pulp must rise before it's economically feasible.