$26M fuels new growth for Harmac

Robert Barron, The Daily News
Published: Saturday, October 10, 2009

The Harmac pulp mill in Nanaimo will receive almost $27 million from the federal government's $1-billion aid package designed to prop up the nation's struggling pulp and paper industry.

The funding will strengthen the mill's position against U.S. competitors that receive subsidies for using alternatives fuel and pave the way for the employee-led company to diversify beyond pulp production and begin producing electricity to add to Vancouver Island's power grid.

International Trade Minister Stockwell Day announced at Harmac on Friday that the Nanaimo facility is among 38 pulp and paper mills across the country to receive funding under the federal Pulp and Paper Green Transformation Program. Catalyst Paper's Crofton pulp mill will receive $18 million.

The funding is a response to an estimated $6 billion in subsidies and tax credits America offers to pulp mills that use a pulp byproduct known as black liquor, considered to be an alternative fuel, to fire their boilers.

Some American mills that were closed due to market difficulties have reopened thanks to the subsidies. Canadian mills, which don't receive comparable subsidies, continue to deal with a struggling marketplace so the funding is an attempt to level the playing field. The money must be used within three years to improve energy efficiency or environmental performance.

Harmac uses 458 million litres of black liquor each year with one pulp line in operation. That number is expected to increase by 50% now that the mill has started a second line.

The funding couldn't come at a better time for Harmac, which has been having problems accessing credit needed to start new projects at the 500-hectare mill site.

Among other plans, Harmac will upgrade to the mill's boilers to operate more efficiently with less effluent. Harmac also has plans to produce 70 to 100 gigawatts of power from wood at a generation site that would be added to B.C.'s power grid.

Day said the federal administrators of this program will consider "anything related to ongoing capital adjustments."

"Any improvements at the mills that are geared toward increasing their efficiencies will also improve their green processes," he said.

Harmac president Levi Sampson said he only learned two days ago about the funding announcement. He said having Day choose the Nanaimo mill to make the national announcement is an endorsement of the facility's new worker-owner model. Nanaimo Forest Products, consisting of three private partners and the workers, bought the mill last year for $13.2 million after former owner Pope & Talbot went bankrupt.

"The government chose companies that they feel will be around in the future by keeping their costs in check and continually operating during these hard times," Sampson said.

"We believe this is good for these companies and for Canada, which is well on the way to making its pulp and paper industry one of the greenest in Canada."

Day said the past few years have been "trying times" for the country's forest industry and commended companies like Harmac and the federal government, for "not just sitting back and taking a pounding" and making efforts to forge ahead despite worldwide economic difficulties.

He said Harmac is proving to be successful due to the innovative actions of its new ownership.

"Harmac's workers take a positive approach to their workplace every day and that has been instrumental in creating a world-class operation that is having such a tremendous impact on the community and the country," Day said.

James Lunney, MP for Nanaimo-Alberni, said the funding announcements are part of the government's response to the demand that "the west wants in." "This is what 'in' looks like and it shows that the west is not being ignored by this government," he said.