Displaying items by tag: St. Marys Paper

The receiver for the shuttered St. Marys Paper mill in Sault Ste. Marie, Ont. has been granted court approval to proceed with a sale of assets to 2319839 Ontario Inc. The purchaser is described by the receiver as a consortium of companies, including an auctioneer, a real estate developer, a forest products company and a metals recycler.

All employees of St. Marys Paper are to be terminated prior to the sale. The purchaser has stated it may try to operate a biomass and co-gen facility, but does not expect to manufacture paper. Any unused assets of the mill are expected to be liquidated.

St. Marys Paper consists of a groundwood pulp mill and three supercalendered paper machines. The mill has operated sporadically since 2009. It shut down in March 2011, due to mechanical problem on a paper machine, was not restarted due to market weakness. The receiver, Ernst & Young, noted that it had received feedback from several parties during the sales process that it would be not economical to restart the mill given current market conditions for supercalendered paper.

The mill has remained in a cold idle state, and was put into receivership on Dec. 30, 2011. When fully operational, it employed about 300 people.

The mill wood yard is subject to lien in favor of Ministry of Natural Resources, and is excluded from the purchase agreement.

Ernst & Young, in its latest report to the court, explained that nine parties submitted bids. Three were from demolition firms, three from auctioneers, and three from parties interested in operating certain aspects of the mill or redeveloping it into a biomass operation. The winning bid was none of the above.

Ernst & Young also noted that none of the bids would provide sufficient proceeds to cover the debt of the mill’s primary secured creditor, International Forest Products. That debt is estimated in the media to be about $7 million.

source: http://www.pulpandpapercanada.com

St. Marys Paper Corp. has signed a 10-year, 30-megawatt power-purchase agreement with the Ontario Power Authority for the electricity produced by a biomass-fueled co-generation plant to be built adjacent to the St. Marys Paper mill in Sault Ste. Marie. The plant will be operated by St. Marys Renewable Energy Corporation.

The co-generation plant will replace St. Marys' aging boilers and allow wood waste, in this case, forest industry residuals, to be used as fuel in the new a bubbling fluidized bed boiler.

The construction phase is expected to begin in 2011 and generate 400 jobs. About 30 people will work at the co-gen plant once it is operational, and another 125 will be employed providing biomass fuel and logistics.

St. Marys has negotiated a commitment of up to 400,000 tonnes of biomass annually from the Algoma and Northshore Crown Forests for the life of the project. "We plan to finalize the funding and begin construction in 2011. The co generation plant capital budget is $135 million plus additional capital for integration and soft costs of an additional $40 million. We expect to be producing electricity by early 2014," said St. Marys Paper Corp. chairman and CEO Dennis Bunnell.

"The provincial government's support for a power purchase agreement is extremely important to the long-term viability of St. Mary's Paper as it allows the mill to build a biomass co-generation plant that will provide a self-sustaining supply of energy that helps protect local jobs," Bunnell commented.

Local MPP David Orazietti notes that the power purchase is in addition to a recent funding announcement for an $8.8 million re-payable loan from the province's Ministry of Northern Development, Mines and Forestry (MNDMF), which will enable St. Mary's Paper to re-open and resume printing production in December, 2010. In 2007, the Ontario government provided St. Mary's with a loan of more than $17 million for working capital to restructure and re-open, which brings total provincial support for the paper mill to $25.8 million.

Announcing the power purchase agreement on Nov. 9, Orazietti said that the goal was to balance support for the mill and jobs, with a rate that would be acceptable to the government and the taxpayer, according to a report in the online edition of Sault Ste. Marie This Week. He described the process as new in the province, and the lengthy negotiations between the company and OPA leading up to the agreement had focused around revisions to the size and the cost of the project, the engineering, and the rate that would be paid for any surplus power generated.

Sault This Week reports that Orazietti would not specify at this time what rate per kilowatt-hour was negotiated in the contract with St. Marys, other than to say it was lower than the 42 cents per kw/hour agreed to for large scale solar projects in the province.

A press release from the Ontario Power Authority explains that heat from the co-gen plant will be used in the mill's industrial processes, and surplus electricity not used by the mill will be sold to the provincial electricity grid.

St. Marys' groundwood pulp supercalendered paper mill has a capacity of 220,000 tonnes per year. The mill has been closed since March.

St. Marys Renewable Energy Corporation has announced that a [ten-year] power-purchase agreement has been reached with the Ontario Power Authority. Under this agreement, the OPA will purchase the electricity produced by a bio-mass-fueled co-generation plant to be built by SMREC adjacent to Sault Ste. Marie's St. Marys Paper Corp.

"We are excited by this agreement, which has taken several years of hard work by the shareholders and employees of St. Marys, and by the dedicated staff at the OPA," said St. Marys Paper Corp. chairman and CEO Dennis Bunnell.

On Friday Bunnell announced that St. Marys Paper Corporation is in the process of re-starting paper-manufacturing operations. With today's announcement, SMPC is a step closer to accomplishing a primary cornerstone of its business plan by expanding into green, renewable, forestry-based businesses. The co-generation plant will replace SMPC’s aging boilers and allow wood waste to be used as fuel in state of the art boilers- the first of their type in Ontario - which together with a bag house and /or electrostatic precipitators will improve air emissions and meet or exceed Ontario’s new air emission standards to be in force in 2013.

"The construction project alone will create more than 400 jobs provincially and generate $4.5 million in provincial taxes in the region, Once complete the facility will employ 30 people plus provide employment for 125 persons in providing biomass fuel and logistics, while ensuring that St. Marys will have a sustainable, long-term future for our employees, shareholders, and customers," said Bunnell. “Conversion of raw wood fibre to usable high value products requires energy, and this new plant is an essential step the transition of SMPC’s business into the bio economy”

"We want to thank everyone who has worked so hard on the project design, the application process, and the approval process. The direction given by the Ministry of Energy to procure renewable biomass energy, the support for SMPC’s vision by our local MPP David Orazietti, and the efforts expended by SMP and Provincial government staff to this point have been enormous. St. Marys is now in a position to step into the twenty-first century while looking confidently toward the future. We plan to finalize the funding and begin construction in 2011. The co generation plant capital budget is $135 million plus additional capital for integration and soft costs of an additional $40 million. We expect to be producing electricity by early 2014."

St. Marys Paper Corp. has engaged Dennis Bunnell as chairman of the board and CEO to head up the plans to restart production at the St. Marys Paper mill in Sault Ste. Marie, Ont. The mill ceased production of groundwood pulp and paper in March of this year.

At that time the company indicated it would manage the shut down in order that paper production could continue when market and business conditions warrant.

"St Marys has used this period of curtailment to conduct an independent updated marketing and sales study and to evaluate the operational and capital changes needed to ensure long term cost competitiveness, says president Gord Acton. "Our goal continues to be to transition the business from simply a paper production facility to a paper production, green energy and bio-economy business."

Bunnell comments: "I am excited to join St. Marys team and believe that the biomass co-generation facility proposed to be built on St. Marys property, when combined with capital improvements in the mill, will ensure the long-term sustainability of the St. Marys business model."

"We have already commenced discussions with stakeholders concerning our plan. These talks will continue with the goal of restarting the paper mill as early as possible this fall. Our discussions with major stakeholders have been positive," says Bunnell.
He notes that Ontario's recently-announced energy conservation program is "one of the critical pieces of our business plan."

The company will solicit support for its new business plan over the coming weeks.