On the block: Weyerhaeuser taking offers for Wawa OSB mill.

• Author: Ross, Ian
• Position: FORESTRY - Weyerhaeuser Canada Ltd.

If an idled Weyerhaeuser oriented strandboard mill (OSB) in Wawa ever resumes production again, it will be under new ownership.

The Washington state pulp and paper giant has the northeastern Ontario mill on the selling block to anyone that wants to run it as an OSB operation.

Trouble is, there is no Crown wood supply attached to the mill and the North American OSB market is showing no signs of recovery anytime soon.

Wawa was included in a slate of Weyerhaeuser mill closures when wood products markets collapsed in the fall of 2007. The workforce of 148 was laid off.

Company spokesman Wayne Roznowsky said the company had fully intended to reopen the mill when market conditions improved.

With that mind, the company made a business plan submission last year through the Ontario Crown wood supply competition asking for 700,000 cubic metres annually, higher than Weyerhaeuser's previous allocation.

But in mid-December, senior management decided to file an impairment charge with the U.S. Securities Exchange Commission on Wawa and two other closed mills in Minnesota and Alabama.

Essentially, it was a tax consideration to write off these properties at year's end. But it was a signal that these mills were unlikely ever to open again under the Weyerhaeuser banner.

Roznowsky said that move likely "threw uncertainty" into its wood supply submission and the company was notified in February that its application was rejected.

He said Weyerhaeuser was not told what proponents were awarded the mill's traditional wood supply.

In the meantime, four proponents approached Weyerhaeuser about acquiring the mill and operating it as an OSB operation.

Roznowsky said the mill could be profitable under new ownership with a different strategy and business model.

"We've sold (sawmill) facilities that were not strategic to us that other companies have run successfully"

Roznowsky said it's difficult to say how Weyerhaeuser will hang onto the property. "You get more value if you sell it as an operating facility."

Only as a last resort would the company start removing and selling off mill equipment components.

"The greatest value for us is to continue to wait and hope that we can work something out," he said. "There's a lot less value to us if it's a salvage. We have no desire to go down that road at this point."

Still considered a modern mill, the Wawa plant was built in the mid-1990s and operated as Jager Strandboard, before it was sold to MacMillan Bloedel, and then to...