Thunder Bay mills on the come-back.

• Author: Ross, Ian
• Position: SPECIAL REPORT: FORESTRY - Cascades Inc. to reopen it's paper mill

The long-awaited plan to re-start the shuttered Cascades mill in Thunder Bay under new ownership has been finalized.

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Andre Nicol, the new president of Thunder Bay Fine Papers, could finally exhale last month after a two-year search for financing that endured many setbacks.

Things looked bleak last fall as some private investors were losing faith and withdrawing their support.

"The Ontario government came to the rescue again because they don't want it to fail," said Nicol.

Thunder Bay MPP and the new Northern Development and Mines Minister Michael Gravelle delivered a $1.5 million loan on Jan. 7 on top of a previous pledge of a $1.5 million grant along with a conditional loan guarantee of $12.7 million through the province's Forest Sector Prosperity Fund.

"The timing was critical because we were almost out of gas," said Nicol.

In announcing the sale of its mill to the purchasers, Cascades kicked in $4.5 million to support the $42.7 million startup. The title had transferred over from Cascades, Dec. 21.

The Kingsley Falls, Que. paper-maker closed the mill in early 2006 citing unfavourable market conditions.

But it's been mostly local investment from Thunder Bay with some U.S. money involved, said Nicol.

The plant will provide 340 mill positions and overall about 500 jobs in the region in harvesting and trucking.

Nicol says it was a difficult sell to convince outside investors, equity firms and banks that forestry mills can make a profit despite an unfavourable currency exchange rate.

Instead, they choose to raise capital funds locally combined with Ontario government loan guarantees.

"We had a good (business) plan that showed we could operate the mill efficiently and make money with the dollar at par," said Nicol.

Once the mill is cleaned up and heat restored, start-up of the three paper machines will be gradual over the spring, summer and late fall.

Management is committed to producing 200,000 annual tonnes of Grade 2, 3, 4 coated paper used in magazines and catalogues, about 89 per cent of capacity.

Some grades will be unique, said Nicol, by using bleached aspen ground wood, available in bulk and at low cost, which offsets the high cost of kraft and pulp.

"It allows us to make certain (paper) grades better," including coated reply-cards in publications. "We can make it in specs lighter than any competitor with the same stiffness because of the ground wood content."

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