SAN FRANCISCO, Aug. 8, 2001 (paperloop.com) - Skeena Cellulose, Inc. could be forced to close in another month because the local government is unwilling to continue subsidizing the Vancouver, B.C.-based firm's operations, Northern Development Minister Rick Thorpe told The Canadian Press.
Skeena's credit line expired on Thursday, and the government is now working with the Toronto-Dominion Bank to secure a one-month financial extension for its mill in Prince Rupert.
The mill, which has capacity to produce about 478,000 tonnes/yr of northern bleached softwood kraft (NBSK), has taken considerable downtime this year. Skeena's 450 tonnes/day "B" line has remained shuttered since January, losing at least 12,000 tonnes per month or some 30 percent of its capacity. In July, the firm closed its "A" line as well, which has effectively shut its pulp production.
The Canadian government has been trying to sell the mill since it bailed out the struggling firm back in 1997 but in the current difficult pulp market few expected a deal could be made in the short term. But Thorpe warned the government would shut down the mill if that doesn't happen. The province, which owns 58.5 percent of Skeena, has invested about $178 million in the firm. Toronto-Dominion Bank, employees, and unions own the balance.
The latest development follows speculation from various British Columbia sources in recent weeks that Skeena would be shut down. "There is speculation that (Skeena's second) line is down for good. It's highly likely that it will never come up again," said a B.C.-based source, who noted the operation has continued to absorb tax revenues.