N.B. helps Fraser Papers upgrade mills
The future of Fraser Papers sawmill in Plaster Rock is looking brighter thanks to a $40 million loan from the New Brunswick government for the struggling forestry company, government and industry officials stated at an announcement last week.
While company officials have yet to release details of their plans for the Plaster Rock sawmill, the Juniper mill and their paper operations in Edmundston, getting rid of expensive oil-fired boilers in favour of biomass energy sources for the Plaster Rock mill operations is obviously high on their priority list.
"Energy today plays a much greater role than it did even last year. It's up 15 per cent over last year. To eliminate the use of oil would mean dramatically reducing our energy cost," stated Peter Gordon, president and CEO of Fraser Papers during the funding announcement in Edmundston.
Gordon said the company is still examining their options to reduce costs at their three locations.
"It's likely we'll have to concentrate on one mill before the other and it's likely we'll concentrate on the mill in Plaster Rock….. One is to improve the efficiency of the saw mill itself, the other handicap that Plaster Rock has is the fact that they have lumber kilns that are currently fired by oil. And obviously we all know that in today's environment it's very expensive to do that. So the opportunity at Plaster Rock is to consider a bio mass process to replace the oil fire process.
"Most saw mills today would use bio mass. So that's one opportunity we need to address," Gordon stated. "Like any business, we have to be extremely well-organized to be efficient and ensure our operations are running 365 days a year, around the clock. We're essentially a commodity business so we have to commit largely on cost."
Terry Noble, general manager of wood procurement for Fraser Papers, said the North American lumber market has still not recovered.
"The demand for lumber is very low right now. Off by approximately 50 per cent. And the supply in the US market has not dropped by 50 per cent, more like 25. So there's an over-supply of lumber right now. That situation will correct itself over time…. There is also a large supply from Western Canada because of the lumber beetle, but experts say within two to four years that supply will be decreased, and at the same time the US market will likely correct itself.
"What we have to do is maintain and upgrade our equipment to make sure that's it's very efficient. We have to be as competitive and better than anybody. And with the market improving in the next few years we should be in good shape," Noble commented.
Premier Shawn Graham delivered the news to a crowd of company executives, employees, and local politicians on the grounds of Fraser's Edmundston mill.
"Our government is pleased to support Fraser Papers as it undertakes upgrades to its operations," Graham said. "We recognize how important it is for the long-term viability of companies to invest in their operations. We are pleased to support them as they upgrade technology and implement efficiencies that help them be more competitive in an increasingly competitive world market. Strategic partnerships such as this one will help New Brunswick achieve self-sufficiency by 2026."
The premier was joined by Minister of Business New Brunswick Greg Byrne; Natural Resources Minister Donald Arseneault; and Edmundston Mayor Jacques Martin.
The $40-million loan is for up to six and a half years at the government's standard industry rate of 4.7 per cent interest.
"Combined with a recent $60-million equity offering, the loan will allow us to upgrade our equipment and lower costs," said Gordon.
Fraser Papers employs 820 people in New Brunswick.
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