Catalyst Permanent Closing Elk Falls Mill

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Catalyst Paper, Richmond, B.C., Canada, announced yesterday that it is permanently closing its Elk Falls paper mill near Campbell River, B.C., Canada, in September. This facility has been indefinitely curtailed since February 2009.

"Today's news is a disappointing outcome for mill employees and families, for the community, and for our business," said Catalyst president and CEO Kevin J. Clarke. "The steep decline in commodity paper markets, coupled with uncompetitive labor and tax costs, were contributing factors that could not be overcome.

"Adaptation has always been the key to survival," Clarke noted, "and the uncertainty regarding the future of this mill was detrimental to all of our operations and had to come to an end. With this difficult decision behind us, we can now focus our sales and marketing strategies and production planning around mills that still have the potential to operate competitively, which is a better basis to future-focus our business overall."

In a related decision, Catalyst also announced the permanent closure of its paper recycling operation in Coquitlam, B.C. The facility, which supplied the company's Crofton mill, was indefinitely idled in February due to reduced recycled pulp requirements, combined with higher cost and constrained availability of quality recovered paper. All employees were laid off at the time.

The associated asset impairment charge, including severance costs, is estimated at $302 million and will be reflected in the company's second quarter results. Only a small number of employees will continue to be required to manage and decommission the facility, resulting in approximately 100 Elk Falls employees being immediately impacted by the permanent closure.

The Elk Falls mill began operation in 1952, and at its peak, produced 784,000 metric tons of pulp, paper, and kraft paper annually. With five mills located in British Columbia and Arizona in the U.S., Catalyst has a combined annual production capacity of 2.0 million metric tons.