UPDATE 1-Sinar Mas unit to buy Canada’s Mackenzie pulp mill

* Pulp mill idled by Pope & Talbot in 2008

* Sinar Mas interested in more acquisitions in Canada
(Adds Greenpeace reaction, paragraphs 14,15)

By Allan Dowd

VANCOUVER, April 16 (BestGrowthStock) – A unit of Indonesia’s Sinar
Mas will buy a idled pulp mill in Mackenzie, British Columbia,
with plans to resume production from the Canadian plant for
Asian markets by fall, officials said on Friday.

The mill and town in northern British Columbia have become
symbols of the economic woes that have dogged Canada’s forestry
industry over the past three years with plant closures and job
losses in rural communities.

British Columbia forestry minister Pat Bell even struggled
to hold back tears as he announced the complex deal to reopen
the facility that was shuttered in the 2008 collapse of North
American forestry firm Pope & Talbot.

“It tore my heart out to see that town go down … For me,
Mackenzie is back and it deserves to be back,” Bell told a news
conference about the town of 5,000 people that saw all of its
lumber, pulp and paper mills all close in the economic crisis.

Sinar Mas’s Netherlands-based unit, Paper Excellence BV,
will pay C$20 million ($19.8 million) for the mill, and invest
between C$30 million and C$40 million to restart it, plus
additional costs, officials said.

The mill’s union has signed a contract for the more than
240 workers, and the McLeod Lake Indian Band, which holds
resource rights in the area, says it will ensure the facility
receives sufficient fiber supplies.

Sinar Mas plans to market about 80 percent of the mill’s
NBSK pulp production in Asia, said Peter Wardhana, a director
of Paper Excellence.

Wardhana said the company, which already owns a mechanical
pulp mill in Meadow Lake, Saskatchewan, is interested in more
acquisitions in Canada. It is in final talks with Tembec
(TMB.TO: ) to buy two of the the Canadian firm’s pulp mills in

Sinar Mas tried to buy the Mackenzie mill in 2008, but the
deal fell through partly because of the international credit
crunch. That proposed transaction had also included two other
Pope & Talbot mills.

“This is a completely separate deal,” Wardhana said.

The original deal’s collapse launched an almost bizarre
chain of events that saw an Alberta businessman buy the then
idled mill, only to abandon it when it became clear he had no
financial backing.

Workers found themselves manning the plant for weeks
without pay to ensure hazardous chemicals stored there would
not leak out into the community. Eventually, the province and
community took control of the property.

The C$20 million purchase price paid to the community
development agency will pay off the debt built up by the prior
owner during what a local official described on Friday as “that

Sinar Mas has been criticized for its logging practices in
Indonesia, and environmental group, Greenpeace, said it will be
monitoring the operations in Canada.

“Sinar Mas should expect their environmental record in
Indonesia and the Greenpeace campaign to follow their business
wherever it goes,” the group said in a statement.

Bell said he has discussed the deal with Greenpeace and
other environmental groups, and said the province and the
McLeod Indian Band are satisfied with the company’s
environmental practices at its Saskatchewan mill.


(Reporting Allan Dowd; editing by Rob Wilson)

UPDATE 1-Sinar Mas unit to buy Canada’s Mackenzie pulp mill