Land Barons of Beijing

They’re ready to dream the dream of Watson Island again, with the news Thursday that Sun Wave Forest Products has purchased the land that the Watson Island pulp mill sits upon.

Described by Mayor Herb Pond as just “one more step in what has been an important process.” The sale of the land will be the thing of renewed hope for production of pulp and paper at the mothballed mill, and with it a chance for a return of some employment options for the north coast.

However, there are still some cautionary tones coming out from all the players involved, a concern over the sudden rise in value of the Canadian dollar and the always volatile state of pulp prices. So no one is expecting any change in the situation at the moment, but hope as ever springs eternal.

For a complete look at the developments of the day (and the recent history of this tangled web), here’s the story from the Daily News.

CHINESE COMPLETE DEAL TO BUY SKEENA
By James Vassallo
The Daily News
Thursday, June 15, 2006
Pages One and Two

Like a phoenix from the ashes, the pulp mill was reborn today in the hands of new owners with the official acquisition of the land by Sun Wave Forest Products, the B. C. division of the China Paper Group (CPG).

“We bought the land,” said Susanna Xu, CEO of CRG Investments, the Canadian company representing the China Paper Group.

The process has been a lengthy one for partners involved in the purchase of the oft-troubled pulp mill.

“It’s been well over a year that I’ve been working on this,” said Bill Belsey, Points North Consulting. “It’s taken a lot of patience and understanding, cooperation and trust with First Nation, municipal government, provincial government, the Chinese government and business.

“We think we now have the plan in place --- and we can start moving towards the next step.”

For the city, it’s yet another piece in a puzzle that has yet to be entirely finalized.

“It’s one more step in what has been an important process,” said Mayor Herb Pond. “It’s important that people recognize that it’s one more inning down, but the game is not over. It’s not the final announcement we’ve all been waiting for that the mill is going to produce pulp.

“(However), it does show the work that the Coast Tsmishian have done, the work the union has done, the city has done and that Sun Wave has confidence on the North Coast which is a significant sign.”

Among the major challenges for the company are the high Canadian dollar and pulp prices.

The most recent chapter of the Skeena saga lasted nearly a year-and-a-half. CPG had begun talks with local officials just prior to Chinese New Year 2005, a fortuitous time that gave people sudden hope as the mill had seemed to be destined to be sold off piecemeal at auction and leave the area. However, the China Paper Group surprised many when they not only purchased a large amount of the equipment at the Watson Island site but expressed interest in buying the land and running the company.

“Apparently, they originally purchased the pulping equipment with the intention of relocating the assets to China,” said Mayor Pond at the time. “However, as a result of discussions with the provincial government and others, the China Paper Group became convinced that relocation would be a waster of resources and that the preferred option would be to re-start the operations in Prince Rupert.”

The group met with representatives from Lax Kw’alaams, who had acquired Skeena’s Tree Farm Licence (TFL), to discuss fibre supply and the Pulp, Paper and Woodworkers of Canada to discuss a new wage regime. They also met with a group of businessmen in Terrace who would later purchase the sawmill and form the Terrace Lumber Company 9TLC0 in that community.

Belsey, North Coast MLA at the time, brought together various community leaders with the Chinese delegation including Patrick Wong, Minister of State for Multiculturalism.

Things seemed to languish for a few months and the people of the Northwest held their breath – Maynard’s was set to auction off ‘A’ and ‘B’ line from the mill, equipment the China Paper Group would not need if they sent the Skeena assets back home, but would require if they wished to operate here. Two weeks later on May 16, 2005, the company announced memorandums of understanding with Coast Tsmishian Resources on fibre supply and with the PPWC on staffing.

In June, the company made a $1.8 million offer for the Watson site plus a $1.5 million offer for Skeena’s Carnaby Mill in Hazelton. The city supported the offer; however the court-appointed receiver said it was significantly lower than the $6 million market value of the Watson site alone. In July, the B. C. Supreme Court approved the purchase of the two sites for $3.3 million as well as made Lax Kw’alaams purchase of TFL 1, for $4 million official. The China Paper Group then went to the Chinese for approval funds for the deal with a deadline of August 11, 2005.

Meanwhile, on July 18, the PPWC signed a labour contract with the mill. A week later, the city entered into a deal with the company offering major tax concessions – including not paying back taxes and contributing to the economy in other ways than property taxes until at least 2010 – if they operated the mill. Extensions to finalize the deal were given to late August, then September – the tax deal was given final approval by the city on September 13 in the face of public opposition from people who thought the deal was too good – and then December. In mid December the province gave approval to the city’s special tax deal. On December 19, the deal deadline was pushed to February 28 after the China Paper Group agreed to pay all of the expenses at the mill, including security and utilities costs, until a decision was made. On February 27, the deadline was pushed to April 27 as the deal could still not be finalized but the company committed a $1 million non-refundable deposit to show their commitment to the initiative. With the approval still not in as the April deadline neared, CPG tripled their non-refundable deposit and were given an extension to today.