Sun Wave still hopes for a sunrise on former Skeena mill

The owners of the all but deserted pulp mill on Watson Island were in town this week, here for meetings with local officials and regaling them with a tale of interest in, but little hard fact in a timeline for re-opening the long closed operation.

With 2008 a deadline for the tax exemption status on the property, the owners were reminded that if they would be required to be producing pulp by the first week of 2008 for the agreement to stay in effect.

Details of the visit to the city and the state of operations (or lack of) at Watson Island were provided in Wednesday’s edition of the Daily News.

MILL START UP STILL ON HORIZON AS OWNERS VISIT SITE
By Leanne Ritchie
The Daily News
Wednesday, November 8, 2006
Pages one, three and five

Sun Wave Forest Products executives were in town this week for meetings. However, there appears to be no developments in the near future for the Watson Island Pulp mill.

“They said they are still trying to get their money and go forward and 2007 is still the time they hope to open,” said Port Edward Mayor Dave MacDonald.

“Other than that there was not much of an update – except they are continuing to try and get it started.”

Ni Ri Tao, director of the China Paper Group, was in town yesterday along with Susanna Xu, CEO of CRG Investments, the Canadian company representing the China Paper Group and Sun Wave Products. They moved on to Terrace today and will go to Vancouver for more meetings later this week.

The company purchase the mill earlier this year from the assets of New Skeena Forest Products, however Sun Wave is yet to get financing from the Chinese government to open the operation.

“They are continuing to work for all of the approvals that we need from China,” said Mayor Herb Pond.

“Obviously, the emerging scenario with changing pulp markets, changing supply, the bankruptcy of the Terrace Lumber Company and all of those factors need to be taken in to recalibrate the business model.

“(But) they are continuing to work on the premise that they will be producing pulp and that’s very much the discussion that we’re having – what’s to be done to hurry that process on.”

The clock is ticking on the tax agreements made between the city and the company. The city agreed to forego $2 million of potential taxes annually on the Watson Island site in exchange for the company opening the pulp mill in Prince Rupert.

The city recently sent the company a letter reminding Sun Wave that the tax exemption status is contingent on the company producing pulp by the first week of 2008.

“Very clearly, the community as well as PPWC and First Nations have made significant efforts to get economic activities going out at the mill,” said Pond. “We wanted to just identify that the clock is ticking and that there are some natural timelines that will require activity rather quickly if those deadlines are to be met.

“We wanted to make sure they’re still proceeding, that they will see it as a possibility… (and) it certainly appears they’re planning to operate a pulp mill.”

Port Edward also has a tax deal with the company that is contingent upon the company producing pulp at the facility.

However, compared to some of the historical delays, this one has been relatively short. Sun Wave completed its purchase of the land in June of this year, only five months ago, while the mill was sin the hands of New Skeena Forest Products for two years and eight months before the company declared bankruptcy in September 2004.

Prior to New Skeen Forest Products, the Watson Island pulp mill was part of Skeena Cellulose, which was sold by the province in January 2002.

While Sun Wave continues to seek start up financing, prices of Northern Bleached Softwood Kraft (NSBK) pulp, the type produced by the Watson Island facility have only gone upwards.

According to Economic Development Canada, prices have risen from $668 U. S. per dried metric tonne to $719 in October of this year. The $20 price increase in October pushed the prices to near record highs and prices are up 21 per cent year over year.