Constrains Lack of wood supply could impede future expansion - the potential to create up to 30 new jobs, says AV Group boss

B5

MICHAEL STAPLES
Canadaeast News Service

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The successful conversion of the AV Nackawic Mill to dissolving pulp comes with a warning that a secure supply of hardwood is needed if the mill is to thrive in its new venture.

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David Smith/for the telegraph-journal

Some say the availability of wood comes down to the issues of price, stability and certainty that the product can be delivered year round.

AV Group president and CEO Peter Vinall said wood supply is tight in the province and the mill has not procured the supply of Crown or private wood it needs.

"We need some additional Crown wood," Vinall said, "Right now, the way the markets are, particularly in the U.S., there is a big drain of private wood in that direction and we can't compete."

The AV Group, a member of the Aditya Birla Group of India, announced the successful $90-million conversion Wednesday of AV Nackawic from hardwood paper grade pulp to the production of dissolving pulp.

Dissolving pulp is the main raw material used in the manufacture of viscose staple fibre (rayon).

The AV Nackawic operation is initially set to produce 190,000 tonnes per year of high-quality dissolving pulp, primarily for consumption in Aditya Birla viscose plants in India, Thailand, Indonesia and China.

The company said plans are underway to increase output significantly, but it's subject to the availability of additional hardwood in New Brunswick.

Vinall said the lack of wood supply could impede a future expansion, a move that has the potential to create up to 30 new jobs.

The mill employs around 300.

"That is the constraint," Vinall said. "We don't have any commitment on additional hardwood."

Vinall's concerns come the same day the province released a pair of reports on the future of the province's forestry sector.

Reports on wood supply and investment possibilities are being examined by the provincial government.

Natural Resources Minister Don Arsenault said the province will announce what actions it will take before the end of the year, but he's rejecting a call for public hearings.

Arseneault said the government is working with AV Nackawic, but acknowledged a challenge exists in terms of wood supply.

"There are many industry players asking for more wood; I just don't have it," Arseneault said.

The minister said there are some difficult choices to be made and that will be part of the ongoing process connected to the release of the reports.

"If I tell you that we will give Peter (Vinall) his wood, but we'll take it away from this guy - that's the difficult choice we have to make."

Troy Lifford, assistant manager of the New Brunswick Federation of Woodlot Owners, said the mill's conversion is good news for the province.

He said he hopes it will translate into an opportunity for woodlot owners to sell more wood to the mill.

Lifford said the availability of wood comes down to the issues of price, stability and certainty that the product can be delivered year-round.

"Right now, that mill is having a difficult time getting wood from private woodlots because a couple of mills in the State of Maine are offering a much better price," Lifford said.

But David Palmer, manager of the York-Sunbury-Charlotte Forest Products Marketing Board, said pricing isn't the only issue when it comes to private wood supply making its way to mills such as AV Nackawic.

Palmer said private woodlot operators have been clobbered by mill closures and other issues over the last several months and harvesting is only at about 40 per cent of what it was four years ago. He said there is not a lot being harvested right now because producers need to regain their confidence.

Despite the concern over wood supply, Vinall said he was pleased the conversion to dissolving pulp has been completed.

"The initial quality levels have exceeded our expectations," Vinall said. "We are able to quickly ramp up our production levels while continuing to develop our quality parameters thanks to advanced cooking technology."

Vinall described the conversion as challenging because of its complex design and because the most critical part of the conversion was carried out last winter.The project cost AV Nackawic $90 million - about double the original estimate.