Jan. 23, 2009
A deal to buy the idle Weyerhaeuser mill fell through because of problems with a wood allocation, not a business plan says a spokesman for the company interested in the mill.
Arbec Forest Products vice-president of finance and administration Serge Mercier said the company is still trying to agree on a sufficient wood allocation with the province before they finalize a deal with Weyerhaeuser.
"We're still discussing with New Brunswick Business."
Earlier this week, media outlets around the province reported problems with the deal to buy the Weyerhaeuser mill after a conditional agreement between the two companies expired in December.
Representatives from the Natural Resources Department said the province didn't receive the required business or industrial plans necessary when a company seeks a wood allocation.
Arbec submitted a preliminary business plan to indicate to the province their interest in the mill and to get an idea of how much wood was available.
Mercier said the allocation size was the problem for Arbec, not the business plan.
"From our discussion that was not the issue."
Arbec would need about 650,000 to 700,000 cubic metres of wood per year to run the mill, with 30 to 40 per cent of that coming from private woodlot owners.
That amounts to between 195,000 and 280,000 cubic metres, with the rest of the wood coming from a crown allocation.
Natural Resources Department spokesperson Chrystiane Mallaley said Weyerhaeuser required about 600,000 cubic metres, with 200,000 of mixed hardwood from a crown allocation.
Since the mill closed, a portion has been re-allocated to the AV Group for their Atholville operation. Arbec needs hardwood, but could use some softwood in the mill.
Mercier said the amount of wood left from the Weyerhaeuser allocation would only provide about half the wood they need and the company didn't want to buy the mill only to have it close six months later.
"We were clear on that point."
Arbec has never run into a problem with wood allocations at other sites and they were under the impression there would be a lot of wood available in the region after other mill closures, he said.
"That was one of the reasons that spiked our interest in the mill."
Mallaley said the province temporarily reassigned the former UPM allocation, which she thought was a mix of hard and softwood.
"What Arbec was looking for was specifically hardwood."
Umoe Solar bought UPM's assets in New Brunswick, including their sawmills in Blackville and Bathurst. Portions of the former UPM allocation have been re- allocated until the end of the fiscal year in March.
When Umoe bought the mills, they asked the province to roll the allocation for the Bathurst mill over to them, Mallaley said.
"That's been granted."
Mercier said he knew Umoe needed the wood allocation for their operation.
"It seems that they need the wood as much as we do."
Arbec found out they couldn't get the necessary allocation for the Weyerhaeuser mill before the tentative deal expired, Mercier said, but he didn't know exactly when.
"What I can say is we're still in contact with Weyerhaeuser."
Natural Resources Minister Wally Stiles sent a letter to Arbec offering to meet with company officials to discuss the issue. Mercier has received the letter, but said he wouldn't discuss the letter's contents.
"We're not going to divulge the letter."
Although he was out of the office until today, Mercier said the company was going to set up a meeting with Stiles, but he wasn't sure where or when the meeting would be.
"There will be another meeting in a couple of weeks time."
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