Investment contingent on reaching labour agreement with United Steelworkers union and resolving municipal tax issues
MONTREAL—Forest products producer AbitibiBowater will invest $32 million to revive a sawmill idled for five years in Ignace, Ont. once it comes to terms with union workers and the municipality.
The Montreal-based paper, pulp and lumber producer says production could resume by 2014 as lumber demand is expected to recover following years of weak U.S. housing starts.
But the investment is contingent on reaching an acceptable labour agreement with the United Steelworkers union and resolving municipal tax and fire protection issues with the Township of Ignace.
Spokesman Pierre Choquette says the company is optimistic about reaching an agreement with both groups but has declined to provide details, including if the company will seek further wage concessions.
Neither union nor township officials could be reached for comment.
The investment includes the addition of an energy system and kilns to dry lumber, a planer and packaging system for the production of finished lumber.
Engineering, design and construction would take place over two years.
AbitibiBowater hopes to create 90 jobs at the sawmill and another 80 harvesting jobs.
Annual production capacity would be increased to 115 million board feet from 84 million.
The mill closed in December 2006 because it didn’t have enough lumber allocated under quotas in the Softwood Lumber Agreement between the U.S. and Canada.
AbitibiBowater CEO Richard Garneau says the project is consistent with the company’s strategy of improving the efficiency of is assets and building on its proven competencies.
“Lumber is and will remain a core business for the company, particularly where it can favourably affect the economics of our pulp and paper facilities,” he says.
The sawmill in northwestern Ontario would supply both the domestic and U.S. markets.
It would also improve fibre costs for AbitibiBowater’s pulp and paper mills in Thunder Bay and Fort Frances, says wood products vice-president Yves Laflamme.
AbitibiBowater is a producer of newsprint and wood products, owning or operating 18 pulp and paper mills and 24 wood products facilities located in the United States, Canada and South Korea.