Tembec secures $75-million loan for capital investment at Temiscaming plant

Forest products producer could invest more than $300 million by 2015 to modernize plant

September 8, 2011   by The Canadian Press

MONTREAL—Tembec has secured a $75 million loan through Investissement Quebec to upgrade its boilers at Tesmiscaming facility.

“We were looking at some investment in the Temiscaming plant but the details are not completed and that’s why we’re not ready at this time to really be more specific,” says Linda Coates, vice-president of communications at Tembec.

The Quebec-based forest-products producer has not disclosed how much money it would be investing into the project or the potential impact it would have on the 900 workers, which includes 680 union members, at the Temiscaming facility.

The union says workers have agreed to various concessions since 2006, conditional on Tembec investing some $300 million by 2015 to modernize the old plant.

The concessions are reportedly cancelled if a major announcement is not made by next July.

Paul Quinn of RBC Capital Markets says the total project was expected to cost about $160 million and not be completed before 2014.

The project has been on the company’s potential capital investment plans for more than a decade.

Quinn says the loan likely also signals the company has reached an agreement with Hydro-Quebec to purchase excess generated power.

The large facility contains a specialty dissolving pulp mill, high-yield pulp mill, paperboard mill and chemical plant.

The investment would likely replace a large high-pressure boiler for the three smaller ones operating on the site that date back to 1911 when the plant was owned by the Canadian International Paper Company.

Wood residue from the sawmill operations are burned with steam being used to dry the paperboard and pulp. The new boiler will reduce or eliminate the need to purchase electricity or fossil fuels, while excess power would be sold for millions of dollars.

The Temiscaming mill has already received $975,000 from the federal government’s Pulp and Paper Green Transformation Program for the capital project.

Tembec announced in July it is investing $6 million, more than half of which coming from the Quebec, to reduce energy costs by replacing boilers at its Bearn sawmill.

The province is providing a $3.6 million grant from its heavy oil consumption reduction program.

The replacement of two boilers with a single device will heat the sawmill and operate its two kilns.

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