Neucel has no firm date for restart

Neucel Speciality Cellulose's conditions are not right for reopening in early 2016

  • Nov. 25, 2015 10:00 a.m.

It looks like the grim employment situation in Port Alice will continue. On Friday the 13th of November, Neucel Specialty Cellulose informed its employees via letter that conditions are not what they need to be in order for the pulp mill to reopen early in 2016.

“While there has been some upward movement in the global dissolving pulp market and forecasts indicate that this trend could continue, the current market price for dissolving pulp is not at the level required to ensure profitable operations,” Neucel Chief Executive Officer Wanli Zhao wrote in a letter sent to staff. (Neucel is owned by Fulida Group Holdings Ltd.)

“Consequently, the shareholders have evaluated the situation and believe that the basic conditions for implementing significant capital investment projects and restarting have not been met.

Therefore, the shareholders are not able to provide a firm date for restarting the mill,” Wanli said. “I was completely surprised with the lack of information coming forward from Neucel,” said Port Alice Mayor Jan Allen.

The recent letter is repetitious of the one they sent to Neucel employees in May 19, Allen said, “but at least the May 19 letter conveyed some hope.”

The letter said the shareholders had “approved the development of a number of mill projects to address mechanical and operational issues that contribute to chronic poor reliability”.

“We are hopeful that those projects will still move forward,” said Allen. The uncertainty is taking its toll on the community. “This waiting game’ is very difficult for the majority of residents. People were hoping they would be going back in a couple months, but now it’s possible that difficult choices have to be made by some families,” Allen said.

“Port Alice residents are being tested, but we are a resilient, giving community. The second last line of Neucel’s letter reads “This is a difficult time for all stakeholders and we continue to ask for your patience and support”.

It is also difficult for Neucel’s loyal, dedicated employees and the businesses on north Vancouver Island who are just waiting for the start up announcement,” said Allen.

Neucel is investigating opportunities to reopen the mill, Wanli said, which may include strategic partnerships and the cooperation of all levels of government.

“We have made some progress with the BC government, but we continue to seek assistance from the municipal and federal governments,” said Wanli.

Tai Cheng, Neucel vice president, Community and Government Affairs, appeared before Village of Port Alice council in April to open up a dialogue about lowering its taxes.

Neucel asked for a deferral of their current tax obligations with a mutually-agreed payment plan, a re-evaluation of its current and future industrial tax assessment and a review of the Village tax assessment based on the value of services provided by the mill to the town.

Allen told Cheng the village would like to strike a select committee comprised of council and Neucel representatives to discuss five-year planning issues. That committee has met three times, said Allen, June 17, July 23 & Oct. 15. At the time, Allen said Neucel’s taxes are about $950,000, about half the Village’s tax revenue.

The mill must continue to reduce its expenditures as much as possible to maintain the site, “reduce the financial burden on the shareholders”, and buy time to work towards restarting operations.

“The shareholders remain committed to the mill in Port Alice and will work towards the operational reliability of the mill with the intention to restart production when the market improves and other conditions are suitable,” said Zanli.

 

 

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