Catalyst Paper Corp. chief executive Kevin Clarke has made his mark quickly since joining the Richmond-based paper maker June 16 with the company announcing Tuesday it would permanently close its paper mill near Campbell River in September.
Production at the 58-year-old Elk Falls mill had been indefinitely curtailed since February 2009. About 100 employees will be immediately impacted by the decision.
Clarke said in a statement: “The steep decline in commodity paper markets, coupled with uncompetitive labour and tax costs, were contributing factors that could not be overcome.”
Catalyst is also permanently closing its idled paper recycling operation in Coquitlam due to reduced recycled pulp requirements, higher costs and constrained availability of quality recovered paper. The company had also recently settled its tax debt in three of four municipalities were it had been disputing its municipal tax assessment.
The company’s share price was trading at a new 52-week low of $0.135 mid-day Wednesday.
“With this difficult decision behind us [the mill’s closure], we can now focus our sales and marketing strategies and production planning around mills that still have the potential to operate competitively which is a better basis to future-focus our business overall.”
Catalyst said that a $302 million impairment charge related to the mill’s closure would be reflected in the company’s second quarter results.
The Communications, Energy and Paperworkers Union of Canada (CEP), which represents worker at Elk Falls, will now look for a new owner for the mill.
“What we have done in the past when there have been mill closures is worked with whoever we need to work with to see if we can find an new owner," said Karen Cooling, CEP’s national staff rep. “If Catalyst has decided that they don’t want operate this plant, it could very well be that there are other potential operators who would be interested."
She added: “We always believed that it’s a good mill and that it can be profitable. It’s surprising that [Catalyst] would do this.”