Low market demand and a tax credit for U.S. pulp producers is forcing Quebec-based Tembec to shut down its B.C. pulp mill in Skookumchuck for two weeks.
Located about 50 kilometres north of Cranbrook, the mill will begin its shutdown June 29.
Ongoing challenges in the pulp market, a rapid strengthening Canadian dollar and a U.S. tax credit for black liquor contributed to the company's decision to idle the plant.
The company said the black liquor tax credit for U.S. chemical pulp producers is allowing chemical pulp capacity into the market that otherwise would be uneconomical to operate, which is also distorting the pulp market.
In May, Canada and several other countries threatened to take the U.S. before the World Trade Organization to close a loophole that allows pulp and paper companies in the U.S. to take advantage of the tax credit.
A group of diplomats from Canada, the E.U., Chile and Brazil says American companies are getting up to $8 billion a year by mixing black liquor, a pulp byproduct, with diesel fuel, to qualify for the tax credit.
James Lopez, Tembec's president and CEO, said, "In the absence of an offsetting measure to allow Canadian producers to level the playing field, our industry and its employees will continue to pay the price through mill idlings and closures."