Selling Resolute to Asian Interests | Better hopes for factory modifications

It’s a headquarters coming under foreign control, but within the fold of Paper Excellence, opportunities for converting factories for Resolute Forest Products will likely be greater, believes Richard Garneau, former CEO of Quebec’s largest forestry company.

Posted at 5:00 am

Julian Arsenal

Julian Arsenal
The press

The retired industry veteran, who led the forestry giant’s relaunch from 2011 to 2018 following its legal restructuring, is positive about the $2.7 billion transaction announced on July 6.

The main reason, according to Mr. Garneau? Paper Excellence is already considering a career change for Resolute’s Gatineau newsprint mill – a sector in perpetual decline. If the transaction receives all the necessary approvals, a feasibility study will be carried out for a possible conversion of the site to gift wrap.

Demand for cardboard is growing. To manufacture them, they require kraft pulp from the Saint-Félicien and Thunder Bay mills [en Ontario]. If they are successful at Gatineau, it will extend the life of the other pulp mills.

Richard Garneau, former CEO of Resolute Forest Products

The feasibility study could take up to 24 months. Paper Excellence, a privately held company, is conducting this type of transformation in Tennessee as part of a $350 million project.

This company is based in British Columbia but owned by Indonesian businessman Jackson Widjaja. This comes from the family behind conglomerate Sinar Mas, whose pulp and paper division Asian Pulp and Paper (APP) is a global paper giant in Indonesia and China.

Last year, after buying Catalyst Paper in 2019, Paper Excellence also got its hands on Domtar — which specializes in making board and specialty papers — for around $3 billion. During his long career, Mr. Garneau worked for the latter two companies.

Until now, Paper Excellence has not hesitated to loosen its wallet to invest in its growth in the West. In Quebec, the company will also own the Kénogami facility (Saguenay), which can produce cellulosic filaments that increase the durability of multiple materials.


PHOTO DAVID BOILY, LA PRESSE ARCHIVE

Timber industry veteran Richard Garneau, pictured here in 2014, ran Resolute from 2011 to 2018.

A successful rebuild in Gatineau could “eventually” raise hopes for the newsprint mills in Amos and Baie-Comeau, which have been closed since 2020, Garneau believes, adding that patience is needed.

“I insist on the word possibly,” affirmed the ex-Big boss of Resolute in a telephone interview The press. Certainly not in the near future. »

A “false debate”

Given Resolute’s weight in the industry, its acquisition by a foreign player suggests the control of Quebec’s forest by interests thousands of miles from Quebec. When questioned, Mr Garneau believes that this is a “wrong debate”.

It is connected to sawmills. Sawmills produce wood chips for pulp mills. It’s nice to be in Indonesia [APP]the wood is connected to the sawmills to supply the pulp mills.

Richard Garneau, former CEO of Resolute Forest Products

Resolute operates 15 sawmills in Quebec.

Luc LeBel, Professor in the Department of Wood and Forestry Sciences at Laval University, agrees with Mr. Garneau’s offered analysis of the transaction.


PHOTO BY LINKEDIN

Luc LeBel is Professor in the Department of Wood and Forestry Sciences at Université Laval.

“The cost of converting factories is enormous,” he says. Resolute couldn’t seem to make that kind of investment. Here we have an investor who has money for conversions. »

Since Paper Excellence does not operate sawmills in Quebec, Mr. LeBel is not overly concerned about the change of control. Sawing activities are “important” at Resolute, and the buyer has “very little experience in this area,” emphasizes the professor. He expects Paper Excellence to draw on the expertise of Quebec society.

Provisional agreement ratified at Resolute

Unifor union members have just signed their new four-year contract, covering Resolute Forest Products’ eight sawmills, with 67% of the vote. The contract provides for significant pay increases, namely “adjustments” of $2.50 per hour upon ratification of the contract and $1.00 per hour effective Janah May 2024 for craftsmen. For their part, production workers receive “matches” at $1.25 per hour upon signing the contract and $1.25 per hour beginning January 1stah May 2024. Add to these amounts increases of 3% in year one, $1.30 per hour in year two, 3% in year three and $1.30 in year four. This contract, which Unifor later used as a model for negotiations with other companies in the industry, covered 1,000 workers at eight sawmills in Comtois, Girardville, La Doré, Maniwaki, Mistassini, Normandin, Saint-Thomas and des Outardes in Baie Comeau.

The Canadian Press

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  • 25
    Sites operated by Resolute in Quebec in the wood products and pulp and paper sectors.

    SOURCE : the press

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