Baldacci says Millinocket mill owner weighs a restart costing $30 million

Posted Sept. 24, 2008, at 11:47 p.m.
Last modified Jan. 29, 2011, at 11:35 a.m.

MILLINOCKET, Maine — Multibillion-dollar corporation Brookfield Asset Management Inc. hopes to finish in three weeks its final vetting of a 20- to 30-year plan to revitalize the Katahdin Avenue paper mill for about $30 million, Gov. John Baldacci said Wednesday.

Baldacci will meet in Augusta on Friday with union representatives to discuss how Brookfield hopes to install a biomass boiler and otherwise improve the Katahdin Paper Co. LLC mill. The unions sought the meeting due to frustration with Brookfield’s silence on its mill plans, which the firm shared briefly with the governor last week.

“My sense when I talked to them was that it was going to require two or three weeks of drilling down and getting through things exhaustively. They are doing a lot of number-crunching right now,” Baldacci said Wednesday.

“They are going to know what they have in two or three more weeks,” he said. “Then they would be able to give me more specifics.”

Brookfield announced plans May 29 to shut down the mill indefinitely on July 28, cutting 208 jobs, because of runaway oil prices. The mill used more than 400,000 gallons of oil to make steam in 2007. That date was extended repeatedly before the Sept. 2 shutdown.

Eighteen workers had been laid off as of Friday, with several more planned for this week, state officials said.

Baldacci’s statement doesn’t mean that Brookfield has made a final pledge to reopen the mill.

Officials at Katahdin Paper, a Brookfield subsidiary, agreed on June 13 after meeting with U.S. Sens. Susan Collins and Olympia Snowe that they would open the mill in 2009 with a biomass boiler rebuilt from a mill oil burner — if the numbers added up.

Company officials had told union workers months before then that they dropped their plan for an energy upgrade because it would take up to $50 million over the next two years to install a biomass boiler to power the plant and cover expenses during the 18 months to two years it would take to get the boiler running.

But state forest products industry advisers, who have been working with Brookfield since the mill crisis began, indicated that the dollar and time estimates were too high. The boiler could be rebuilt and made operational in 2009, and the state would provide considerable aid in the restart process, they said.

Former mill manager Serge Sorokin has assembled a team that created the plan which Brookfield is scrutinizing. Mill management and Brookfield officials have been in negotiations since late May with an unidentified third party that would handle the biomass boiler refit negotiations.

Duane Lugdon, a representative for three United Steel-workers International unions at the Millinocket and East Millinocket paper mills, expressed frustration Sunday at the slow pace of the negotiations. He said the mill owners have failed to abate skepticism about Brookfield’s real commitment to the mill.

“I don’t think they are being as diligent as they say,” Lugdon said. “This is not rocket science. They ought to be able to get this done. You can’t go on saying that you’re in negotiations forever.”

Lugdon, who helped set up the meeting with Baldacci, and several other union officials or representatives did not immediately return messages seeking comment Wednesday.

Baldacci responded to Lugdon’s criticism by saying that given the recent cratering of the housing market and the resultant instability of Wall Street and financial markets, it is natural for Katahdin region residents to be concerned about the mill’s future. Katahdin Paper is the region’s single largest employer.

But it is also prudent for Brookfield to scrutinize the plan with the greatest care, he said.

“Our country in some quarters is facing a very precarious condition,” Baldacci said. “Sometimes that puts everything on hold, and you are talking about a $30 million project here.”

And the plan has many facets. Among them, Baldacci said, is improving freight rail service into the Katahdin region to reduce transportation costs for Katahdin Paper.

Since Sept. 2, workers have been mothballing and winterizing the mill, causing the gradual layoff pace.

The mill’s work force is highly skilled and, through its unions, it has agreed to concessions that make it among the most affordable in Maine. The mill’s coated paper production is high-quality, earning superlative marks from customers.

“They still have a great machine there that makes a great product,” Baldacci said. “We just have to solve the energy problem.”

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