Domtar pulp plant sold to Hong Kong investors

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Domtar's Baileyville mill shut down Tuesday, May 5, 2009. (Bangor Daily News/John Clarke Russ)  (WEB EDITION PHOTO)
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CAPTION Domtar's Baileyville mill shut down Tuesday, May 5, 2009. (Bangor Daily News/John Clarke Russ) (WEB EDITION PHOTO)
Posted Sept. 30, 2010, at 11:48 p.m.
Gov. John Baldacci concludes a tour of Domtar's pulp mill in Baileyville on Monday, along with mill manager, Tim Lowe (left) and Washington County Sen. Kevin Raye of Perry. Baldacci visited the mill, which is slated to begin idling in May, affecting more than 300 employees at the mill along with about 70 in Eastport, where the pulp is shipped from.  (BANGOR DAILY NEWS PHOTO BY BRIDGET BROWN)



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Governor John Baldacci concludes a tour of Domtar's pulp mill in Baileyville on Monday, March 9, 2009 along with mill manager Tim Lowe (left) and Washington County Senator Kevin Raye (right) of Perry. Baldacci visited the mill which is slated to begin idling in May and will affect more than 300 employees at the mill along with about 70 in Eastport where the pulp is transported to and shiped out from. (Bangor Daily News/Bridget Brown)
BDN
Gov. John Baldacci concludes a tour of Domtar's pulp mill in Baileyville on Monday, along with mill manager, Tim Lowe (left) and Washington County Sen. Kevin Raye of Perry. Baldacci visited the mill, which is slated to begin idling in May, affecting more than 300 employees at the mill along with about 70 in Eastport, where the pulp is shipped from. (BANGOR DAILY NEWS PHOTO BY BRIDGET BROWN) CAPTION Governor John Baldacci concludes a tour of Domtar's pulp mill in Baileyville on Monday, March 9, 2009 along with mill manager Tim Lowe (left) and Washington County Senator Kevin Raye (right) of Perry. Baldacci visited the mill which is slated to begin idling in May and will affect more than 300 employees at the mill along with about 70 in Eastport where the pulp is transported to and shiped out from. (Bangor Daily News/Bridget Brown)
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Jerry Smith, a millwright or general mechanic, walks out to pick up his lunch at Domtar's pulp mill in Baileyville on Monday, March 9, 2009. &quotIt's the uncertainty that's the problem," said Smith of the mill's future who has worked at there since 1963.    BANGOR DAILY NEWS PHOTO BY BRIDGET BROWN  (WEB EDITION PHOTO)
BDN
CAPTION Jerry Smith, a millwright or general mechanic, walks out to pick up his lunch at Domtar's pulp mill in Baileyville on Monday, March 9, 2009. "It's the uncertainty that's the problem," said Smith of the mill's future who has worked at there since 1963. BANGOR DAILY NEWS PHOTO BY BRIDGET BROWN (WEB EDITION PHOTO)

BAILEYVILLE, Maine — Canadian paper maker Domtar Corp. has sold its pulp mill in this eastern Maine town to an investor group for $64 million, a transaction that will protect the jobs of the mill’s 300 workers, the company said Friday.

The Montreal-based company sold the mill, hydroelectric facility and related assets to International Grand Investment Corp. so it could focus on softwood pulp manufacturing. The mill focuses on hardwood pulp, Domtar President John Williams said.

IGIC is a Delaware-registered company that represents international investors in pulp trade and imports, Domtar said. IGIC is part of a Chinese-based holding company.

Maine Gov. John Baldacci welcomed the new owners to Maine, saying, “I’m optimistic that we can develop the same open lines of communication and cooperation that existed between my administration and Domtar.”

U.S. Sen. Susan Collins says she received assurances Friday from Williams that the sale will protect the jobs of the mill’s 300 workers.

The mill, which will be known as Woodland Pulp LLC, began operations in 1905, and with its $15 million annual payroll “has been the hub of economic activity in that region of Maine,” Baldacci said.

The mill was shut down for seven weeks in 2009 because of weak global demand for pulp, high inventory levels and depressed prices. Workers who were laid off were later recalled as the market rebounded, and tax and currency-exchange conditions improved.

The mill, which had been owned by Domtar since 2001, is Washington County’s largest employer.

The sale would be effective immediately, according to an announcement by Domtar that was obtained by the Bangor Daily News.

“The sale of the Woodland mill is part of our strategy to reduce our exposure to hardwood pulp markets; the majority of our market pulp activities are in softwood and fluff pulp grades,” Williams said in the announcement. “We concluded that this transaction was in the best interest of the company, in terms of strategy, and for the mill as it continues the employment of its dedicated work force.”

Baldacci said that Domtar’s ownership always was perceived as temporary, as the company is a paper company, not a pulp manufacturer.

The Baileyville mill is Domtar’s only pulp mill. It has an annual production capacity of 395,000 metric tons. International Grand Investment annually brokers more than 800,000 tons of pulp.

International Grand Investment represents individual investors in pulp trade and imports. This is the corporation’s second pulp mill acquisition in the U.S. this year; the other mill is on the West Coast. International Grand Investment maintains corporate offices in Delaware.

“With this sale, the workers at Domtar won’t have to worry,” Baldacci said. “The community won’t have to worry.

Rosair Pelletier, Maine’s senior forest products adviser, said that when Domtar closed in 2009 for six weeks and then reopened, it was only a temporary move.

“The company was looking to transition out of pulp,” he said. “Domtar is a papermaker. [International Grand Investment] concentrates on pulp. It is a big corporation that deals only with pulp. This is such good news because it will bring stability to the entire area. It is also good news any time a new, major investor comes to Washington County.”

Baldacci said Domtar has had a $15 million annual payroll in Washington County and the sale will stabilize that. “No one will have to look over their shoulder now,” he said.

Pelletier said that International Grand Investment “will keep the mill in tip-top condition” and that could include a $20 million to $30 million investment in infrastructure each year.

Baldacci said it is too early to say if a mill expansion is planned or if new workers will be hired. “I think they want to hit the ground running and get into production first,” Baldacci said.

“Since 2001, I have appreciated Domtar’s commitment to the Woodland mill,” Baldacci said. “I want to convey my thanks and appreciation for their hard work in Washington County.”

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The mill’s story

For more than a century, the Baileyville mill has been an integral part of Down East Maine.

Construction on St. Croix Pulp and Paper was begun in 1905 and completed in 1906. Soon after construction began, the village of Woodland, now within the town of Baileyville, grew up around the mill.

In 1964, Georgia-Pacific purchased the facility, owning and operating it until 2001, when it was purchased by Domtar, which is headquartered in Quebec.

One of Domtar’s first actions was to return Gordon’s Island, a tribal burial ground during the 1800s, to the Passamaquoddy Indian Tribe in May 2002. The mill operated well and during the period of Domtar ownership set production records and solidly established, through the shipment of market pulp, the viability of the Port of Eastport.

Declining paper markets forced the closure of the company’s only paper machine in 2007, but pulp production continued at the facility. In 2009 the global recession forced a six-week shutdown of the mill, but upon the mill’s restart in June 2009, the mill has had strong production numbers.

Today the mill employs 300 men and women. It is Washington County’s largest employer.

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