Coated papermaker ready to roll: local ownership group heads up former Cascades mill.

For Andre Nicol, the months of organizing the finances to reopen the former Cascades paper mill is over.

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The heavy lifting of restarting plant machinery now begins.

In April, the first few employees at the fledgling Thunder Bay Fine Paper were putting into motion their plans to activate three paper machines that had been lying dormant for two winters, since Cascades closed the mill in February 2006.

The first shipment of coated paper was due out by the first week in May

"Some mills have to die before they come back," says Nicol, the company president in reflecting on the plant's revival and the overall state of the forestry industry in northwestern Ontario.

In 2004, the Cascades mill had 640 employees. Now with a 10-year labour agreement in place with four unions, the new lean and mean Thunder Bay Fine Paper will have 320 by September when the third and final No. 6 paper machine comes on stream. Former unionized employees will be called back as needed.

It was two years from the conception of an idea to re-open the mill through a rocky financing process to raise $42.7 million. The deal almost fell apart before Christmas.

Some local investors had backed out and there was little interest in the private equity markets to revive a paper mill that was declared a money-loser.

But a group of knowledgeable and experienced local paper mill men knew the operation could be a winner, with the right paper mix and select niche markets.

Also, coming to their aid was the Ontario government, boosting the amount of a provincial loan guarantee.

Nicol credits Thunder Bay-Superior North MPP Michael Gravelle, the new Northern Development and Mines Minister, for coming through with some nick-of-time funding in January with an additional $1.5 million loan from the Northern Ontario Heritage Fund on top of more than $10 million in loan guarantees.

Local investors invested $3 million with former mill owners. Cascades contributed $4 million.

"We needed it quickly or it was going to die," says Nicol. "At the same time, I was having a hard time keeping the team together. The frustration and stress of the whole thing was starting to show."

Nicol spent 30 years in sales and marketing at Lakehead Newsprint, a paper rewinding company

He was part of a group formed in the fall of 2005 when Cascades announced it was closing the mill. The Quebec paper producer blamed high energy costs, an unfavourable U.S. exchange rate and overall market conditions for the closure.

On his management team is operations manager John Hitchman, who moved up through the ranks at the plant, beginning as a summer student, to eventually become mill manager.

Hitchman has a knack for turning around underperforming mills with Tembec and later with an Australian company in Tasmania.

The Thunder Bay operation will produce No. 2, 3 and 4 coated paper, a grade of paper considered to have the highest projected growth in North America over the next five years. The major end-users are book and high-end magazine publishers.

By year's end, the company hopes to produce 200,000 tonnes annually.

In a staggered start-up, the mill's No. 8 paper machine will be the first to produce saleable paper by May with a supporting groundwood mill starting soon after.

The No. 5 paper machine would start-up in June, followed by the No. 6 in the weeks after.

Nicol says there's a good potential order book formed up with markets for coated paper in Winnipeg, Minneapolis, Milwaukee, Chicago and Toronto. The company will rely on U. S. distributors and a business plan with a Canadian dollar at par.

Lyndonmeyer Monroe, a Milwaukee broker in book publishing, has shown some initial interest.

There are also long range plans to build warehouse storage space and a co-generation plant using forest waste to create power instead of natural gas.

www.mndm.gov.on.ca

By IAN ROSS

Northern Ontario Business