Sean Twomey, vice-president of Repap, announced Friday morning that Repap has made a formal offer to Resolute Forest Products to acquire the Fort Frances paper mill.
It will operate as Rainy River Packaging Inc. and when operational, the kraft mill and two paper machines will produce kraft paper to be used in packaging everything from cement bags to paper grocery bags.
Half of the capital expenditures of Repap will be made to acquiring the company while the balance will be used to getting the Fort Frances mill operational. It is expected the mill will be operational in late 2019.
The offer is good for seven days.
Resolute has received and acknowledged the offer, with Twomey expecting formal talks to begin in Montreal early this week.
As part of the offer, Repap has offered to trade saw logs to the Resolute sawmills in Atikokan and Ignace in exchange for hardwood pulp from Resolute's Thunder Bay operation.
Twomey stated his company's analysis has shown there is more than enough fibre available to accommodate all users.
The company will use one million cubic metres of fiber in the Fort Frances operation. The company also will incorporate high-quality recycled fibre to meet demands by companies looking for kraft with recycle content.
It is noted the company will work within two forest management agreements: the SFL (Sustainable Forest Licence), which runs through to March 31, 2010, and then the eSFL (Enhanced Sustainable Forest Licence) that will begin on April 1, 2020 with a different management system.
The slow-growing softwood fibre found in the forests of Northern Ontario is ideal from making kraft and that in making cement bags, the strength of the fibre allows the use of only two-ply instead of three-ply of paper common in bags produced in Brazil.
One of the capital expenditures identified to making the bags is a Clupak machine that makes cement bags stretchy for line filling.
Paper packaging has been growing at 3.7 percent a year and that growth indicates long-term markets for the Fort Frances mill, according to Twomey.
The Fort Frances operation is expected to employ 350 workers within the mill and provide employment for another 350 workers in harvesting and delivering fibre to it.
Twomey indicated that through Fort Frances Mayor June Caul, Repap has received great co-operation from both local MPP Greg Rickford, who also is the minister of Energy, Northern Affairs and Mines, and Indigenous Affairs) and local MP Don Rusnak.
Both believe this is a great opportunity and good policy to develop these manufacturing jobs in the northwest.
In addition to the start-up of the kraft mill and two paper machines, Repap also is looking to start up the biomass energy plant to supply power and steam to the mill.
Rainy River Packaging hopes to attract back to the mill many of the former workers who have good working knowledge of the machines within the plant.
Even if they only look to work for two or three years, their knowledge is important to transfer to a younger working force.
Repap is hoping the workforce will be reflective of the diverse population in the district, and to replicate the success of New Gold in providing training through technical schools and the Seven Generations Education Institute.
Noting that Resolute and Rainy River Forest Products had won safety awards, Repap hopes to build on that culture of safety and that returning employees would be of value in restoring it.
The development of apprentice programs, and the use of both federal and provincial training programs, also will be important to the future of the Fort Frances mill.