Hundreds out of work in Terrace Bay, Ont., after pulp mill idles operations
Michelle Allan | CBC News | Posted: January 5, 2024 9:00 AM | Last Updated: January 5
As mills shut down, consumers could end up paying more for paper products, analyst says
The Terrace Bay Pulp Mill in northwestern Ontario is temporarily shutting down with no opening date in sight.
As the northwestern Ontario town braces for the potential loss of its biggest employer, the mayor and union representing mill workers say they're trying to stay positive.
On Tuesday, the mill's owners, AV Group, which is part of Aditya Birla, announced there will be a "temporary idling of its pulp operations, with immediate effect, due to prevailing market conditions," meaning 400 workers are off the job.
"It's obviously a big blow for Terrace Bay. I mean, we're a population of 1,600 people," said Mayor Paul Malashewski.
The shutdown will be devastating for businesses in the town and ripple through other surrounding communities on the north shore of Lake Superior, he said.
NBSK pulp used in everyday paper products
The type of pulp produced in Terrace Bay is premium grade, said pulp industry analyst Brian McClay, chair of Trade Tree Online and Brian McClay & Associates (TTO BMA).
Northern bleached softwood kraft (NBSK) is used in items like tissue, toilet paper and paper towels.
"It's really the best pulp fibre in the world," he said. "It's the thing that holds the sheet together."
As mills producing NBSK shut down, manufacturers could face greater difficulty and higher expenses in making these products, and consumers could find themselves paying more for flimsier toilet paper.
Terrace Bay, which is about 220 kilometres northeast of Thunder Bay, was once an economically thriving town. The pulp mill, which was established in the 1940s, grew to employ thousands of people by the late 1970s.
The mill fell on hard times in the early 2000s when the pulp and paper industry entered a period of uncertainty. It went through cycles of shutting down, changing ownership, then shutting down again as different owners found themselves in debt.
The current owner, Aditya Birla, stepped up to buy the idled pulp mill in 2012. The mill was fined $250,000 after pleading guilty in 2015 to seven offences under the Environmental Protection Act, and was temporarily shut down in wake of an explosion that killed a worker in October 2011.
Malashewski said he's optimistic the mill will reopen as it has after previous closures. It will be kept in a state of warm idle to allow for a potential future restart of operations, leaving the mayor hopeful.
"It's a positive sign," he said. "I mean, they just didn't shut it down, and turn the heat off and all that."
Union mill workers also hope the market conditions cited as the reason for closure will improve.
"The markets change. There's really good reason to keep that place operating. It's an efficient mill," said Cody Alexander, staff representative for the United Steel Workers (USW) in Thunder Bay.
Workers 'kind of in shock,' union says
The union represents approximately 275 of the mill's steelworkers who are now without employment, said Alexander.
"Everybody's kind of in shock right now about it. It's a really small community and that pulp mill is the anchor."
Currently, pulp prices are low and demand is weak, said McClay.
"We went through a couple of pretty volatile years where prices reached record levels and now they've come back down," said McClay.
Pulp mills are expensive to operate and maintain, he said, and inflation has exacerbated this. Some mills have closed even when pulp prices are high due to the sheet capital investment required to operate.
"It's not just a question of where the market is today; it's what companies have to spend to keep the mills in decent running order."
McClay said he couldn't predict whether the Terrace Bay mill will reopen.