Bowater Mersey fears Asian paper threat

Companies that produce newsprint in Nova Scotia arebracing for stiff competition from therapidly growing newsprint industry inChina.

By next year, plants in China are expected to be producing more paper than the country needs.

That means Chinese paper will likely end up on international markets, where its price could cause major headaches for Canadian producers.

China's emergence as a newsprint exporter may be one of Bowater Mersey's biggest challenges, says Kent Nickerson, a manager at theBrooklyn plant.

"It's certainly significant and we'll have to wait and see what develops, but certainly the mills that have come online have a tremendous capacity," Nickerson told a gathering of exporters and port officials Friday in Halifax.

The Bowater Mersey plant produces 255,000 metric tons of newsprint a year. With 400 full-time workers, it's the biggest employer in Queens County.

Mills have closed and paperworkers have been laid offacross Canada as the industry faces rising costs, a drop in demand for newsprint and increasing competition from overseas.

Nickersonsaid the combination of cheaper labour and newer technology will make China a tough competitor. "Being newer mills, they have very modern technology," henoted.

Bowater Mersey has been struggling. In May, the Nova Scotia governmentannounced it wasbuying $26 million worth of land from the company in a bid to prop it up.