Domtar says no decision about fate of Sask mill, despite claim by province

By Jennifer Graham

REGINA (CP) - The fate of a pulp mill - and hundreds of jobs - in Prince Albert, Sask., remained up in the air Wednesday after Domtar Inc. (TSX: DTC.TO) said it had not made a final decision about the assets.

Provincial government officials said earlier that the company planned to dispose of some or all of its assets in Saskatchewan after a deal to reopen the mill failed to materialize.

Domtar spokeswoman Bonnie Skene disputed that claim.

"We've been in active discussions with the province for some time," said Skene.

"We believe that the most constructive path forward will see discussions continue to focus on the potential restart of the Prince Albert pulp mill and related facilities.

"A final decision, frankly, has not been made at this time."

The Prince Albert facilities were closed by Weyerhauser in April 2006. Domtar became involved when the two companies announced plans to merge in August 2006, finalizing the deal this past March.

The province had been working with Domtar since last August on a "comprehensive plan" to reopen the pulp mill and sawmills, and develop new forest products facilities.

But Eldon Lautermilch, minister responsible for the forestry secretariat, said Domtar has decided not to pursue any opportunities.

Lautermilch said the comprehensive plan developed jointly is is not where Domtar is heading.

"Domtar's direction is uncoated, free-sheet paper," he said. "That's what their board's focus is and that's where they're headed and I can understand that.

"Our business plan ... went beyond that because it included sawmilling and other components."

Lautermilch said the province was unhappy with Domtar's decision, but would keep working with the company to find a solution to reopen the mill.

If that wasn't possible, the province will help manage a sales process, he said.

The province said it will begin the process to seek expressions of interest for developments using the wood supply.

Under the Prince Albert Forest Management Agreement, the timber would become available for reallocation if the Domtar facilities remain closed for two years.

Skene insisted that Domtar is looking at what she called "a range of options," including the restart of the pulp mill that closed last year and put nearly 1,000 people out of work.

"We appreciate that these are unsettling times for the people in Prince Albert," said Skene.

"We're going to continue to make every effort to communicate this decision in a timely way, once those are made."

Prince Albert Mayor Jim Scarrow said many people are waiting for answers.

"We're in shut-down mode and there are 1,000 people directly involved and indirectly many times that number," said Scarrow.

"We have a workforce that has remained in the community based on the positive feelings that we have a potential industry here. They've toughed it out for a year and now the clock is ticking ... Will we see an exodus from the community? I'm hopeful not."