Conditions on the upswing for Prairie Paper

Wednesday, Mar 02, 2016

Firm developing new business plan for environmentally friendly product

Officials from Prairie Paper Inc. don’t try to hide the fact that a legal dispute between the company and its founder and former CEO, Jeff Golfman, was a setback for the "green" paper company last year.

But the lawsuit was settled in December and according to company chairman Clayton Manness, things are back on the upswing.

"We are quite renewed right now," said Manness, a former provincial finance minister under the Progressive Conservative government of Gary Filmon.

Along with Hollywood movie star Woody Harrelson, an outspoken environmentalist and a long-time partner of Prairie Paper, Manness said the company is forging ahead with a slightly different business plan. But the goal continues to be to make paper that is 100 per cent tree-free, chlorine-free and sulphur-free using wheat straw fibre from southern Manitoba.

A new CEO with extensive experience in the paper business, Vancouver-based Jeff Calvert, is now running the company. It’s still selling its Step Forward brand of paper in Staple stores throughout the U.S. and its goal continues to be the construction of a production facility in Manitoba.

However, rather than focusing on building an integrated wheat-straw pulp and paper mill that would likely have required up to $700 million in startup capital, the strategy now is to build a pulp-only mill in Manitoba.

"There is paper-making over-capacity in North America at the moment," said Calvert. "There is no point building another paper machine when there are lots of mills already... more than they need."

Calvert said they are in the process of analyzing new pulping technology that is available that could bring capital costs down to $100 million (it could still cost as much as $500 million, however).

"The other thing is that building a pulp-only mill allows us to go bigger than we would have been able to do were we to build an integrated pulp and paper mill," Calvert said.

In addition to the disruption of the lawsuit, the slumping Canadian dollar meant that its current supply of Step Forward paper — made on a contract basis from a plant in India — is now priced out of the Canadian market.

"It was a tough year," said Calvert. "With the drop in the Canadian dollar we just have not been able to supply cost effectively. It sucks. We hate that we can’t supply to our home market."

Manness said shipments to Canadian Staples stores were suspended last June. The plan is that when the dollar stabilizes and things get back in order Step Forward paper will be re-introduced into the Canadian market.

But in the meantime, sales actually doubled last year.

Among other things, Manness said that consumer acceptance of the product has grown, at least in part because of the fact many companies are now mandated to reduce their greenhouse gas footprint and have designated champions in-house to source suppliers that can help.

"We have no trouble finding those people in every company," Manness said. "That has matured in the last three years."

But Manness said it was never the intention to build a company selling paper made in India.

"The idea was never to be re-seller of paper," Manness said. "To be honest, that does not excite me. I don’t want to burn straw on my farm anymore. We have a product with incredible value."

Calvert said Prairie Paper will raise more money this year. He said a pulp mill in southern Manitoba could get done as quickly as five years. But realistically, he said it may take as long as 10 years.

"You’ll be hearing more as time goes by and more about our intentions as plans become more firm." said Calvert. "We’re re-grouping and building on our sales success in 2015 and getting us on a solid financial footing so that we can do the things we are here to do — find a way to take Manitoba wheat straw and use it as a paper-making fibre."




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