Mill quiet as costs soar
Port Hawkesbury Paper has been shut down for nearly two weeks over the past month.
The shutdowns haven’t resulted in layoffs and are caused by high electricity costs, said Archie MacLaughlan of Unifor Local 972, which represents the mill’s 300 workers.
“When the load is high we have to pay big rates,” said MacLachlan. “We could have run, but our bill would be three or four times the cost.”
Port Hawkesbury Paper is generally sold electricity at a discount by Nova Scotia Power — paying the cost of producing the electricity it consumes plus making a marginal contribution to the fixed costs of this province’s grid.
The cold temperatures that have hit the northeastern seaboard of North America have resulted in skyrocketing natural gas prices over the past month as supply into the Boston market has been limited by a shortage of pipeline capacity.
“If Nova Scotia Power is burning natural gas to produce the power required by Port Hawkesbury Paper then the price to Port Hawkesbury Paper would reflect the cost of that natural gas,” said William Mahody, consumer advocate at the Nova Scotia Utility and Review Board.
A former mill employee who didn’t want his name used explained that Port Hawkesbury Paper purchases blocks of natural gas supply in advance and that it may find it more profitable to resell those blocks at high spot prices, not purchase expensive electricity and still pay its employees not to produce paper.
Mill manager Marc Dube could not be reached for comment on Wednesday. Prices for the supercalendered paper produced at the mill had been weak coming into 2017, but have since stabilized according to analyst Chip Dillon.
“There has been massive capacity closures in the last six to nine months,” said Dillon, of Vertical Research Partners.
“The prices have stabilized and might go up … so right now they’re getting a reprieve but it’s a race to the bottom. Who reads a magazine anymore.” In response to low prices for its main product, a glossy paper used in inserts, and import tariffs placed on it by the United States government, Port Hawkesbury Paper has been attempting to diversify.
It has hired experts to test new products that could be produced at the mill ranging from wood-based alternatives to petrochemicals, paper bags and heat-resistant sandwich wrappers.
“The price of paper is going in the wrong direction (but) no one wants to shut the mill down,” Dube told the Chronicle Herald in an interview last year. “(Meanwhile) we’ve got a legal team in the States that costs us more than $2 million a year. We need to diversify and we need to do it quickly.”