* Latest Canadian expansion by Paper Excellence
* Dissolving pulp in hot demand from textile makers
VANCOUVER, March 7 Domtar Corp (UFS.TO) will
sell its Prince Albert, Saskatchewan, pulp mill to a unit of
Indonesia's Sinar Mas (SMMA.JK), which plans to restart the
long-idled facility to meet rising demand from the textile
The Sinar Mas unit, Paper Excellence, said on Monday it
plans to invest C$200 million ($206 million) to convert the
former kraft pulp and paper facility to make dissolving pulp,
which is used in the production of a variety of products,
Other financial terms were not disclosed.
Paper Excellence has been expanding rapidly in Canada,
having last year purchased an idled pulp mill in British
Columbia as well as the long-struggling Howe Sound pulp and
newsprint operation in British Columbia from Canfor (CFP.TO)
and Japan's Oji Paper (3861.T).
The company has owned a pulp mill in Meadow Lake,
Saskatchewan, since 2007.
The deal is the latest to highlight the increasing demand
for dissolving pulp, which is a chemically refined, bleached
pulp that is composed of pure cellulose fibers and made by only
a small number of mills around the world.
Fortress Paper (FTP.TO) purchased a mill in Quebec last
year to convert it to make dissolving pulp, and Chinese textile
giant Fulida Group agreed last month to purchase an existing
facility at Port Alice, British Columbia.
The Prince Albert deal is contingent on Paper Excellence
reaching a labor agreement with mill's unionized workers, but
the Communications, Energy and Paperworkers union issued a
press release praising the purchase. The mill has been idled
since 2006, but the union said the deal would "preserve" about
The Saskatchewan government has agreed to allocate wood
fiber to the mill and the province's SaskPower utility will
purchase surplus electricity to be produced from a biomass
generator at the mill.
The province also help fund employee training.
Weyerhaeuser Corp closed the mill in 2006 after it was
unable to find a buyer. Domtar, which took control of the site
in 2007, has removed the plant's papermaking equipment and was
looking a demolishing the rest of it.
(Reporting Allan Dowd, editing by Peter Galloway)