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Kamloops mayor expresses confidence in Domtar, Paper Excellence

While the merger of Domtar and Paper Excellence has been approved by the Competition Bureau of Canada, part of the approval means the Kamloops pulp mill must be sold to a third party
Domtar pulp mill
The Domtar pulp mill is on Mission Flats Road in Kamloops.

Kamloops Mayor Ken Christian said he will be waiting to see who buys the pulp mill, which will not occur until 2022.

While the merger of Domtar and Paper Excellence has been approved by the Competition Bureau of Canada, part of the approval means the Kamloops pulp mill must be sold to a third party.

On May 11, 2021, Paper Excellence and Domtar, based in Montreal and Fort Mill, S.C., reached an agreement for Richmond-based Paper Excellence to purchase Domtar for $55.50 per share, a deal worth about $3 billion in United States currency.

“I had every confidence in Domtar,” Christian said,

“I had confidence in Paper Excellence and now we’ll see who the new buyer is and, once we have that established, I want to meet with them because there is a number of initiatives that we have ongoing with the Domtar management team and we want to make sure that those will continue.”

Christian noted “land initiatives,” about which he could not speak, but also mill improvements and changes to the city’s property tax formula. The mill pays about $5 million per year in property taxes, without which Christian equated to about a four per cent tax increase for every home in the city.

“One of the things that we’ve been talking to them a lot, and we’ve been working with them to lobby the government on, is chip supply,” he said. “We’ve also been working with them on a lot of their climate and environmental initiatives and we’ve been working with them on some of their energy initiatives. I’m confident that it’s probably a good buy for someone who is looking for a pulp mill. It’s well run and they have a very stable kind of workforce. I think it would be pretty sought after.”

The Competition Bureau of Canada has concluded that the merger would likely lessen competition substantially for the purchase of wood fibre — a key input in the manufacture of pulp — from the Thompson/Okanagan region.

As a result, the bureau has determined the proposed transaction is anti-competitive because it would enable Paper Excellence to pay lower than competitive prices to sawmills and other suppliers of wood fibre in a region where Paper Excellence already has a high concentration of pulp mills.

To resolve the bureau's concerns, Paper Excellence has agreed to sell Domtar's Kamloops pulp mill following its acquisition.

The bureau said the sale will be made to an independent purchaser to be approved by the Commissioner of Competition.

The pulp mill on Mission Flats Road is one of the city’s largest employers, with about 350 employees,