Asians Target North American Pulp Mills

Implications:  The past decade saw 9 US & Canadian pulp mills shut down...a total of 2.5 million mt/year as being unable to operate profitably.

Government and labor's significant concessions have made it viable for foreign companies to restart these mills.  These concessions were not available to the previous owners but now have become palatable.

Two pulp mills have already been purchased and now two more appear ready to be acquired by a Chinese and an Indonesian company.

Using this same formula it is very likely that more shut mills may be purchased by Asians and restarted.

Analysis: In 2005 and 2006 China's large boxboard container company, Lee and Mann purchased the 210,000 mt/year unbleached softwood pulp mill in Somoa, CA.  All the production was shipped back to China.   The Sun Wave Corp. a div. of the PRC, purchased the 1500mt/day Prince Rupert, BC mill (NBSK).  The smaller of the two dryer lines was immediately dismantled and shipped back to China.
This mill became economically because the B.C.Province forgave all unpaid back taxes and forgave all taxes for 5 years hense.  The Union, which had formerly been quite strident, agreed to a rumored 30% reduction in wages.  With these concessions, plus a guaranteed market (China) the mill became viable.
Now, in 2007 Lee & Mann appear to be on the verge of acquiring the shut Weyerhaeuser dissolving pulp mill at Cosmopolis (170,000mt/year).  The mill was scheduled for dismantling until Lee and Mann appeared.  China has an ongoing appetite for rayon-grade dissolving pulp.
The latest is Asia Pulp & Paper's announcement that it intends to acquire MeadowLake Pulp company in Saskatchewan which had been operating in bankruptcy by the Provincial Government.  The announced purchase price was only CAN$37 billion even though the Government had invested more than CAN$875 million in this mill.
APP will be acquiring this modern, 15 year old mill, for only 5 cents on the dollar!
There is at least one other Canadian mill who is an excellent candidate for takeover by a Asian company and it would only seem a matter of time before it happens.