Feb. 21, 2006 - Neenah Paper reportedly is shutting down its remaining pulp operation in Terrace Bay, Ontario, for an indefinite amount of time due to a lack of wood fiber for its operations. The news was reported today by Reuters

The fiber shortage is the result of an ongoing strike by the company's logging division. In late-January, Neenah warned its shareholders that a fiber shortage was imminent and that the mill would run out of fiber. “In the case of an extended woodlands strike, it is expected [by Feb 21] the Terrace Bay mill will not have the fiber necessary for its operation and will shut down,” the Neenah Paper said in a report to the U.S. Securities and Exchange Commission.

According to a report in Ontario's Chronicle Journal, the loggers have been without a mutually-agreeable contract since August and were facing a 6.4 percent pay cut just before Christmas.

Up until last year, Neenah operated two pulp mills at the Terrace Bay site. In March 2005, the company announced that it would permanently close the older No. 1 mill, which was built in 1948. ""Terrace Bay and its woodlands have been identified as one of the highest cost pulp operations in Canada," commented Sean Erwin, CEO of Neenah Paper. "The smaller scale of the No. 1 mill did not justify the investment necessary to compete successfully in today's global pulp market."

The idling down of the second mill, which was built in 1978 and has a capacity of about 345,000 metric tpy of pulp, will affect about 400 workers.

SOURCE: Industry New Reports