OPERATIONS

Harmac Pacific personnel have conducted studies for two years to develop a new operating plan for Harmac Pacific Pulp Operations. The capabilities and challenges of the operation have been carefully documented and modeled, from both engineering and financial perspectives. From this work the operating configuration having the best opportunity to provide consistent investment returns, based on modest capital investments, has been determined.

Using this model, Nanaimo Forest Products Ltd restarted the Harmac mill as a single production line and will restart a second production line as soon as practical. In this configuration, the mill will produce 331,000 tonnes of pulp per year.

Equipment Age and Condition 

The Harmac mill was built as three separate production lines, from 1950 to 1963.  More than $230 million has been invested in major process upgrade projects since 1986. Total capital investment over the last 20 years has exceeded $340 million. These substantial capital investments provided the opportunity to develop a production plan based on utilization of the newest assets. The Harmac pulp mill restarted after an initial maintenance expenditure of $4.5 million.

Harmac's largest production line is capable of producing 226,000 tonnes per year of fully bleached kraft pulp based on Douglas fir and hemlock pulps, or 206,000 tonnes per year including high value but lower yield western red cedar pulp. The "technical age" of this production line, based on the history of capital investment, is 18 years. This pulping line is competitive with many other single line pulp mills in this region, producing similar products.

The addition of a second operating line will raise the annual production rate to 331,000 tonnes per year with western red cedar. This operating configuration will provide adequate scale to deliver the required production efficiencies and cost structure.

Future Opportunity

With further discretionary capital investments of $15 million, the production rate of the operation would be increased to 370,000 tonnes per year. The cumulative payback period for this package of projects would be 15 months.