The British Columbia Supreme Court has approved the sale of the former Pope & Talbot pulp mill in Mackenzie to Edmonton-based Worthington Properties. The Court has also upheld the fibre-supply agreement the mill had with Canfor.

Worthington president Dan White is expected to arrive in Mackenzie Friday to meet with former managers and employees of the mothballed mill to discuss a start-up strategy.

Details of the purchase agreement reveal that the fibre-supply agreement, which obligates Canfor to provide 200,000 tonnes of wood chips a year to the pulp mill, is worth more than the pulp mill itself. If PricewaterhouseCoopers exercises an option not to transfer the licence, the $20-million purchase price for the pulp mill is reduced by $13.5 million to $6.5 million. If Worthington chooses an option not to accept it, the purchase price is reduced to $7.5 million, giving the fibre-supply agreement a value of $12.5 million.

Canfor owns a sawmill adjacent to the pulp mill and the two operations thrived from the symbiotic relationship during better times in the forest industry. A conveyor belt transferred the wood chips, residue from the sawmilling process, to the adjacent pulp mill.

However, the collapse of lumber prices prompted Canfor to shut the sawmill down. It argued in court that its consent is required for the fibre-supply agreement to be transferred to a new owner. Justice Brenner rejected that argument, saying details in the agreement don't support Canfor's view.

After today's ruling, a lawyer representing Canfor said that the company may appeal the decision. It has until Sept. 2 to decide.

If the Mackenzie pulp mill can not get wood chips from Canfor, it will have to find another fibre source, or bring in a whole-log chipper to produce its own wood chips. Either option would add significantly to the mill's operating costs. Canfor currently receives about $17 million a year for its chips. Whole-log chipping would add about $13 million a year to fibre costs for a total cost to Worthington of $30 million a year to replace Canfor's wood chips.

270 people were employed at the mill before it closed on June 11th.

Read more:
Supreme Court clears obstacles to Mackenzie pulp mill start-up (Vancouver Sun)
Sale Approval Positive But Mayor Cautious (Opinion250)