Low loonie a boost for Corner Brook newsprint mill

The low Canadian dollar is providing a boost for Corner Brook Pulp and Paper, but its parent companysays profits are not soaring.

KrugerInc. vice-president Daniel Archambault saidnewsprint is sold in U.S. dollars, so the weak loonie is positive for exporters like newsprintcompanies.

There will always be newsprint consumed in the world for many, manyyears to come there'll be less but there'll be some.- DanielArchambault

"The Canadian dollar is right now a positive factor for us. However,it does not really resolve the structural issue of the newsprint market,"Archambaulttold CBC's Corner Brook Morning Show.

Hesaidthatdemand for newsprint dropped by more than 12 per cent on world markets last year, whichforced prices down, wiping out the exchange rate advantage.

"At the end of 2015, our revenue in Canadian dollarswere about the same that they were when the dollar was at parity, because the price went down drastically while the exchange went on the rightside," said Archambault.

"So that's what we're facing. It's a challenging market."

Archambault said theprice will eventuallystabilize but the low dollar does give the mill some breathing room.

Corner Brook Pulp and Paper's primary markets are in the U.S. and South America, with other product sold to India and elsewhere around the globe.

Archambault said continuing to producea high-quality productthat newspapers wantand reducing manufacturingcosts are both key to remaining competitive.

"So when we sell atonneof newsprint on the worldmarket, you know, we have a positive margin on the end."

Oilimpact

Archambaultsaid the low cost of oil has also had a positive impact.

The companiesshipping costs arelower, and itsmachineryusesdiesel, which also lowers thewood costs.

Mill operation costs, however, remain the same.

"The mill, as its day to day operation, other than for its moving equipment doesn't use any bunker, we're generating oursteam from bio-mass and a bit of recycled oil that we buyon the marketthe low price of oildoesn't have really an impact on the mill itself," he said.

Long-term plan

To keep the Corner Brook mill competitive, Archambaultsaid they willkeep the mill producing newsprint while trying to increase the value they offer to their customers.

He said this mill has an advantage because of the integration with Deer Lake Power, which according to the company, produces almost 75 per cent of the mill's power requirements.

There will always be newsprint consumed in the world for many, manyyears to come there'll be less but there'll be some.- DanielArchambault

"We've invested, you know, monies and time to improve our quality, have a new grade, new basis weight to meet the market demand and maybe differentiate ourselves from our competition," saidArchambault.

"For example, we'reintroducing a very lightweight sheetthat is an advantage on theprinterbecause it'sgoing togive him a verygood printing quality but it's going toreduce its cost because on theper tonne basis, he's going tohave a lot more yardage of newsprint."

Over the years the mill has had to tighten up its operations and workers have made concessions to keep things going, butArchambault said its employees relations are "moving ahead as they should be".

• Krugerlooking to modify pension payments at Corner Brook mill

Archambaultconcluded thata company that can produce alow cost,high quality productwill stayin business.

"Newsprint, when you look at the technology today is a product of the past, but you know there will always be newsprint consumed in the world for many, manyyears to come there'll be less but there'll be some."