Pulp News

Dryden and Domtar talk about a way to keep the factory viable

Management at Domtar's pulp mill in Dryden, Ontario, asked city councillors to review how much property taxes it pays, to try and keep the mill competitive on a cost per ton of pulp basis

Dryden city council will sit down with Domtar officials in the coming weeks to see if there is “meaningful discussion” to be had, which could lower some of the operating costs of the northwestern Ontario pulp mill.

Mill manager Marie Cyr wrote city council in October asking for a meeting to discuss a review of the industrial taxes paid by the mill.

The review of taxes and the mill’s competitiveness is part of an agreement signed in 2016 by Domtar and city council. The purpose is to try and keep the mill at a cost structure similar to other Domtar operations across the country.

“Part of that agreement was to work with Domtar going forward and consider ways to build the mill’s competitiveness,” said Coun. Norm Bush, who is also the chair of the city’s finance committee.

“Now, we didn’t commit to lowering taxes further, but we did commit to consider ways to further improve their competitiveness.”

Bush said from the information the city has received the Dryden mill has one of the highest cost structures on a per ton of pulp produced basis.

Domtar also has a pulp and paper mill, along with a biomass plant, in Espanola.

“Domtar is the city’s largest employer,” said Bush. The mill employs about 360 people.

“As a council, we recognize it does behoove us to sit down and listen to what they have to say, and if the city can contribute in a meaningful way to the economic viability of the mill then certainly we need to consider that.”

The company and city came to an agreement in 2016 on the taxes the mill would pay to the city; however, financial issues in Dryden for the past few years meant the city was unable to be in a financial position to reduce the mill’s costs, Bush said.

In 2020, of the $14.1M collected in property taxes, about $2M of that was from the mill. Previously, the levy was much higher when its two paper machines were working at full production.

Bush said Domtar’s business had changed due to COVID-19, along with leadership changes in the City of Dryden, which prompted the company to write council, requesting a meeting.

Bush said it was important to work with the company, pointing to the closures of mills in Kenora, Fort Frances, Red Rock and Marathon as examples of high cost operations that were eventually shuttered and demolished.

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