Natural Resources
January 26, 2007

Province Encourages Abitibi to Work Collaboratively to Find Efficiencies

The Provincial Government is encouraging Abitibi Consolidated to work cooperatively with its union and management employees to find efficiencies within the existing Grand Falls-Windsor operation.

"The company wants to significantly reduce its costs per metric tonne through operational efficiencies to make the company profitable and we all understand the need for them to maintain a profitable mill," said the Honourable Kathy Dunderdale, Minister of Natural Resources. "At the same time, we expect them to find these efficiencies in a proactive and cooperative way and to only implement the measures identified in that collaborative process."

The company outlined its intention to government and its employees this week to develop a strategic plan for its Central Newfoundland operation that will increase the mill�s annual profitability by $10 million. The company wants a plan developed to achieve these efficiencies within 45 days, with the cost-saving measures implemented within the next few months.

"The union believes these savings can be found and is pledging to work with Abitibi on ways to return the mill to profitability," Minister Dunderdale said. "We are encouraged by this approach and we expect the company to implement the options brought forward in this process."

Government has worked with Abitibi on its energy and wood costs, which has resulted in the Grand Falls-Windsor mill having some of the best energy costs of its mills in North America and very competitive wood costs that are on average with its other operations.

The financial position of the Grand Falls-Windsor operation is enhanced by revenues it receives from the sale of hydro electricity to Newfoundland and Labrador Hydro at a rate higher than the industrial rate at which it purchases power for the mill. Government has also covered the portion of the historical balance in Newfoundland and Labrador Hydro�s Rate Stabilization Plan (RSP) relating to the loss of a large industrial customer, the Abitibi mill in Stephenville. This was done to ensure the operations of the remaining industrial customers were not adversely affected by having to pay the historical costs related to energy they did not use, resulting in a decrease to industrial customers of 18 per cent this year.

"Government has clearly demonstrated its commitment to this mill in assisting Abitibi to become more competitive in the market place and we now expect the company to work cooperatively with its management and union employees to achieve these efficiencies from the existing operations," the minister said.

The minister reiterated that government will immediately invoke Bill 27, which will strip the company of its timber licences covered by the legislation, if Abitibi closes its Number 7 paper machine in Grand Falls-Windsor prior to 2010.


Media contact:
Tracy Barron
Director of Communications
Department of Natural Resources
709-729-5282, 690-1703

2007 01 26                                              1:20 p.m.

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