Power generation and export: a new strategy for the survival of the Kamloops pulp mill

This paper presents a new strategy for survival of the Kamloops Cellulose Fibers softwood pulp mill. The mill currently competes exclusively in the North American softwood segment of the global kraft market, and is not generating returns sufficient to cover the cost of capital. The mill?s boilers need replacing or rebuilding in five years and the mill faces a more stringent environmental permit. Pressures on production costs make it increasingly difficult to continue operating profitably. By addressing the mill?s needs with equipment that can generate more electrical power, the mill can compete in a new market ? the independent producer segment of the provincial power generation market. This market is more attractive than the kraft market. This paper will analyze the two different industries as well as the mill, and determine whether the proposed project is financially viable and is thus a valid survival strategy for the Kamloops Cellulose Fibers mill.