Media Releases


CIC SELLS SASKFOR MACMILLAN INVESTMENT; CONSTRUCTION OF HUDSON BAY OSB MILL TO BEGIN IMMEDIATELY

May 14, 1999

Deputy Premier and Crown Investments Corporation Minister Dwain Lingenfelter and Craig Neeser, Senior Vice-President of MacMillan Bloedel Ltd., announced today that MacMillan Bloedel will purchase Saskatchewan's 50 per cent interest in Saskfor MacMillan for $80 million and that it will immediately begin construction of a $180 million oriented strand board (OSB) mill in Hudson Bay.

"These two announcements are very good news for Saskatchewan's economy and for the future of our forest industry," Lingenfelter said. "The sale of our investment will bring a significant financial gain to the province, while MacMillan Bloedel's commitment to build a new OSB mill will increase economic activity and create hundreds of jobs for people in the Hudson Bay area."

The OSB project will create 150 jobs at the mill, 300 woodland jobs and 300 jobs during peak construction. In addition, it is anticipated that hundreds of indirect jobs will be created as a result of this new development. The mill will be located four kilometres south of Hudson Bay. It will have the capacity to produce 570 million square feet of 3/8 inch OSB annually. The consistency and quality of OSB is making it a popular replacement for plywood in North America.

MacMillan Bloedel will continue to operate the three mills that had been owned by Saskfor MacMillan a plywood mill and an OSB mill in Hudson Bay and a sawmill at Carrot River. They employ about 400 people and provide another 250 woodland jobs.

"Our partnership with MacMillan Bloedel over the past four years has been very rewarding," Lingenfelter said. "Our three mills have provided hundreds of jobs for local people and numerous spinoffs for local businesses. The partnership has also been profitable, returning $8.2 million in dividends to the province. The sale of our interest will result in a gain of about $30 million and the repayment in full of an $11.7 million loan."

Saskfor MacMillan was formed in 1995 as an equal partnership between the Province of Saskatchewan and MacMillan Bloedel Ltd. Each party contributed $50 million in equity, with Saskatchewan's contribution coming from the assets of the former Saskatchewan Forest Products Corporation.

"We have had an excellent relationship with the Province and the people of Saskatchewan and we hope to continue it through our commitment to the existing mills and the new OSB mill," Neeser said. "We are particularly excited about the prospects for our new state-of-the-art mill. The fibre resource in the area is among the best on the continent and there's a huge untapped market for the quality products we will produce. We believe we will have a long and rewarding future with the people of Hudson Bay and area."

The new mill and associated forest operations as outlined in the company's 20-year forest management plan were both subject to the province's Environmental Impact Assessment process.

As well, an integrated land use plan with full public and stakeholder involvement was completed by government last summer.

"This new OSB mill is an exciting example of how we will be doing more manufacturing in Saskatchewan by applying technology and innovation to create marketable products," Economic and Co-operative Development Minister Janice MacKinnon said. "We are making better and smarter use of our forestry resource to create jobs and opportunities while still preserving our precious forests."

The OSB project is part of $850 million of private sector investment in the forest industry in Saskatchewan that will result in the creation of as many as 10,000 direct and indirect jobs over the next three years. Additional jobs are expected in manufacturing, agro-forestry and research and development.

"We are pleased and proud that MacMillan Bloedel's new OSB mill will be part of the major expansion that is occurring in our forest industry," Lingenfelter said. "The benefits will be enormous, not only to the people and businesses of northern Saskatchewan, but to the economy of the entire province."

Construction of the new OSB mill will take about 14 months. Commercial production is expected to begin in August, 2000.

-30-

Karen Schmidt
Crown Investments Corporation
Regina
Phone: (306) 787-5889

Steve Mitchell
MacMillan Bloedel Ltd.
Vancouver
Phone: (604) 661-8651