Resolute Forest to cut 300 jobs from Ontario, Quebec newsprint operations

The corporate logo of Resolute Forest Products is shown (THE CANADIAN PRESS)

MONTREAL -- Resolute Forest Products is closing a newsprint mill in Ontario and permanently idling paper machines at two Quebec mills as it sheds 300 jobs.

The biggest impact will be at a mill in Iroquois Falls, Ont., which employs 180 people and will close permanently on Dec. 22. The other 120 jobs are affected by the permanent closures of paper-making machines in Baie-Comeau and Clermont, Que.

The cuts will reduce Resolute's capacity for making newsprint by 465,000 tonnes as the company struggles with reduced demand, higher costs and the negative impact of campaigns by environmental groups.

The century-old Iroquois Falls mill serves the North American market which faced an 8.3 per cent demand decline last year, equivalent to 300,000 tonnes of production. Global demand has fallen seven per cent or two million tonnes, but has accelerated in recent months.

"In the last couple of years we invested $20 million in effort to improve its competitiveness and its quality, but with this decline in the market it was one of the sites that was most vulnerable," said company spokesman Seth Kursman on Friday.

He said the falling Canadian dollar has helped, but the mill is less competitive than others in Canada and the southern U.S. that have port access for shipments abroad.

Resolute (TSX:RFP) said its challenges were exacerbated by provincial forest plans that increased costs by up to 30 per cent and made it tougher to access fibre. In Quebec, higher electricity costs and the spruce budworm infestation were also factors in the decision.

CEO Richard Garneau also cited the impact of "the ill-founded attacks" by environmental activist groups and their "deceptive" campaigning.

Kursman said the threats and intimidation against customers is having a domino effect on operations and communities.

Greenpeace recently singled out electronics retailer Best Buy, alleging that it is "fuelling destruction in Canada's Boreal Forest" by sourcing paper for its weekly advertising flyers.

"The Greenpeace campaign has had an impact and it is impacting people's livelihoods, it is impacting community well-being and the behaviour is absolutely unconscionable," he said.

Nicolas Mainville, Quebec director of the environmental group, said Resolute should change its practices instead of pointing fingers.

"For us it's extremely troubling to see that instead of investing on the ground and to achieve a better environmental performance, Resolute prefers to invest in lobbying and propaganda to try to obtain a better image," he said.

Mainville said Resolute has lost three FSC certifications, an internationally recognized recognition of good forest practices, and has done nothing to regain them.

Resolute owns or operates nearly 40 pulp and paper mills and wood products facilities in the United States, Canada and South Korea, and power generation assets in Canada.

On the Toronto Stock Exchange, its shares gained 2.9 per cent or 55 cents to $19.39 on Friday.