Celgar responds to court decision; confirms grant money
By Kyra Hoggan
Celgar manager Al Hitzroth confirmed today that the mill he manages here in Castlegar has gotten the green light for $57.8 million in federal grant money through a program intended to help level the playing field after the U.S. announced $8 billion in black liquor subsidies for American pulp mills.
Unlike the U.S. program, which allows mills to use the money as general revenue, the Canadian program requires the funds to be spent on capital projects furthering environmental stewardship goals.
Hitzroth said the Canadian grant program expires in March of 2012 – and it could take that long to realize some of the funding.
“You have to submit projects to get the funding, and there’s a process after that,” he said. “Having said that, our green energy project (involving trapping waste steam to generate power, which will then be sold to the grid) has already been submitted and undergone an environmental impact assessment, so we’re hoping that, for that project, we’ll see funding as early as November.”
Celgar is hoping to use $40 million of the full $57.8 million for its green energy project.
“What it (the full grant) enables us to do is some other projects that were on the books – we can bring them forward now,” he explained. “In the long run, it should make us more competitive.”
He said the green energy project is still a good eight or nine months from coming on line … and then, only if the federal funding is received in November, as anticipated.
When asked whether the almost-$60-million in tax-generated grant money would make Celgar paying its outstanding $3.6-million municipal tax bill more palatable, Hitzroth demurred.
“No – it’s a different issue,” he said. “There’s no connection between them – it’s really two separate issues.”
He said a recent B.C. Supreme Court ruling in a similar case between Catalyst Paper and the City of North Cowichan, in which the court upheld the city’s position and ordered Catalyst to pay the city’s costs, hasn’t altered Celgar’s decision.
“It doesn’t have any bearing on our case – the issue is still the issue,” he said, adding he doesn’t see it as cut-and-dried proof of where the court will land in the Castlegar/Celgar dispute, despite marked similarities between the two cases.
“I don’t want to suggest that it will (foreshadow any upcoming ruling). It might. I don’t know. The bottom line is, we still need the tax system to change.”
He explained Celgar’s desire is to remain competitive with U.S. companies that are able to take black liquor subsidies and use them in any way they choose – including to offset costs – while still enjoying lower municipal tax rates.
“We need to be competitive across the board,” he said.
And, while he said some of the projects being funded by federal grant money may ultimately see profits or cost-savings for Celgar, those benefits are months, if not years, from becoming a reality.
