The Eurocan pulp and paper mill in Kitimat will close permanently January 31, parent company West Fraser announced on Wednesday, October 28.

After many years of ongoing efforts to reduce operating costs and improve results, the company handed down the decision last week.

“We deeply regret the impact the mill closure will have on our 535 employees, their families and the community,” said Hank Ketcham, West Fraser’s chairman, president and CEO in a news release.

“We will ensure those who are affected are treated with fairness and respect.”

The mill is Kitimat’s second largest employer.

The 40-year-old mill produces 450,000 tonnes of linerboard and kraft paper annually, about two per cent of Canada’s total paper production. About 75 per cent of Eurocan’s paper product is linerboard, a component of corrugated cardboard boxes, while the remainder is kraft paper.

West Fraser said Eurocan has seen product prices drop by about 40 per cent since December 2008. A number of factors were cited, including the global economic slowdown, the rise of the Canadian dollar and competition from low-cost foreign paper producers.

The company pointed out that while residual wood chips produced by the region’s sawmills have traditionally provided low-cost fibre to the mill, recent sawmill shutdowns meant that 20 per cent of Eurocan’s fibre needs have been met with more expensive whole log chips.

On currency, West Fraser said mill revenues are extremely sensitive to the Canadian dollar, with every penny increase reducing revenues by $3 million annually.

“A deep and thorough review by the company looked at ways to offset the steep decline in Eurocan’s financial results,” said Ketcham.

“Unfortunately, even with the most optimistic projections the business fundamentals of the operation have deteriorated to the point where permanent closure is the only reasonable alternative.”