WEST FRASER announced today that it will permanently close the Eurocan paper mill in Kitimat.

The closure is expected to take place on January 31, 2010 leaving 535 employees out of work.

A press release sent out earlier this afternoon from West Fraser states that after many years of ongoing efforts to reduce operating costs and improve results at Eurocan the company will permanently close the unprofitable operation.

“We deeply regret the impact the mill closure will have on our 535 employees, their families and the community and we will ensure those who are affected are treated with fairness and respect,” said Hank Ketcham, West Fraser’s Chairman, President and CEO.

Skeena NDP MLA Robin Austin is devastated with the news and hopes to make contact with forest minister Pat Bell, mayor of Terrace, Dave Pernarowski, and mayor of Kitimat, Joanne Monaghan, to see what can be done.

"It's not just the individuals but the families of those who lost their job...and it's not really 535 jobs that are directly affected, there's Excel trucking...and what's left of West Fraser saw mill chipping logs in Terrace," says Austin.

Austin says he's fearful of what this means for the northwest's economy, as the loss of these high paid jobs will have a ripple effect throughout the region.

The mill is 40 years old and produces linerboard and kraft paper.

It has historically struggled with high costs and negative returns.

West Fraser also notes that a contributing factor to the mill’s problems in recent years has been sawmill curtailments in the region, which have decreased the supply of lower-cost unused wood chips to Eurocan and increased the mill’s reliance on more expensive whole log chips.

Also, since December of 2008 Eurocan has experienced a drop of approximately 40 per cent in the net selling price of its products.

West Fraser will record an asset impairment charge in the third quarter of 2009 of $138 million related to the property plant and equipment and certain other assets at the Kitimat facility. In addition, West Fraser will incur costs over the next several quarters related to the shutdown of the facility. The total of these costs is estimated to be approximately $70 million.