Domtar secures critical agreement to restart Howe Sound pulp operations

A strategic lifeline for British Columbia's pulp sector

After a period of intense uncertainty and an indefinite curtailment earlier this year, Domtar is preparing to restart its Howe Sound Pulp and Paper mill in Port Mellon, British Columbia. The breakthrough comes following a targeted agreement in principle brokered between the provincial government and the company, marking a rare moment of stabilization for a regional forestry sector that has faced severe structural headwinds throughout 2026.

The restart of the facility, which directly employs approximately 400 workers, now hinges on the ratification of a new collective agreement by members of Unifor Local 1119. The initial shutdown was driven by a perfect storm of market pressures: a sharp drop in global pulp demand, depressed pricing, and a chronic shortage of economically viable wood fibre in the region.

Negotiating fibre access and energy parity

The provincial government's intervention highlights the critical economic footprint of the Howe Sound facility. To break the deadlock, British Columbia appointed veteran negotiators Don Wright and Don Kayne to work directly with Domtar's leadership. The core of the negotiations centered on structural viability rather than short-term subsidies.

According to industry sources, Domtar's requirements for a sustainable restart included steadier and more cost-effective access to British Columbia wood fibre, a streamlining of regulatory burdens, and crucial adjustments to electricity pricing. Specifically, the company sought energy rates for its cogeneration plant that would put it on par with other Canadian biomass producers. In exchange, the province secured job guarantees and a commitment to keep the facility operational, alongside a broader pledge to review the industry's framework if global pulp prices fail to recover.

Stemming the loss of NBSK capacity

The successful negotiation at Howe Sound is particularly significant when viewed against the broader landscape of the Pacific Northwest's pulp industry. The region has suffered severe capacity contractions recently. Domtar's own Crofton mill faced permanent closure late last year, eliminating 350 jobs, while Canfor's Northwood mill in Prince George followed suit, cutting another 300 positions. Combined, these permanent closures erased roughly 680,000 tonnes of annual northern bleached softwood kraft (NBSK) pulp capacity from the global market.

By securing the future of the Port Mellon site, Domtar not only preserves its operational footprint in Western Canada but also maintains a vital supply node for high-quality kraft pulp, which remains essential for packaging and specialty paper grades globally.

• Employment impact: Secures approximately 400 direct union jobs on the Sunshine Coast.
• Market capacity: Prevents further erosion of Canada's NBSK pulp market share.
• Energy integration: Highlights the growing importance of competitive biomass cogeneration in mill economics.

The Truck Loggers Association has also welcomed the development, noting that the mill's operation is fundamental to moving away from the boom-and-bust cycles that have historically plagued the coastal forest economy.

The collaborative rescue of Howe Sound proves that targeted government-industry partnerships can effectively stabilize critical pulp assets against volatile market cycles. Will this framework serve as a blueprint to save other vulnerable mills in the Pacific Northwest, or is it merely a temporary fix for deeper structural fibre shortages? Follow The Paper for daily news, market signals and key updates from the global paper, corrugated and packaging industry. — Sigue toda la actualidad del sector en www.thepaper.ai