The Nippon Paper Industries USA mill in Port Angeles is shown on Thursday. (Keith Thorpe/Peninsula Daily News)

The Nippon Paper Industries USA mill in Port Angeles is shown on Thursday. (Keith Thorpe/Peninsula Daily News)

Nippon paper mill, cogeneration plant in Port Angeles for sale

There is no sign the Ediz Hook facility would close, officials say.

PORT ANGELES — The paper mill that has anchored Ediz Hook for 98 years is for sale.

The Nippon Paper Industries USA plant and the company’s newly built biomass cogeneration plant west of downtown Port Angeles are being marketed for sale by PricewaterhouseCoopers Corporate Finance LLC in southwest British Columbia.

There is no sign the mill, which employed 160 as of June 2015, would be closed, said City Manager Dan McKeen.

PWC Managing Partner Rishi Kapoor invited the Port of Port Angeles to consider purchasing Nippon in a July 25 email to port Executive Director Karen Goschen.

“We are working with our client (Nippon Paper – Japan) on running a formal sale process for the Pulp and Paper Mill & Co-Gen [cogeneration] facility located adjacent to the Port Angeles Harbour,” Kapoor said in the email.

“We wanted to make you aware of our sale process as we believe the Port of Port Angeles may be interested in acquiring this key piece of property as part of our sale process.”

The email included a flier titled “Acquisition Opportunity, Leading producer of lightweight industrial and specialty papers and Co-gen facility.”

According to the flier, $25 million has been spent on the plant since 2012 on capital upgrades and more than $90 million on a biomass cogeneration plant, which was built to produce electricity for sale and steam for the mill.

Previous company estimates had pegged the cost at $85 million.

“The shareholders are evaluating interest from qualified industry and financial participants to acquire and continue operating the paper mill and/or co-gen facility in order to fully exploit the company’s market opportunities,” according to the flier.

Goschen said Thursday the port is not interested in becoming the mill’s new owner.

“What is important is for them to continue operating the site as a mill and a cogeneration plant,” she said.

“That is not something the port can do.

“We are not in the business of operating things like that.”

Kapoor did not return phone and email requests for comment, and mill Manager Steve Johnson would not comment for this story.

The flier did not include a purchase price for the paper mill and property, which is valued at $17 million by the state Department of Revenue.

The valuation is based on income, not acreage, Clallam County Assessor Pam Rushton said Thursday.

“In a complex industry like that, if someone comes to purchase it, they are looking at the income and [would] not be looking at the land, necessarily,” Rushton said.

“The land could or could not be an asset.”

A large section of the land on which Nippon is located is leased from the city, Rushton said.

McKeen said Thursday that Nippon also pays $450,000 a year in electric utility taxes to run one paper machine after shutting one paper machine down in 1986 and another in 2015.

“There has been no rumor or indication of the mill shutting its doors,” McKeen said.

“All we know at this point is that the mill is for sale to operate as a pulp and paper plant.”

McKeen said Thursday the potential sale of the plant will be discussed Tuesday at a prearranged meeting among city and company officials.

They had already planned to discuss the city’s ongoing dispute with the National Park Service, which wants to hand over operation of the Park Service’s Elwha River water intake facility that feeds river water to the plant’s industrial operations.

The Port Angeles mill, built by Isidore Zellerbach in 1920 as Washington Pulp & Paper Co., carried the name Crown Zellerbach for most of its 90 years.

Daishowa Paper of Japan purchased it from James River in 1988.

In 2003, Daishowa merged with Nippon Paper Group and became Nippon Paper Industries USA.

Nippon is the only maker of telephone book paper in the United States.

Hourly workers at the plant are members of Local 155 of the Association of Western Pulp & Paper Workers Union.

Union International Vice President Greg Pallesen did not return a call for comment late Thursday afternoon.

Nippon employed 264 hourly and salaried employees in 2003.

It had 200 employees in 2011, generating a $25 million annual payroll, and 160 as of June 2015.

Company officials have said they have been trying to move away from telephone-book paper by offering other paper products.

In addition, as part of a $1.22 million project, Nippon purchased a new paper-pulping machine in mid-2015 that uses recycled paper.

The cogeneration plant was built to produce “green energy” for sale that is generated by burning biomass material.

But the plant was plagued with operational problems and higher-than-expected construction costs.

Construction ended up costing $20 million more than the original $71 million estimate projected in 2010.

Nippon and FSE Energy, which manufactured the boiler, reached a confidential, out-of-court settlement over the facility’s defective boiler and $17 million in disputed monetary charges.

Port commissioners were made aware that Nippon was being put on the market in an executive session, port Commissioner Connie Beauvais said Thursday.

“Saddened — that was my first reaction, saddened that they were making efforts and that they were trying to move forward,” she said.

“My hope is that a new owner would come in and keep the line open and running and not have to let any employees go.

“At the very least, what the port can do is help welcome a new owner in.”

________

Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 55650, or atpaul.gottlieb@peninsuladailynews.com.

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