BUSINESS

Wednesday, November 28, 1990

The eaetiewsr Sun

Page. 5B

Pulpmakers

By NANCY LINGLEY

became In fact, the

Sun Editor

Pulp mills, much maligned for
the penetrating odor and suspect
discharges they produce, were
actively recovering and reusing
materials long before recy

business of a pulp mill is to pro-
duce a much sought-after com-
modity from what was, and in
some cases still is, burned as
wasfe in another sector of the for-
est industry.
‘The

ae

Cok oe :

Y Pi

Located in
“Towne Square Ma
| Downtown Trail

evel more than chips |

of reduce, reuse, and recycle is
inherent in the process of produc-

ing pulp. Chemicals used in the -

cooking process are recovered
and reused; steam created in the
evaporators is condensed and

sawlog to make a cant, the squared
log that is milled into boards,
“Chips make up approximately
one-third of the useable wood in a
sawlog,’ said Jack Dunn, a retired

). “Io a

fibers together must bet d.

Kraft pulping is a chemical pro-

cess that cooks wood chips in | a
lution of sodium hy

(caustic soda) and sodium sulfide

to dissolve the lignin, hee

reused in the w ig P
other steam needed for processing
is produced by buming “hog fuel
(sawdust and bark).

“The whole process is a very
efficient process,” stated Eric
Ross, production manager at the
Celgar Pulp Company.

The product itself, high quality
kraft pulp (kraft is German for
strong), is made from wood chips,
{Wood chips that come from logs
‘that are not suitable for lumber
production or wood chips that
come from the slabs cut from a

Celgar employee who now puts 2
hours the
Modemization Info Office, “It we
quite a boost to the sawmills when
they found they could be used. For
a lot of mills, chips are no longer a
by-product. Without selling chips,
a lot of sawmills would no longer
be in business,’

Pulp is a mixture of individual
wood fibers that is used as the
basis for making paper and paper
products. Pulping is the process
by which the fibers are separated.
To separate the fibers, lignin, or
the natural ‘glue’ that holds the

Is are re na
recovery furnace after the ea hing
stage and the lignin is bumed to
produce steam and electricity.

But all is not sunshine and
roses in the pulping industry.

To produce top-quality Celstar
bleached kraft, the pulp must be
lightened to remove the natural
brownish color of wood fibre and
provide the bright white pulp that
is demanded by papermakers. To
do this, the pulp is bleached in a
five-step process that uses chlo-
rine, caustic soda, oxygen, and
chlorine dioxide. The residual
the first two stages

~ Gonurati

SZ

The Cast legar Sun

AIS

WY

on the opening of their
weekly newspaper.
We are proud to have

Ww

ales

is then discharged as an effluent
into the Columbia River. While

variance is an extension of time to
meet permit limits, The limits
don't change, the time to get there
is extended. In the interim, the
company is obligated to operate
as efficiently as possible while
undertaking phased upgrading.”
‘The five-year variance for air

. quality granted to Celgar runs out

this coming June. A ten-year vari-
ance issued for effluent is ‘good
until June, 1996.

To meet the permit limits,
Celgar is prepared to undertake an
estimated $630 million project
that will modernize as well as
expand the mill. The cost of the
project will be offset by the
expansion which will'see the
daily production of the mill
increase from 550 tonnes of pulp
produced per day to 1,200 tonnes
perday. “The new mill will use
basically the same Process with

ging the :
in the recovery boiler the smell of
rotten eggs caused by sulfides’ is
released into the atmosphere.

‘At this time the Celgar Pulp
Company is not operating within
its discharge permit limits. Two
variances on those permits were
issued to the company by the
Minister of the Environment in

“Due to economic ‘problems,

’ the company applied to the
_ Minister for the variances,”

explained Jim McLaren, regional
di “of. Envir 1
Protection (formerly Waste

Ross.

A gentler cooking process that
will remove more lignin without

destroying fiber strength will be. .

employed.

“The net result of improved
cooking and an oxygen deligni-
fication stage is that the amount
of residual lignin to be removed
in the bleach process will be half
of what it is now, and that will
reduce the use of chlorine,” said
Ross.

See PULP MAKING 5B

‘Why would anybody want on
investment that loses money? “So
you can deduct the loss and get a
tax break, of course,” comes the
Teply.

But wouldn't an investment
that shows a profit be a better
choice? “no,” you say, “because
then I'd have to pay tax.”

Sorry, I can’t always agree
with that logic.

Money-losing investments are
particular popular around this time
each year, The tax shelter promo-
tions are beginning to appear as
the Dec. 31 deadline approaches.
Tax'shelters often gencrate tax
savings because they loce money -
at least initially and sometimes,
unfortunately, forever.

Let’s compare two identical
investments; assume you are in
the 45-per cent tax bracket

Investment “A” loses
$1,000 - that is, expenses exceed-
ed income during the year by
$1,000. “Great,” you say, as you
deduct the loss from your other
income. “That will save me $450
in tax.”

True, but the tax break only
reduces your loss by $450. You
are still out of pocket $550.

Investment “B" produces a
$1,000 profit. Sure, you pay $450
tax - but at least you still have
$550 in, your pocket. so you are
$1,100 better off than being $550

“out of. pocket.
- You should consider an invest-
ment that loses money only if you

expect the value of the investment

"your access to the capital ‘salna ;
exemption, Let!s say you have

run up a $5,000
your rental ‘property. Now, jad
sell some stocks and make a
$10,000 profit.

, Instead of declaring a $7,500
taxable capital gain (75 pet cent
of the actual si 000 capital gain)
and capital

to increase more (after tax) than
*the cash flow losses you are expe-
riencing.

Typically, rental income might
not cover rental expenses. But
over the long term, you hope the
property itself will go up in value
and produce an after-tax profit
much higher than the total after-
tax rental income losses.

Since Jan. 01, 1988, however,
‘money-losing investments face
another problem:, CNIL (cumula-
tive net investments loss).

If your investment expenses
have exceeded your investment
income since that date, you have
been building up a CNIL balance.
(You should have been complet-
ing Form T936 to monitor your
CNIL.

Ask Revenue Canada for -

its Capital Gains Tax Guide,
which includes this form.)
A CNIL balance will restrict

gains ; exemption (assuming you
haven’t used it up), you will in
effect have to.declare and pay tax
on you $5,000-CNIL balance and
can claim your exemption for
only $2,500 of the taxable capital
gain.

Tax shelters often produce sig-
nificant losses, which io turn
build up your CNIL, That's only
one potential problem.

Most tax shelter calculations
assume you are in the top tax
bracket. But never. let. the
prospect of saving tax now tempt
you into an investment that in the

_ long run will leave you in the red.

Answer this-key question:
What will your bottom line be 10
years from now?

Add up your p d after-

‘Tax shelters. require advice: from an expert.

4Do you understand the invest-
ment? Would you make the
investment:if there were no tax
breaks? In other words, is the
underlying investment a sound
one?

+A tax break is usually offered
because of the risk. Can you
accept the risk? Can you afford to
lose the rest of your investment? -

+How reputable are the pro-
moters and managers of the tax
shelter? What is their track record
with previous shelters? ~

-+How - and how much - do the
promoters and managers get paid?
Do they get paid up front, or is
their income tied to the success of
the project?

+What about future cash calls
if the project runs out of money?
After all, a partly finished apart-
ment building won't produce any

Can you

borrow more if you don’t have the
money?

+What about liquidity? Can
you sell, and to whom - and at
what price? If all the tax benefits
have been taken up front, and

d price quickly

tax costs and look’at your pro-
jected eRe tex return,

* tion, CNIL and the ‘Altevaative

Minimum Tax (AMT) could con-
tribute to a hefty tax bill. Also
answer these questions:

deflates,

Always get expert advice
before you invest in a tax shelter.
And don’t be pressured. Do your

research now, well ahead of the -

year-end deadline,
Copyright 1990

@ Pulp making

Continued from 4B

He added that over the past
four to five years, the amount of
chlorine used in the process had
dropped from 72 kg. per tonne of
pulp to 54 kg. per tonne by a
change made in the process to
use 20 per ceat Ly elo

90 per cent self-sufficient for elec-
trical energy.

However, construction of the
modemization and expansion of'
the mill cannot be undertaken
until approval is given and permits
are issued by the appropriate min-
istries, both provincial and feder-
al.

Sew mil would we 70 t0 79 pet
cent high.

- “Certainly there is
about accumulated chlorinated

dioxide, reducing the use of
chlorine to nine kg. per tonne of

pulp, ae

“And the possibility is there
that within a year or so of start-
up of the new mill that we could
do a 100’per cent substitution
and the chlorine would go to
zero,” he speculated.

“Air quality would improve
drastically, too, noted Ross, “The
smelly TRS, total reduced sul-
fide, would be reduced by 97 per
cent with the new equipment.”

In addition, a turbo generator

in the fish in the river.

- There is concem about the long-

term impact on the food chain.
And the Americans are concemed
about Lake Roosevelt down-
stream,’ said McLaren. “But
because of the size of the river,
there is a lot of dillution. The river
is still of a water quality that
allows it to be used for drinking
water. Warfield and part of Trail

- have traditionally used it for that

urpose and there is no indication
that it shouldn’t be used for that

purpose.
“But there is definitely a need

p d with high p

steam from the new recovery
boiler, will be installed , making
the modemized pulp mill up to

for a cl ip. There’s no dis-
agreement about that. A matter of
how to accomplish that is what the
disagreement is about.”

ORK L(
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End of the line. Pulp grader Steve Miros pulls sheets -
of the finished product from the conveyor to test the
pulp for brightness, weight, and cleanliness.

COTTA or TT

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Congratulations & Good Luck CCERNE

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..replace your old
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ALL THE BEST!

GDUUUEUUUNUUUUE DULL obo ou ue,

WG...

‘SUN STAFF PHOTO/ Raney Lingey

Sure beats shovelling. A load of wood chips emp-
tied the easy way - with the help of a $6 million place ? : :
of equipment. ‘ Ai : ] : to

The Castlesar Sun

We are suppliers of:
, . Reg. or Diet 355ml. Tin
S00 g. Tub Plus Deposit

99.F2*°

Advertised Prices in Effect Sunday, November 25
through Saturday, December 1, 1990

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if We Ran This Ad On TV, This Week's Special}

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Now youd only have 25 seconds, and you woutn' be able lo go back and
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‘426-2775 Fax - - 426-3933

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Mon. to Wed. & Sat. Thursday & Friday
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We reserve the right to Umit sales to retail quantities,

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It's In the bad: Chip truck driver P ‘er Kalesnikott fills!
“ a:bag with sample'chips from. his: load: Each load is.
| sampled and tested for moistu
thickness. : ;

We eeRES

ren Senos —