Tuesday, May 19, 2009 • Business partners plan to reopen Bieber mill

Publisher’s note: This story originally appeared in the Tuesday, May 19, 2009 edition of the Lassen County Times.

While the massive blades have stopped spinning at a number of sawmills across northeastern California, if all goes according to plan, the sawmill and power plant in Bieber may reopen soon.

A ribbon-cutting ceremony at a new pole mill operated by Lance Forest Products is tentatively scheduled at 9 a.m. Wednesday, May 27. United States Representative Tom McClintock, California Assemblyman Dan Logue and Lassen County Supervisor Brian Dahle are expected to attend.

Art Lance, Jr., one of the principals in Lance Forest Products, said the new pole mill/peeler mill will be a joint project between his company and Big Valley Power. He said BVP owns the site, the biomass power plant and the sawmill.

“The plan is to get the mill in operation,” Lance said.

He said the project could employ as many as 30 to 35 people, which he said was “significant for the area.”

In addition to the five to seven jobs at the pole mill, Lance said there would be additional jobs in the woods, at the mill and power plant as well work for truckers who will haul the logs and chips.

Lance plans to work projects with the U.S. Forest Service and the Bureau of Land Management. The company hopes to work biomass projects that could supply wood chips for the power plant and convert some of the quality trees into higher value posts and poles. He said his company has contacts with treatment companies that could process the poles.

Big Valley Power
Dave Hall, the facility manger and power plant manager, said the power plant currently is not in operation, but he hopes it will reopen soon.

He said the high cost of chips and the low price Pacific Gas and Electric paid for the electricity generated at the plant made it unprofitable.

Hall said the mill closed in July after about a year in operation, and the company is hoping to obtain a loan to “put it back in service.”

He said the pole mill is “a small operation” that will partner with the power plant by creating biomass fuel that can be burned to run the steam turbines that generate electricity while using some logs to creating posts and poles.

 “We need to get all of this facility up and running to make it profitable,” Hall said. “I’ve got high hopes we can get all these problems worked out.”

National Power
Jerry Deroche, one of the mill’s owners, said his company, National Power, owns one-third of the mill. Investors from Australia own the other two-thirds.

He said his company purchased the mill and the power plant in 2004 for an undisclosed amount. In the process, the company inherited nearly $500,000 in back taxes owned to Lassen County. The property recently was slated for sale to satisfy a lien for back taxes.

Deroche said the property came with “a huge tax bill” and the county charged 18 percent annually on the unpaid amount.

On Tuesday, May 5, Deroche asked the Lassen County Board of Supervisors to grant the company an extension on nearly $400,000 in back taxes. The county was prepared to put the property on the market and sell it to collect the back taxes, and the board took no action on Deroche’s request.

Later that week, Lassen County Tax Collector Richard Egan said the property was removed from the tax sale list after the county received $326,097 to settle the bill for most of the unpaid taxes. Egan said the company still owes $20,775 in taxes and penalties in an installment that was due on April 10 this year.

Much of the equipment from the sawmill had been sold at auction before National Power purchased the property.

On the bright side, the company recently negotiated a new contract with PG&E that should help the power plant operate in the black.

The power plant needs about $150,000 in chips to start the power plant, Deroche said. The chip suppliers need to be paid in two weeks, but PG&E takes 60 days to pay for the power the plant generates, creating a cash flow problem.

“We need lots of working capital,” Deroche said.

He said the company could have used the money it spent on back taxes to help get the mill and power plant in operation, creating as many as 70 jobs in the Bieber area.

Supervisor Dahle, who represents the Bieber area in northern Lassen County, said, “I hope they succeed. I hope there’s something I can do to help them.”

While Dahle said he’s very sympathetic to the challenges facing the partners in getting the mill and the power plant up and running, when it comes to taxes, he said, “You’ve got to pay them.”

“We’ve always been underfinanced,” Deroche said. He said the company is looking for other investors and estimated it will take about $1.5 million to purchase planers and kilns to expand the sawmill.