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The Ontario Power Authority (OPA) and St. Marys Paper Corporation have signed a 10-year contract for the company to generate clean electricity at a new biomass-fuelled plant to be built next to its existing mill in Sault Ste. Marie.

St. Marys Renewable Energy Corporation will operate the new plant, contracted to supply 30 megawatts (MW) of electricity. About 555 direct and indirect jobs will be associated with the project, which is expected to reach commercial operation by early 2014.

The plant's primary fuel source will be biomass including bark and waste wood. The heat it provides will be used in the mill's industrial processes, and the electricity that is not used by the mill will be sold to the grid.

"We are delighted to announce this contract," said Ontario Power Authority Chief Executive Officer Colin Andersen. "We recognize the strategic importance of this project to the mill and to Sault Ste. Marie, and we are glad we could reach an agreement that works for St. Marys and serves Ontario ratepayer interests."

"We want to thank everyone who has worked so hard on the project design, the application process, and the approval process," stated Dennis Bunnell, CEO of St. Marys Paper Corp. "The efforts expended to this point have been enormous. St. Marys is now in a position to step into the twenty-first century while looking confidently toward the future. We plan to finalize the funding and begin construction in 2011. Everyone involved in St. Marys is excited to be part of the province's renewable energy initiatives."

"Our government has provided loans for St. Marys Paper in order to protect local jobs and revitalize the forestry sector, and this new provincial power agreement makes it possible for the mill to build a biomass co-generation plant, which will provide it with long- term stability and greater job security for its workers," said David Orazietti, MPP for Sault Ste. Marie. "A biomass-fuelled co- generation plant creates a cost-effective energy alternative that can supply the mill with enough power to be self-sustaining and positively impact the environment by decreasing green house gas emissions."

Recognizing the importance of a secure biomass supply to the success of the project, St. Marys has negotiated a commitment of up to 400,000 tonnes of biomass annually from the Algoma and Northshore Crown Forests for the life of the project.

The project will meet all Ontario Ministry of the Environment requirements. The biomass boiler technology chosen for the project, a bubbling fluidized bed boiler, will lower overall emissions. Existing boilers at the mill will be decommissioned, thereby improving emissions per tonne of fuel consumed.

The Ontario Power Authority and St. Marys have been in negotiations since August 2009, working to secure an agreement after the company submitted an initial bid in the OPA's combined heat and power (CHP) III procurement process for projects using renewable energy.

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