$120 million wood pulp mill
proposed near Gallup
New facility would use Navajo, Zuni, Jicarilla timber

ABOVE: The old Carbon Coal Company plant sits vacant, an attraction for graffiti artists and a scattering of bullet holes. BELOW: A peek inside the old Carbon Coal Company plant reveals graffiti, broken skylights and only a small amount of debris. The Navajo Nation is considering a proposal to create a wood chip processing plant at the location north of the Mentmore end of the High Desert Trail, [photos by Jeff Jones / Independent]

By Kathy Helms
Diné Bureau

WINDOW ROCK — A Billings, Mont., firm is proposing to build the largest wood-processing plant in the Southwest at the site of the old Carbon Coal processing site in northwest Gallup, with Navajo, Zuni and the Jicarilla Apache tribes being the major providers of timber.

Herman Hauck, president of the company, and Marlin Johnson of Canada, a forester with the company, in a presentation to the Navajo Nation Resources Committee, said their proposed $120 million project would process about 400,000 tons a year of timber, or 68 truckloads a day, primarily from Navajo and Jicarilla forests, Mount Taylor, Zuni Mountains and national forests.

The major portion of Pioneer Forest Products’ line produced at the mill — shelving, cabinet doors and components — would be put shipped by rail and delivered to ports in California for shipment overseas.

The proposed project is being backed by unnamed venture capitalists from the East, and Pioneer is looking for a 10-year commitment from tribes.

When the proposed mill hits peak operation in about its fifth year, it is projected to have a gross revenue of around $100 million and a payroll of $15 million for its estimated 350 employees.

“That’s rough right now, it’s being fine-tuned a little bit,” Johnson said.

Benefits for the Navajo Nation are sustained annual revenue from timber stumpage, according to Johnson.

“Depending on final amounts and prices negotiated, that could easily be over half a million dollars.” However, the Nation could have opportunity for additional revenue as a stakeholder in the plant.

“A share- or stakeholder status is going to be available to any timber supplier who comes up with a 10-year commitment. We’d like a 10-year commitment because our financiers don’t want to go with a project as big as this if they can’t see that we don’t have timber for at least 10 years to operate this mill.”

Johnson did not say what would happen to the mill after 10 years if the timber supply dwindled. He said Navajos’ timber supply would be only a portion.

“We can’t rely on one source. There isn’t sufficient timber to support our mill.

“You’ve got quite a few pretty large logs, but you’ve got an awful lot of small ones from the data I’ve seen. We’re going to be taking down to 5-inch tops and running it through this mill.”

Pioneer wants the 10-year commitment by August.
“You have to understand that we’re talking about $120 million-plus investment here, and it’s not normal investment money. It’s venture capitalists’ money coming from investors from the East, primarily,” Hauck said.

Johnson added, “I know that’s an ambitious time frame. It’s not quite your normal decision-making, but again, we have a serious concern with the way the overall economy is going, that this roughly $120 million loan from venture capital could go somewhere else if we don’t take advantage of it.”

Selection criteria established by the private investors include a railroad-railhead, a central location to timber, desirable haul distance from the forest to the plant, close to utilities, services and labor source, and that it be built on non-trust land. The project would require 400 to 500 acres for its more than half-a-million square feet of buildings.

“We started looking at timber supply in national forests, private lands, everything from southern Colorado across western New Mexico ... We looked as far west as Holbrook,” Johnson said. “What we came up with for a location that would meet most of our criteria so far is the old Carbon Coal processing plant just northwest of Gallup.

“It’s located very close to a railroad — right on it — it’s located centrally between your Navajo forests and all the timbers in the Zuni Mountains. Between those two areas we’re going to get a large percentage of our supply. We’ll haul a little bit of it from the Gila National Forest or the Jicarilla Tribe, some place like that. But those two are going to be our major source.