Lumber News Archives: July 2012

Lumber News Archives: July 2012

BC Resource Roads ; Madison’s Timber Preview ; Canadian Housing Starts ; Housing Starts, Japan ; Wildfires ; Sawmill Contractor Dies Oregon Timber Drama ; BC Minister of Forests Responds ; Terrace Bay Pulp Sold ; WorkSafeBC Expands Safety Order ; City of Williams Lake Timber Supply Recommendations ; FPB Cites Vancouver Island Firms ; Logger Fatality Not Satisfactorily Restocked ; Madison’s Timber Preview ; Wildfires, Colorado and Yukon ; Oregon Timber Payments Extension ; US Real Estate ; Catalyst Restructuring Approved ; Sawmill Fire BC Mid-Term Timber Supply ; Madison’s Investment Rx ; BC Flood Watch ; US Housing Starts, Home Sales ; Bowater Mersey Closes ; Sawmill Fires ; Sawmill Worker Injured

July 25, 2012

BC Resource Roads

This week the Mid Term Timber Supply Committee continued its tour of the province, spending three days in Vancouver, BC. The Monday to Wednesday sessions were packed with representatives from industry, agencies, groups, and scientists, each using their alloted half an hour to give their take on the issue of British Columbia’s immediate timber supply problems and to answer questions. The wide range of presenters offered a variety of thoughts, philosophies, and ideas. There are two jurisdictions left to go, in Merritt and Vanderhoof, Thursday and Friday, before the Committee meets in Victoria to deliberate. It is tasked with delivering its report on August 15.

After only a few speakers, Madison’s began to notice some themes mentioned repeatedly, uttered at least once by basically everyone. Going back over the Hansard manuscripts, Madison’s searched for three of these particular phrases: over the course of the hearings and meeting held up to the end of Wednesday, “transportation” was mentioned 43 times, “infrastructure” came up 97 times, and “road” was stated 128 times.

Clearly this is a vital issue.

Current Infrastructure and New Legislation

The forest products industry in British Columbia has been undergoing a quantum shift due to a complex set of circumstances. One thing, it seems, that everyone can agree on is that as the reduced supply of available merchantable timber really becomes apparent, the lack of accessibility to formerly unwanted stands is going to be a problem.

Lower volume, non-pine, low value, second-growth, and stands at higher elevation are all becoming of interest to companies struggling to find ways to maintain a viable log supply at a reasonable distance.

The other regions in which the transportation issue came up more frequently, besides Vancouver, were Burns Lake, Fort St. James, Vanderhoof, 100 Mile House, and Prince George. The Highway 16 corridor came up a lot in the discussions. It is of special significance to the Lakes District in particular now that there is a question of whether Babine’s Burns Lake sawmill will be rebuilt.

Most presentations from the resource extraction sector looked at road building as an opportunity rather an an impediment or liability.

Since October, the Ministry of Forests, Lands and Natural Resource Operations and the Ministry of Energy and Mines have been working on the question of resource roads. The Natural Resource Road Act Project (NRRA) aims to establish a single legislative framework for the use, construction, maintenance and management of resource roads. Resource roads in BC are currently administered under 11 acts and associated regulations. There are different types of resource roads in the province; for forestry, for mining, for recreation, for hunting, as well as roads specifically for wildfire fighting. The new act would take into account the different strategies, the competing interests, and make a single consistent legislation.

In addition to lowering the duty of care owed by the Crown and road maintainers, the revised legislation shifts the onus for personal injury insurance coverage to third party users and brings the government’s resource road policy into line with policies covering rural agricultural land and marked recreational trails.

“These changes are an important first step to simplifying the regulations covering BC’s vast network of resource roads,” said Minister of Forests, Lands and Natural Resource Operations Steve Thomson when the NRRA Project was announced. “Reducing the possibility of injury-related lawsuits will encourage road maintainers to keep roads open and preserve access to BC’s wilderness areas.”

BC has an estimated 450,000 kilometres of resource roads, which are typically one-lane or two-lane gravel roads built for industrial purposes to access natural resources in remote areas. These roads also provide access to dozens of rural communities and isolated settlements.

According to the Natural Resource Road Act Progress Report of March 2012, “Government staff and volunteers from forestry, utilities, transportation, agriculture, oil and gas, mining, tourism, and recreation are working together to identify possible solutions to the problem. Those policy options are then considered by Government and direction is provided to those drafting the new Bill.”

The amendments will help keep more back country roads open by establishing that people using resource roads of their own accord do so substantially at their own risk.

“We support these amendments because they will keep more back country roads open for hunting, fishing and outdoor recreation,” said BC Wildlife Federation president Bill Bosch to the Courier-Islander. “The BC Wildlife Federation can provide liability insurance to its members through clubs, direct members and programs such as the outdoor passport.”

The issue is complicated not only because different industries and sectors build and use roads at different times, but also because decommissioning or deactivation of such roads can cause problems in the wider community.

“There is general agreement that maintainers should be able to close roads for safety and environmental reasons; however, many users groups do not favour deactivation and closure as the standard practice following industrial use,” says the Progress Report.

The NRRA Project released a Summary of Public and Stakeholder Feedback in February. The suggestions covered a wide range of concerns and observations.

One example; “Currently there is a vastly different approach to permitting roads between the various resource sectors. To produce a consistent approach will mean increased engineering costs for the forest sector, if the mineral / energy sector requirements are followed.”

Another; “It depends on what the baseline requirements are for safety, a forestry road may not be considered safe by oil and gas standards, and a forestry user should not be held to an oil and gas standard of construction and maintenance (i.e. double lane all-season road).”

And; “The NRRA will not include Private Roads. There may be private roads included in Woodlots that may need to be considered. Resource Roads that are constructed (new and existing) on Woodlot Licenses and Community Forests Licenses will need to be taken into consideration particularly if there are other tenures being accessed beyond these tenure boundaries.”

It seems communities are, at least in part, embracing this monumental undertaking.

Recreation tour operators and regional users, in particular, support the new legislation. While these small interests would not be able to maintain a former forest service road to the level a timber company did, they say they can keep up safety standards.

“Obviously we couldn’t keep it open to the same standard that an industrial group like Tembec could. But there is the possibility that if it just requires replacing culverts and digging them out once in a while, that’s probably something we could do,” said Doug Hogg of the Cranbrook Snowmobile Club to the Daily Townsman. “We can’t afford big machinery and replacing bridges, but we can do the easy stuff.”

The BC government does have a budget to maintain forestry roads that are popular with recreational users, such as the road to access the Lakit Mountain trailhead, says the Daily Townsman.

Canadian Housing Starts

Canadian housing starts climbed unexpectedly in June as multiple urban starts in Quebec and British Columbia bounced higher, but homebuilding is still expected to slow as the year progresses, Canada Mortgage and Housing Corp said on Tuesday.

The seasonally adjusted annualized rate of housing starts surged to 222,700 units in June, compared with an upwardly revised rate of 217,400 units in May. The May figure was initially reported as 211,400 units.

Housing Starts, Canada

The seasonally adjusted annual rate of urban starts increased 2.6 per cent to 199,500 units in June. Urban single starts slipped 0.3 per cent to 67,500 units, while multiple urban starts jumped 4.1 per cent to 132,000 units.

June’s seasonally adjusted annual rate of urban starts increased 7.7 per cent in Atlantic Canada, 17.3 per cent in Quebec and 31.2 per cent in British Columbia. Urban starts fell 6.9 per cent in the Prairies and 9 per cent in Ontario.

Separate data showed the average price of a home in Canada increased between 3.3 and 5.5 per cent in the second quarter of 2012 compared to a year earlier, according to the Royal LePage House Price Survey.

By the end of 2012, Royal LePage expects national average prices to be 3.2 per cent higher than in the same period of 2011.

In 2Q, the price of standard two-story homes rose 4.7 percent year-over-year to $408,423, while detached bungalows increased 5.5 per cent to $376,311. Average prices for standard condominiums increased 3.3 per cent to $245,825, the survey showed.

Housing Starts, Japan

Japan’s housing starts in May 2012 were 69,638 units, a 9.3 per cent increase from the same month in a year earlier, marking month-to-month growth for the fourth consecutive month, according to the Japan Lumber Journal. The seasonally adjusted annual rate was 903,000 units, an 0.8 per cent increase over April, which exceeded the 900,000 unit mark for the first time in three months.

Japan Housing Starts

Total new floor area, which also increased for the fourth month in a row, was 6,349,000 square metres, up 9 per cent.

Due to government house promotion measures, housing starts have been showing a recovery trend since February. However, the focus was on rental houses and built-for-sale houses and not on owner-occupies houses. So, the growth in housing starts did not directly connect with an active movement of building materials, says the Journal. Especially after spring, real demand remained inactive.

Housing starts of owner-occupied houses steadily grew, by 8.2 per cent, to 25,468 units.

Units built for owners, rentals, and detached units built for sale all increased, while new condominium starts were down by 3.2 per cent, the first decline in four months, says the Japan Lumber Reports.

The building of new wood-based units rose by 11.9 per cent.

The earthquake damaged prefectures of Iwate, Miyagi, and Fukushima experienced the greatest gains, or 76.4 per cent, 178.7 per cent, and 81.7 per cent respectively, says the Reports.

Wildfires

The largest fire currently burning in Alberta, at 155,000 hectares as of Friday morning, prompted an evacuation of Zama City earlier this week, though it has not crept any nearer to that hamlet. About 160 residents are waiting to hear when they will be able to go back.

More than 100 firefighters — 21 from the Yukon — joined the fight Thursday bringing the total to about 200, along with helicopters and heavy equipment.

Forest Fires

There were close to two dozen fires burning out of control in the northern half of the Alberta Friday.

A forest fire burning just outside Fort Smith, NWT, Wednesday alarmed some residents. The fire started on the Alberta side of the border, near Four Mile Lake, but crews from the NWT’s Environment and Natural Resources Department responded to first. The Alberta government has classified that fire as “being held.”

Firefighters were working Friday morning to suppress a new 5-acre wildfire in Yellowstone National Park. The Blacktail Fire was spotted Thursday afternoon near the park’s northern boundary.

Meantime, the Fontenelle Fire in the Bridger-Teton National Forest was now 80 per cent contained Friday.

Elsewhere, the 153-square-mile Arapaho fire in the Medicine Bow National Forest northwest of Wheatland was 88 per cent contained.

Crews made progress Friday against a stubborn wildfire in Placer County, CA, that forced the evacuation of about 300 people. The blaze, which was burning in a steep, heavily wooded area, was threatening 150 homes and could endanger the small community of Colfax if it crosses into a nearby canyon.

The fire began Wednesday and grew in the windy, hot weather. It blackened nearly 2 square miles and was 10 per cent contained Friday morning.

Farther north, the Mill Fire had burned more than 36 square miles in Mendocino National Forest and destroyed five outbuildings. Three people were injured, and the blaze was 45 per cent contained.

Sawmill Contractor Dies

RCMP say they were called to the Conifex lumber mill in Fort St. James, BC, just after 11 in the morning Wednesday, where a man had died from injuries.
The investigation was handed over to the Coroners Service and WorkSafe BC. WorkSafe BC says the man was crushed under a structure.

The man was identified as Mika Saario, 44, a resident of Prince George.

Saario was an independent contractor in the latter stages of dismantling one of Conifex’s two planer machines, sources said. He was working in an area alone but with others nearby. When they came to get him for a coffee break, he was deceased with a lit cutting torch still in hand.

“Preliminary information is that the worker was dismantling an elevated catwalk approximately 12 feet by 20 feet. As he cut some of the supporting elements, the remaining supports buckled and fell onto the worker,” said Donna Freeman, spokesperson for WorkSafeBC.

This incident represents the sixth person killed so far this year while working inside a Prince George-area sawmill, says the Prince George Citizen.

July 19, 2012

Oregon Timber Drama

Oregon has had its federal payments for timber-dependent counties renewed, if only for another year, in the same week that timber sales on 800 acres of State land have been restricted amid a legal battle with conservation groups over the threatened Marbled Murrelet. Madison’s can just hear western US forest products companies and timberland owners screaming, “Its the Spotted Owl all over again!”

Harvests of timber in the Pacific Northwest were reduced by 80 per cent during the Northern Spotted Owl crisis. Logging in national forests containing the species was stopped by court order in 1991. In 2007, the US Fish and Wildlife Service proposed new recovery plans intended to guide all management actions on lands where Spotted Owls occur. At the same time, the population of Barred Owls, which disrupt nesting and compete with Spotted Owls for food, has been increasing. In 2010, Federal biologists were considering whether to kill Barred Owls, to see if it would help the Spotted Owls.

Forest products companies and timber growers in that region are still recovering from the economic disaster created by the Spotted Owl logging restriction. Meanwhile, populations have experienced only a tiny degree of recovery.

The new deferrals affect 10 recent and upcoming timber sales, suspending planned timber bids and halting logging, in Tillamook, Clatsop, and Elliott State forests.

“This is a new area for us,” said Kevin Weeks, a spokesperson for the Oregon Department of Forestry to Oregon Live. “This is the first time this sort of action has been taken in response to a lawsuit.”

Weeks said the state suspended sales so that officials who would normally work on timber sales could focus on preparing for a fight in US District Court in Portland, OR. He said foresters already manage state lands to protect the Marbled Murrelet by scaling down logging operations during nesting season. The lawsuit could take a year to come to trial but a judge is likely to call a hearing on the motion for the temporary injunction sometime this summer, says Oregon Live.

Meanwhile, the much-debated Transportation Bill finally made it through the US Congress last week. While voting to approve a compromise version, Congress also authorized the one-time distribution of US$346 million to 700 rural counties in 41 states. Oregon gets US$100 million, California US$39.3 million, Idaho US$27.4 million, Washington US$21.3 million and Montana gets US$20.4 million.

Funding Renewed, Rights Restricted

Despite receiving about 30 per cent of the national total, only one more year of payments won’t do much to change Oregon’s budget problems. Counties in Southern Oregon have seen timber dollars dwindle over the years, forcing cutbacks in law enforcement and other county services. Until a couple of decades ago, counties could rely on a hefty share of federal timber harvest revenue. At the same time, rural Oregon prospered from the jobs sustained in forests and mills. Curtailment of timber harvests destroyed rural prosperity and turned county governments into charity cases. They became dependents of Congress, which reluctantly doled out direct payments to compensate for the idled forest land.

Much of the US$100 million coming to Oregon will go toward staving off even deeper cuts during the next go-round on county budgets. At a 31 per cent reduction from funding levels in 2010, the money is the last to come from the Secure Rural Schools Act, which since 2000 has provided US$3 billion to Oregon’s rural counties to make up for their declining shares of federal logging revenues.
Jackson County could receive $4.5 million.

Lane County Administrator Liane Richardson said to Bloomberg, “I can’t justify recommending to the board that we restore services [like rehiring sheriff’s deputies and others already laid off] when we have a very large hole again next fiscal year. The US$3.5 million will help next year. But it doesn’t solve the problem that we’re in.”

In Curry County, which has been hovering on the brink of bankruptcy, Commissioner Dave Itzen said he did not know what commissioners would decide to do with the $1 million expected to be coming. He said he did not like the idea of borrowing against the actual receipt of the money sometime late this year or early next year.

Now that this battle is over, three Oregon congressmen, Republican Greg Walden and Democrats Kurt Schrader and Peter DeFazio, have proposed legislation that would allow more logging on federal lands. The goal is for more flexibility in federal forest policy. That’s a difficult task, and increased logging is only a partial solution for these counties.

Walden says supporters of a bill that would increase logging on the Oregon and California Railroad Revested Lands, or O&C lands, in Western Oregon are still working to get a favourable rating for it from the Congressional Budget Office, which is needed before it can come to the House floor for a vote.

Says a The World editorial, “The main message to Congress needs to be: Oregon’s situation is unique. The former O&C lands are not a national park or a wildlife preserve. They were established long ago as a source of timber to fuel local communities, and they need to be restored to that role.”

These federal lands in western Oregon are arguably the finest Douglas fir timberlands on the face of the earth. They, together with western Oregon’s national forests, formed the economic backbone of western Oregon’s timber economy for more than 40 years. Then the Spotted owl was listed as a threatened species in 1990 and the entire federal timber sale program came crashing down.

The Proposal is still in the discussion stage. It sets aside 1.47 million acres of the O&C lands to be managed by a group appointed by the governor. The revenue from that parcel is to be distributed back into the counties, boosting local economies. The proposal also gives 1.3 million acres of old growth forests to the United States Forest Service designed to be protected from logging.
Politicians like Lane County Commissioner Pete Sorenson don’t think it goes far enough.

Said Sorenson to KLCC radio, “The bill being proposed has an explicit provision that says The National Environmental Policy Act doesn’t apply to these 2.6 million acres.”

Sorenson said The National Environmental Policy Act requires federal agencies to make proposals and take public comments before implementing any decisions that affect the environment. In an election year with many Oregonians out of work, politicians may find themselves walking a fine line between preserving the environment and creating jobs.

Douglas County Commissioner Doug Robertson said to Bloomberg he did not expect any long-term solutions to increasing federal timber revenues this year, but with wildfires burning in Colorado, Congress was likely to get serious in the next session about increasing logging on federal lands to restore beetle-killed forests and reduce fire danger.

BC Minister of Forests Responds

British Columbia’s Minister of Forests, Lands and Natural Resource Operations, Steve Thomson, Friday issued a response to last week’s Not Satisfactorily Restocked report by the BC Forest Practices Board:

“A recent Forest Practices Board report has reaffirmed the importance of reforesting ‘not satisfactorily restocked’ lands. The current estimate of lands that may need reforesting is about two million hectares.

Ministry staff are surveying those areas and doing a detailed cost-benefit analysis. Some areas may be left for wood bioenergy producers to harvest and reforest.

This government has also been investing in forest inventory. As part of being fiscally responsible, inventory efforts are being focused on areas where knowledge is lacking or conditions are changing quickly because of the mountain pine beetle infestation. The ministry is also increasingly taking advantage of innovative and cost-effective tools (such as satellite imagery) to help ensure a reliable forest inventory.”

Terrace Bay Pulp Sold

A company from Mumbai, India has stepped forward to purchase an idled pulp mill in northwestern Ontario. It was announced Thursday that the Aditya Birla Group, through its Canadian subsidiary AV Group, plans to take over Terrace Bay Pulp. The mill has been shut down since late last year. Earlier this year went under protection from creditors.

The purchase agreement is subject to court approval.

Ontario Pulp Mill to Reopen

The Indian company, which already owns two dissolving pulp mills in Canada, plans to invest more than $250 million to convert the Terrace Bay site to dissolving pulp for use in rayon fibre. The conversion process will take about two years, but at least some of the 275 mill workers should be back on the job by October.

The Terrace Bay mill has gone through a series of shutdowns in recent years, in response to the restructuring of its parent company, Buchanan Forest Products. In October of last year, it was shut down after an explosion in a blow tank killed one worker.

The mill is able to produce bleached softwood kraft as well as bleached hardwood kraft. An Ontario government announcement of the purchase notes that the re-start will support 275 mill jobs, 335 woodland jobs and an estimated 1,300 indirect jobs province-wide.

The AV Group operates AV Cell in Atholville, NB, and AV Nackawic, in Nackawic, NB.

WorkSafeBC Expands Safety Order

WorkSafeBC released an expanded order Friday to clean up wood dust that is an explosive hazard to panel, pulp and paper mills, and wood pellet plants. The workplace safety agency already ordered the cleanup of sawmills in April after two deadly explosions in northern BC earlier this year killed four workers and injured dozens.

WorkSafeBC plans to have the first round of inspections of the 280 plants covered by the expanded order complete by late August.

BC Mill Cleanup Order

“Wood processing and paper product operations have been selected because of their high risk of combustible dust explosion due to large amounts of dust produced or handled in these facilities,” says Betty Pirs, Vice-President, Prevention Services in an agency press release. “Like all WorkSafeBC inspections, orders will be issued to employers based on violations observed during the inspections.”
Says the WorkSafeBC Information Bulletin:

“Facilities should carefully identify the following in order to assess the potential for dust explosions:

  • Materials that can be combustible when finely divided
  • Processes which use, consume, or produce combustible dusts
  • Areas where combustible dusts may build up, including hidden areas
  • Means by which dust may be dispersed in the air
  • Potential ignition sources.”

The full bulletin can be found here: http://tinyurl.com/88guw2u

City of Williams Lake Timber Supply Recommendations

The Special Committee on Timber Supply met in Williams Lake, BC, Thursday. Mayor Kerry Cook presented Williams Lake’s official recommendation.

“The city supports the development of a mitigation strategy and plan that addresses the forecasted mid-term timber supply shortages in the Williams Lake timber supply area. The city endorses an AAC of between 2.8 and 3.1 million cubic metres per year as a baseline target. While this is somewhat less than average of the 4 million cubic metres per year the industry has been harvesting over the past ten years, it is substantially more than the 2.5 million metres per year from back in 1985.”

Williams Lake Timber

“I mentioned 2.8 to 3.1 million cubic metres per year as a target. I understand that there are additional opportunities involving forest inventories and incremental silviculture that could help to further increase the timber supply,” said Cook. “An improved inventory is likely to identify forests that have more standing timber than originally thought.

“The additional volume could push the allowable annual cut higher than 3.1 million cubic metres per year. The city recommends the special committee pursue improved forest inventories and incremental silviculture as part of the overall mitigation strategy.”

FPB Cites Vancouver Island Firms

An audit by BC’s forestry watchdog has found that 23 of 24 timber-sales licence holders operating within the Campbell River, BC, area it investigated failed to comply with provincial legislation.

Auditors from the Forest Practices Board discovered instances where fish habitat was not being adequately protected because of sediment introduced into streams.

The board says some BC Timber Sales licence holders failed to maintain the natural drainage patterns of several small streams while others did not have an adequate fire suppression system on site during extreme fire hazard conditions.

The areas audited include Gold River on the west coast of Vancouver Island, Sayward on the west, and Lower Main-land areas across from Campbell River.

Board chairman Al Gorley says more than 100 compliance audits have been conducted since 1996, including more than 20 of B.C. Timber Sales operations, and typically very few problems are found.

He says this audit is an exception, although BC Timber Sales has committed to taking action to address the board’s concerns.

Logger Fatality

A heavy-equipment mechanic from Canada was killed Wednesday in a timber-harvesting accident in the northern Somerset County town, near Augusta, ME, police said Thursday to the Kennebec Journal.

Bruno Cloutier, 46, of St. Zacharie, QC, was pinned between a timber harvester and a service truck as the harvester was being moved Wednesday.

At the time of the accident, two crew members — the harvester operator, who has not been identified, and Cloutier — were working on the Route 6 Cutoff Road for R.G. Lumber of Quebec.

The operator was backing up the large timber harvester to complete needed repairs when the accident happened.

Cloutier was pronounced dead at the scene by ambulance personnel, Gottardi said.

The incident remains under investigation by the sheriff’s department, the US Occupational Safety and Health Administration and the Office State Medical Examiner.

July 11, 2012

Not Satisfactorily Restocked

In the late 1980s British Columbia’s forests were in crisis. Unsustainable practices like huge clearcuts were the norm. Concerned citizens and environmental groups waged a battle to change the system. Over time, new legislation was enacted to maintain forest health, government bodies have been established to survey and oversee the land base, and the forest products industry changed both the method of harvest and the scope of silviculture activity. This system worked very well for 25 years, so much so that BC has become the largest third-party certified forest land base in the world.

However, no one could have anticipated the mass destruction wreaked by the mountain pine beetle. Now that the peak of the beetle population has passed and stakeholders have been able to have a look at the remaining dead and dying timber, questions are arising about the need to update policy and government action in the wake of this epic natural disaster.

Further to a preliminary report released in February 2012, the Forest Practices Board (FPB) this week released an analysis titled, “How Much of British Columbia’s Forest is Not Satisfactorily Restocked? And what should be done about it?”

Please refer to the February 17 issue of your Madison’s Lumber Reporter for background.

At that time, the FPB was focussed specifically on the question of how to define NSR. At issue is the fact that the term, when it was coined 25 years ago, applied to the remaining forest base following timber harvest by the forest industry.

The new report indicates that almost two million hectares of Crown forested land could potentially be not satisfactorily restocked. Of that, nearly half a million hectares will be restocked by industry, and government has current plans to restock about a quarter of a million hectares, says the report.

This topic is not to be confused with the work of the Mid-Term Timber Supply Review Committee, currently holding hearings around the province to get input from communities and stakeholders.

“While there is some cross-over in the content,” explained Forest Practices Board Chair Al Gorley to Madison’s in a phone interview. “That is a mid-term supply issue, while NSR looks at the long term.”

With an 80 year time frame for the average pine, fir, or spruce tree in BC to grow to maturity, the FPB is urging immediate government action.

In the conclusion, the report states, “Government’s proposal to re-measure permanent sample plots partly answers that question; however, the Board is concerned that, given the level of uncertainty and the immediacy of the question, the proposed program will be ‘too little, too late.’”

British Columbia Forests

Another principal uncertainty, says the report, is how much beetle-affected forest will be harvested by the forest industry and therefore will not require rehabilitation by government. “While these uncertainties cannot be completely resolved, reasonable efforts should be made to reduce them.”

“There seems to be a lot of confusion in the public realm,” continued Gorley. “The purpose of this report was to clarify as plainly as possible exactly what is NSR. The definition was created for a specific purpose 25 years ago, when there was a big backlog of Not-Stocked areas after several decades of logging. Until that point there was no legal requirement for industry to restock. As it has been used for the past 25 years, NSR refers to any backlog plus current not-restocked land.

“In the past 25 years, that backlog has been reduced to almost nothing and the industry is current with replanting. The issue now is that the original definition of NSR never anticipated the mountain pine beetle situation. Maybe there needs to be a specific category within NSR to address the pine beetle.”

The report explains that the most pressing issue currently is: what is the impact of the recent beetle outbreak on the future timber supply for the central interior of British Columbia?

There is one million hectares of known and estimated NSR resulting from natural disturbances. At the current rehabilitation rate of approximately 10,000 hectares per year, there will be substantial areas that will regenerate naturally before they are treated, says the report.

The report concludes, “Compared to replanting the entire area promptly, this will have negative consequences for the future timber supply in the area affected by beetles.”

“The Forest Practices Board is acknowledging that there is not a simple answer to this issue,” continued Gorley. “We want to try to remove some of the uncertainty for industry about how much timber will be salvaged and replanted by industry, so it won’t need to be addressed by the government. Due to developments with technology and wood processing, companies may be able to salvage both further into the future and farther away from town.

“The government needs to examine what is going on with the forests that are left,” concluded Gorley. “The Ministry needs to make the best estimate of how much additional area will be salvage harvested by the forest industry and conduct a broadly framed cost-benefit analysis of options to restock or not restock areas.

“Will the additional cost of restocking beetle affected areas that won’t be salvaged by industry yield returns? It is important to remember that the reference to ‘long term’ means 80 years.

“The government shouldn’t leave this decision for too long,” said Gorley.

The report requests a response from government by October 1, 2012. The hope is that such a response will provide decisions and solutions to the concerns listed above.

“If action is to be taken, the Board believes it must be taken quickly,” says the report.

The FPB isn’t the only forestry-related organization holding this belief.

Madison’s Timber Preview

This week’s issue of Madison’s Timber Preview examines the latest statistics of China’s imports of value-added lumber, and looks at companies and agencies working to nurture this important niche industry.

Contact us any time to receive this vital and informative tool regularly.

Wildfires, Colorado and Yukon

Near Colorado Springs, the Waldo Canyon fire ballooned Tuesday night, as high winds caused the fire to double in size to more than 15,000 acres. The city evacuated about 26,000 more people overnight, and on Wednesday, additional families in parts of Woodland Park – to the Northwest side of the fire – and Crystola were given the evacuation order.

About half of the active federal wildfire-fighting resources are now staged in Colorado, including firefighters, helicopters, and air tankers. And by midafternoon Wednesday, several massive C-130 air tankers had dropped about 27,000 gallons of fire retardant on the Waldo Canyon fire.

Lightning was responsible for six new wildfires in the Yukon Tuesday bringing the total for the season to 74, including 64 wildfires in the last six days alone.

Wildfires Rage

Fire crews fought to save the US Air Force Academy and residents begged for information on the fate of their homes Wednesday after a night of terror sent thousands of people fleeing a raging Colorado Springs wildfire.

More than 30,000 have been displaced by the fire, including thousands who frantically packed up belongings Tuesday night after it barrelled into neighbourhoods in the foothills west and north of Colorado’s second-largest city. With flames looming overhead, they clogged roads shrouded in smoke and flying embers, their fear punctuated by explosions of bright orange flame that signalled yet another house had been claimed.

Shifting winds challenged firefighters trying to contain the 29-square-mile Waldo Canyon blaze and extinguish hot spots inside the city’s western suburbs. The National Weather Service reported 60 mph winds and lightning above the fire Wednesday afternoon, but winds were calmer by nightfall.

Meanwhile, Boulder, CO, to the northwest of Denver, faced its own fire worries after a lightning strike sparked several fires Tuesday. While most of the fires were quickly contained, one just outside city limits quickly grew to 300 acres and resisted firefighters’ efforts to contain it.

Oregon Timber Payments Extension

After a long battle, a one-year extension of federal payments for Oregon’s timber-dependent counties is included in the federal transportation bill now before lawmakers.

Congress was expected to vote Friday on the transportation bill, which contains an amendment from Sen. Ron Wyden, D-Ore., that would restore the Secure Rural Schools Act payments to timber counties for one year, a 95 per cent of last year’s level. It would distribute $346 million to 700 counties in 41 states.

Oregon Timber Payments

The proposal would secure US$100 million dollars for places like Josephine, Curry, and Lane counties. All three counties have struggled to raise revenue as timber harvests have dwindled.

Oregon Congressman Greg Walden acknowledged the revenue problems in timber country have dragged out over the years with extension after extension. But he sees the issue coming to a head with this last payment.

“It’s no longer getting a two-, three-, four-, five-year extension,” Walden said. “We’re down to eking out a one-year extension. We got to get one firm ground where we have sustainable policy, that works in our communities, works for our forests, and puts our people back to work.”

To that end, Walden says he and the rest of the delegation are working on passage of a separate, long-term plan for forest management. Congressman Peter Defazio has proposed forming a trust to govern timber harvests on the federal land in question.

US Real Estate

The National Association of Realtors said Wednesday that its index of sales agreements increased to 101.1 last month from 95.5 in April. That matches March’s reading, the highest since April 2010, when a home-buying tax credit boosted sales.

A reading of 100 is considered healthy. The index is 13.3 percent higher than it was a year ago. It bottomed at 75.88 in June 2010, after the tax credit expired.

Sales of new and previously occupied homes are up over the 12 months. Builders are starting more projects. And prices are rising in most markets.

Real Estate, US

Home prices increased in 19 of 20 major US cities in April from March, according to the Standard & Poor’s/Case-Shiller index, released Tuesday. A measure of national prices rose 1.3 per cent in April, the first increase in seven months.

The Office of the Comptroller of the Currency reported Wednesday that delinquent mortgages are at their lows. The OCC started tracking delinquent mortgages in 2008.

Percentages of mortgages that were 30 to 59 and 60 to 89 days delinquent also decreased to their lowest levels since the first quarter of 2008.

Always the contrarians, Zillow reported June 19 that 31.4 per cent of those with a mortgage owe more than their homes are worth.

Catalyst Restructuring Approved

Catalyst Paper Corporation Tuesday announced that the company received the necessary creditor approval for its second amended plan of arrangement. Approval of more than 99 per cent of secured and unsecured creditors was received in votes cast in person and by proxy at meetings held Monday in Richmond, BC.

The company received approval Thursday for its reorganization plan from the Supreme Court of British Columbia.

Court approval of the reorganization plan comes following Catalyst Paper’s entry into creditor protection on January 31, 2012. A confirmation hearing under the Chapter 15 process of the United States Bankruptcy Court for the District of Delaware (the US Court) is expected to occur in mid-July. Approval from both courts is required before the company can complete its reorganization.

Sawmill Fire

Firefighters near Utica, NY, were called to the scene of a fire at Little Falls Lumber Thursday night, put that fire out, but were then called back to the same scene around 11 p.m.

Little Falls Fire Chief Robert Parese said Friday morning that the initial fire appeared to have begun in a wastepaper basket inside Little Falls Lumber’s vehicle maintenance building, and was put out rather easily. He added that fire was definitely out when crews left the scene.

A nearby homeowner later called another fire in. This time, the building was fully engulfed in flames when firefighters arrived.
All that remains now is a pile of metal left behind.

One firefighter was sent to the hospital for heat exhaustion.

Chief Parese said fire investigators looked through the debris Friday morning, but so far do not have a cause of either the initial wastepaper basket fire, or the second fire that appears to have started more than three hours later.

July 05, 2012

BC Mid-Term Timber Supply

The Special Committee of the Legislative Assembly of British Columbia to examine the Mid-Term Timber Supply crisis in the wake of the mountain pine beetle infestation has begun travelling around the province. Interested participants have the opportunity to either present a 15 minute brief to the committee when it arrives in select towns, or to submit video or written suggestions through the website. The schedule of public hearings can be found on the official committee website here: http://www.leg.bc.ca/timbercommittee/public-hearings.asp .

Information on how to send submissions is available here: https://www.leg.bc.ca/timbercommittee/written-submission.asp .

Already voices are cropping up to register either dismay or approval of the hearing process.

Early Thursday, the Pulp, Paper and Woodworkers of Canada (PPWC) union came out against the proposal to open up protected areas to logging.

“If every tree is protected, there are no jobs. But if everything is logged there are no jobs either,” said Arnold Bercov, Forest Resource Officer for the PPWC to The Tyee. “All I’m saying is we have to find that balance.”

For six years, some of it as co-chair, Bercov was on the board of the Forest Stewardship Council of Canada. Through that experience he saw the value of hearing and respecting the perspectives of environmentalists, First Nations, the industry and others. A better managed forest would lead to more jobs, he said.

“We want to create employment, not at any cost, but I think you’d create more employment if you did things right,” he said. “To me it’s about jobs. We want to create as many jobs as we can out of every tree that’s cut here.”

It’s entirely possible to protect the forest, look after the needs of wildlife and still have enough timber supply to provide jobs, he said. “Balance always works best.”

Timber Supply Committee members have already been briefed on the main issues stemming from the aftermath of the pine beetle. Please refer to the June 08 issue of your Madison’s Lumber Reporter for links to documents and reports on the affected BC Timber Supply Areas. Last week Madison’s was notified by a couple of sources that there was a problem with one of the models, specifically in the Prince George TSA report. It turns out to have been an input error which was discovered by vigilant Ministry staff checking through the data. The error has since been reported, recorded, corrected, and all the other TSA models were checked and then double-checked by independent analysts.

Special Committee

“The mitigation forecast for the mid-term timber supply in the Prince George TSA was off by a little bit in the initial report,” explained former BC Chief Forester Larry Pederson to Madison’s in a phone interview Wednesday. “It had been reported as 9 million cubic metres but is actually something closer to 7.8 million cubic metres. The document has been updated and reissued.”

Looking into the situation gave Madison’s the opportunity to talk to some of the main players on the Timber Supply Committee.
“Yes it’s a punishing schedule,” said Bill Routley, BC NDP MLA for the Cowichan Valley and critic for Forests and Range and Integrated Land Management, when Madison’s asked how it was going holding two hearings each day. “We brought up the issue of the schedule, and also our concern about the Terms of Reference. We consider the ToR for the Timber Supply Committee not broad enough, they don’t deal with the matter properly.”

The Committee ToR can be found here: http://www.leg.bc.ca/cmt/39thparl/session-4/timber/5-39-4-39-2.htm .

“The hearings are taking place over such a compressed period,” continued Routley. “As the official opposition, we are participating because it is an important issue for the communities and stakeholders to have input.

“BC has had years of peace in the woods due to very complicated land use plans that had huge input by multiple stakeholders, that were crafted over the course of many years. Now those interested are being asked to look at it all over a short time frame. We would like to see more opportunity for professional alliances, researchers, forest scientists and others, to make presentations.”
“The committee is looking at new developments, this is true. There does need to be an update to the land use plans as they are now, taking into account the dead pine issues and the effects of that on the business of producing lumber,” said Routley.

When asked about the suggestions of removing currently protected areas and what impact that might have on BC’s shining scope of third-party certified forests, Routley said, “We are interested in hearing from the groups that certify, right now we are unsure if they are in favour [of those suggestions]”.

Madison’s asked how stringent the ToR are, if presenters are required to stick to those topics only.

“Speakers can bring up anything they want in their allotted 15 minutes,” explained Routley. “So far there has been a broad and very ranging variety of speakers, for example this morning there was a First Nations group which did not talk about anything that is in the ToR. All briefs that are provided to the Committee are available on the website, so people can see for themselves what the discussions are.”

The transcripts are also posted on the Hansard Blues, here: http://www.leg.bc.ca/cmt/39thparl/session-4/timber/5-39-4-39-7.htm .

In terms of the problem with the model, Routley said, “Apart from that one small error which has since been fixed, we see a huge question about the numbers coming out of the Ministry. There has been a huge discrepancy between the Ministry numbers and what we’ve seen out of independent analysis, by Hampton Affiliates for one example.”

Later on Wednesday Madison’s caught up with Chair of the Committee, John Rustad, Liberal MLA for Nechako Lakes and Parliamentary Secretary for Silviculture to the Minister of Forests and Range.

“There is a significant need for timeliness,” said Rustad in reference to the busy Committee hearings schedule. “Forest companies in Burns Lake, Prince George, and other areas are looking to make investments. They need answers for the mid-term before they can make decisions about whether to invest $60 to $80 million in their mills, whether to upgrade. They need to know details about the fibre supply. It is important for the Committee to bring certainty, to look at the mid-term, to find all options to expand the mandate.

“The Opposition would like a longer timeline, and to address broader issues, such as diversification. A lot of this work has already been done by the Beetle Action Coalitions, part of what the Opposition suggested are already in the strategies proposed by the BACs. The goal of this Committee is not to repeat work already done.”

When asked about potential impacts to BC’s third party certification, Rustad said, “In terms of the protected areas, it is definitely important to maintain certification status. Our options include area based management, harvesting lower-volume stands, removing constraints, intensive silviculture and fertilization activity, and managing the timber flow.

“Right now the Committee is hearing input from all interested parties, then we will compile everything, and make a deliberation to recommend. At that stage we will definitely weigh the input of third party certifiers. The Committee will then submit its report to the Legislature.”

It was Albert Nussbaum, Director of the Forest Analysis and Inventory Branch of the Ministry of Forests who reported the modelling error immediately after staff identified the problem and made the correction.

As always when he and Madison’s get talking, ideas start flying.

“This Committee’s work could be viewed as potentially reconstituting the province’s timber management framework,” said Nussbaum. “Even within the ToR of the committee, what is at play is quite daunting.”

The crux of Nussbaum’s thinking focusses on the harvest of what are currently considered marginal stands; those with less than 140 cubic metres per hectare. To date these low volume stands were considered un-harvestable in areas such as the Lakes TSA as licensees have generally not operated in stands with these low volumes. Outside of constrained stands, there are a lot of areas where, for example, the initial stands had 200 cubic metres per hectare but the pine beetle has taken out half. With 100 cubic metres per hectare left rotting away, these stands are are classified by the forest companies as unharvestable during the mid-term.

“If licensees can find ways of utilizing these low volume stands, mid-term timber supply can be significantly improved,” detailed Nussbaum.

Of course there are economic challenges and obligations, of putting in roads and replanting for example.

All it might take however is an operation that combines bio-mass salvage with sawlog harvest. These areas are already in the timber harvesting land base. To access them requires a change, indeed a fundamental change, to the business model, but would not involve any changes to legislation or existing cutting rights or management policy.

Madison’s was so gratified to hear an expert in the field purport that message. Please refer to your Reporter issues of May 22 and September 13, 2009, October 22, 2010, and June 17 and November 10, 2011, for a sampling of the latest developments in biomass fuel technology, including nanotechnology of wood cellulose, that Madison’s has been covering.

Some timber harvest regions in BC have already moved in this direction. The Williams Lake TSA, for example, specifically Cariboo-Chilcotin, has demonstrated success in harvesting stands with only at 80 cubic metres per hectare of sawlog. Geographically there is not a lot of difficult terrain to deal with, and the trees remaining post-beetle infestation are slow growing so the fibre is quite dense. In the Williams Lake TSA timber supply report, the mid-term looks more robust because low volume stands have already been incorporated into the calculation. Proportionally, the Williams Lake TSA looks good. The forest companies are already incorporating the lower-volume stands, which makes for a better mid-term timber supply, which in turn means the long term recovery will happen more quickly.

“For example, the Lakes TSA has a mid-term timber supply of 500,000 cubic metres per year. If the constraints are removed, it goes up to 600,000,” explained Nussbaum. “It requires significant changes to the management framework protecting non-timber values for this 100,000 cubic metres per year of additional fibre, when there is conceivably 300,000 to 500,000 cubic metres per year available in low volume stands”.

It comes down to the method of harvest. The Ministry currently does not include stands that are 100 cubic metres per hectare because the industry has not harvested these areas to-date. Until the full impact of the mountain pine beetle was felt, in that context, harvesting those stands was not really viable, it had never really been done. Because it never needed to even be considered.

Of course it is not just a matter of snapping fingers and making a shift in business practice. However, when the choice is between a bleak future of only a few additional years of harvest should the protected areas be opened up, and a thriving forest products industry long into the future under a different business model, considering such a shift is not altogether that bad.

“The mid-term fibre solution likely requires addressing a little bit of everything,” concluded Nussbaum. “Replanting, harvesting a little in areas previously help to protect non-timber vlaues, going into lower-volume stands in partnership with energy companies, intensive fertilization, or any combination of these.”

Madison’s will examine the opportunities for silviculture and fertilization available under the Enhanced Forestry Program in an upcoming issue.

Madison’s Investment Rx

This month’s issue of Madison’s Investment Rx analyses the recent jump in solid wood prices, and looks at the latest figures of Canadian softwood lumber exports to the US, China, and Japan.

Contact us any time to receive this vital and informative tool regularly.

BC Flood Watch

The BC River Forecast Centre predicts the lower Fraser River will peak on Thursday
evening or early Friday morning, and levels are expected to remain high through to
Monday. But forecasters say it’s difficult to predict how much impact potential rainfall
or snowmelt will have over the weekend, and warn that Sunday could see levels surge
even higher.

Residents were also warned that the river banks are unstable and should be avoided
for personal safety.

Flooding, BC

Thursday, the River
Forecast Centre maintained flood warn-
ings for the upper and lower Fraser River.
The Shuswap River near Enderby, Shuswap
Lake, South Thompson River and Quesnel
River are also on flood watch.

In the Interior, Prince George remains
under a state of local emergency with 17
homes evacuated.

Shuswap Lake is expected to rise another 10 to 50 centimetres in the coming
days, depending on rainfall, while the South
Thompson is expected to continue rising
and potentially reach flows not recorded
since 1948.

Heavy rainfall and a large snowpack are
to blame for this year’s flood-prone freshet.
Daily dike patrols are in now in effect in
almost all the affected municipalities.
Several other Metro Vancouver regional
parks have also closed due to flooding.

US Housing Starts, Home Sales

The US Commerce Department said Tuesday that groundbreaking on new homes in May dropped 4.8 per cent to a seasonally adjusted annual rate of 708,000 units. April’s starts were revised up to 744,000 units, from 717,000.

Housing, US

New permits for building homes jumped 7.9 per cent to a 780,000-unit pace, the highest since September
2008. Groundbreaking for single-family
homes increased 3.2 per cent. Sales of existing homes fell 1.5 per cent
in May, the National Association of Realtors
said Thursday. Sales for the month yielded
a seasonally adjusted annual rate of 4.55
million, down from an unrevised pace of
4.62 million in April.

Compared to May 2011, sales were up
9.6 per cent, the 11th straight month of
year-on-year gains.

The NAR’s data also showed inventories declined 0.4 per cent to 2.49 million,
or roughly a 20 per cent decline from May
2011. At the current sales pace, there are 6.6
months of supply. Historically, six months
of inventory are considered normal.

Bowater Mersey Closes

Despite provincial and municipal government efforts, and concesssions granted by the union and by Nova Scotia Power, Resolute Forest Products indefinitely idled operations at the Bowater Mersey newsprint mill in Brooklyn, NS, on June 17.

The company is currently assessing the feasibility of selling all of its assets in Nova Scotia, including its private timberlands, the paper mill, sawmill and Brooklyn Power. Resolute is currently the largest private landowner in Nova Scotia.

Resolute Closes Mill

This indefinite idling
will reduce capacity by approximately
250,000 metric tons of newsprint. Approximately 320 employees at the Mersey
paper mill, associated woodlands, Oakhill
sawmill and Brooklyn Power Corporation
will be affected by this action.

The Government of Nova Scotia has
formed a Bowater Response Team to help
support workers, families and small businesses owners on the province’s south
shore in the wake of the decision.

It’s estimated that about 2,200 jobs are
at stake with Bowater’s closure, said Don
Downe, Mayor of the District of Lunenburg.
He said there were 165 workers at the
paper mill, 125 at the sawmill and 30 at the
power plant. As well, 277 truckers and 250
contracting companies relied on Bowater,
as did other sawmills with anywhere from
105 to 476 employees.

“[Sawmills are] looking at shutting
down if they cannot find the market for
the chips they have now,” he said to the
Chronicle Herald.

Sawmill Fires

Firefighters in Hamilton, ON, were on the scene of a fire at a sawmill Wednesday, responding after flames broke out a Millgrove Wood Products. There are no reports of injuries. The building appeared to be vacant when the fire started.

Mill Fires

The building did not
have a nearby municipal fire hydrant so
fire crews had to dispatch water tanker
trucks to the scene. The building was destroyed but crews were able to protect an
exposed building to the west as well as the
lumber storage yard.

Fire crews were expected to remain
on scene till at least Thursday afternoon.
Heavy equipment will be be brought in to
assist with the removal of the remains of
the structure to ensure that all hot spots
have been extinguished.

The cause of the fire has not been determined.

Meanwhile, in Ironton, OH, Friday,
Ironton Fire Capt. Craig Thomas said a
fire in a silo containing 600 tons of sawdust
at Muth Lumber was almost extinguished,
according to the Irontown Tribune.

The blaze ignited Thursday afternoon.
Thomas said there has been no determination yet as to what caused the sawdust
to go up in smoke.

“It could be spontaneous combustion,”
Thomas said. “We got a Bobcat from the
city and we’re taking out bucket loads
(of sawdust) and dropping it off to the
side and keeping water on it. We thought
we had it out last night and left about 10
o’clock but it flared up again.”

Thomas said putting out a fire in a silo
full of sawdust is not an easy as it might
sound. Sawdust, when sprayed with water,
tends to cling to the side of the silo.
Firefighters remained on the scene
Friday morning.

Sawmill Worker Injured

Greg Smith, an owner at Gilbert Smith
Forest Products in Barriere, BC, credited
workers for quickly reacting to help a col-
league who was hit by a collapsing lumber
pile Tuesday.

The company and WorksafeBC continue to investigate the industrial accident
that send a man to hospital with broken
bones in the mid-afternoon. He remains at
Royal Inland Hospital in stable condition,
according to the Canadian Press.

Smith said a lumber pile at the cedar
mill fell on the worker.

“The crew attended to the scene very
quickly and removed the lumber off him
very fast,” said Smith. “It was an outstanding job by the crew.
Smith declined to provide details
about how the accident occurred, saying
it remains under investigation.

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