Lumber News Archives: Aug 2011

Lumber News Archives: Aug 2011

Softwood Lumber Agreement ; US Proposal for Log Exports to China ; Housing Starts, US ; Conifex Posts 2Q Loss ; First Nations and China ; Madison’s Timber Preview ; Canada Housing Starts ; CN Rail Transportation Deal ; Housing Starts, Japan Carbon Credits ; EACOM Closes Deal ; Bioenergy Project Approvals, British Columbia ; Wildfire Update, Ontario ; Prince Albert ReopensFreight Transportation ; Madison’s Timber Preview ; Japan Update ; US Home Prices, Sales ; US Lumber Exports to China Reforestation and NSR; Madison’s Live Online Lumber Directory ; Kitwanga Reopens ; US Housing Starts ; Wildfires Ontario ; West Fraser Closes Sale

August 29, 2011

Softwood Lumber Agreement

The full scope of the Office of the United States Trade Representatives’ claim against
British Columbia’s timber pricing policy specifying alleged breaches under the 2006 Softwood Lumber Agreement was publically released this week by Canada’s Department of
Foreign Affairs and International Trade. It is not pretty. At a full 97 pages of arguments,
some of it censored by Canada, assertions by the US of the BC government providing
benefits to the lumber producing industry in that province are greatly detailed.

Timelines of changes to the timber pricing system, log grading, and the practical application of log scaling are all examined, concluding with the claim that these changes are not grandfathered in the SLA.
The US is asking for C$499 million in penalties from the LCIA, the international arbitrating body chosen by both sides to hear SLA
disputes. This figure is based on real data from BC’s timber harvest plus projections to March 2012, the date of the LCIA hearing on this issue.

The US representatives have used data out of BC Timber Sales, Forestry Innovation Investment, Forintek, and other BC forest industry agencies and companies to make a comprehensive case. To Madison’s informed eye, there are several areas of serious concern
in this claim.

US Claim Against BC

The basis of the US argument rests on the timing of changes to BC timber pricing policy, particularly with respect to changes that occurred during negotiations for the terms of the SLA. In the claim, the US details BC log grading prior to April 2006, at which time sawlogs
deemed to be “dead and dry” were Grade 3 and charged a minimum stumpage rate, usually the $0.25 ‘salvage’ rate used for beetle-kill.

Reforms put in place in April 2006
changed the method of grading good
sawlogs and beetle-affected sawlogs by
refining the calculation determining
what percentage of
a log could be milled into lumber and what
percentage of that lumber was deemed
‘merchantable’. This method was loosely
referred to as the 50/50 rule, because if
50 per cent or more of a log could be made
into lumber and 50 per cent or more of that
lumber was merchantable, that log was
a #1 or #2 sawlog and not eligible for the
$0.25 ‘salvage’ stumpage rate. The April
2006 reforms retained the 50/50 rule but
replaced the “dead and dry” Grade 3, and
automatic $0.25 ‘salvage’ stumpage, with a
standard based on each log’s suitability for
making merchantable lumber.

This pricing method is grandfathered
into the SLA, according to the US. It is the
later changes that are the basis for this
current arbitration.

The US maintains that in April 2007
BC “quickly abandoned the new reforms
beginning in early 2007” but doesn’t explain this alleged abandonment in the
same way that both the pre- and post-April
2006 timber pricing methods are detailed.
There are, however, startling figures provided about the timber harvest, and which
percentage of that harvest was deemed
Grade 4 thus charged the $0.25 ‘salvage’

It is both the speed with which the
amount of beetle-kill was harvested and
the scope of that increase that has the US
concerned. The US repeatedly couples this
marked change in the ratio of good sawlogs to beetle-kill with the sharp decline in
US home building rates, seemingly in an
effort to make the BC government policy
more deliberate. The fact is that US housing starts began crashing in mid-2006, actually the month after SLA was signed. By
mid-2007 problems with US home building rates were obvious to everyone, but
for the lumber industry that had already
been old news for over half a year.

Using basic math the US claim says
that the sheer increase in the volume of
BC’s beetle-kill graded logs during such
a short time period points to non-compliance with the SLA. The US claim states
on Page 18 that, prior to April 2006, “[BC]
priced all ‘dead and dry’ timber (Grades
3 and 5) at the minimum stumpage rate”.

Under the pre-April 2006 timber pricing
policy, 43 to 52 per cent of BC logs were
Grade 3 thus were automatically charged
the $0.25 ‘salvage’ stumpage rate. From
the April 2006 reforms to spring 2007, between 5 and 19 per cent of BC’s logs were
charged the $0.25 ‘salvage’ stumpage,
while approximately 17 per cent fell into
the Grade 4, or less than 50/50, category.

From a broad overview, it is difficult to see how BC will explain charging ‘salvage’ stumpage rates on 44 to 55 per cent of the Interior harvest while making an average of 92.5 per cent of those logs into lumber which averaged out at 85.5 per cent of lumber value made from #1 and #2 Grade sawlogs.


Data taken from page 48 of US Statement of Case

The claim then cites BC Ministry of Forests statistics, after early 2007, 20 per cent of BC logs were rated Grade 4 and by 2008 that number shot up to 44 per cent. Between 2008 and 2010, 55 per cent of all Lodgepole Pine harvested in BC was Grade 4, the US claim determined using BC’s own statistics. The US maintains that, within these ‘salvage’ grade logs, there were “large volumes of lumber-quality timber” which should have been charged the full #1 and #2 market rate for sawlogs.

The US then uses the volume of perfectly good lumber produced in BC during that time to back up its claim that the supposedly ‘salvage’ logs were indeed “misgraded”.

The US claim also points out on Page 37 that the value of good lumber produced in BC during that time did not decline significantly compared to its neighbour, Alberta, a province of similar timber species with — at that time — little beetle-kill harvesting. Further, data is taken from a series of BC Forestry Innovation Investment reports examining the lumber recovery factor of grey logs at several mills throughout BC.

At sawmills in Princeton, Quesnel, Prince George, and a Vanderhoof stud mill, Forestry Innovation Investment found that there was between 87 and 98 per cent lumber recovery from grey, or dead, logs compared to green, or live, logs. From these logs the value of lumber was between 77 and 94 per cent of lumber from green logs.

In an interview Thursday August 18, Pat Bell, BC’s Minister of Jobs, Tourism and Innovation, responsible for trade agreements including the 2006 SLA, told Madison’s that “all of these reports point to grandfathered features” of the Softwood Lumber Agreement. “BC’s grading rules, standards, and procedures are in compliance. The US is twisting the facts. The things they have articulated are not based in fact.”

While the C$499 figure is “outlandish”, Bell went on to say that, “the fact that the penalty requested is not higher proves that the US undoubtably has a weak case.”

The requested penalty is itself a complicated calculation, based on the amount of “misgraded” beetle-kill logs added to an “average market price” [AMP] effect. This “feedback effect”, the US says, artificially drove down the price of those sawlogs that were graded #1 and #2. The penalty request asks C$268 million for “misgraded” beetle-kill, plus C$231 in AMP effect on the price of good timber, running from May 2007 to March 2012, the full date range of the claim.

On the assumption that the SLA will be renewed to 2015, the US divides this requested C$499 million penalty by the remaining 43 months’ duration and comes up with an additional 13.5 per cent export charge to BC lumber going into the US. Added to the existing 15 per cent export charge, this proposed penalty would bring the total duty for BC to 28.5 per cent, as long as the composite price remains below US$315 mfbm. At the very worst of US/Canadian softwood lumber disputes, back in 2002, the duty charged on Canadian lumber exported to the US was 27 per cent.

Zoltan van Heyningen of the US Coalition for Fair Lumber Imports explained to Madison’s, also on Thursday, the US method of calculating BC’s alleged breach: “Every quarter the US gets a spreadsheet from BC’s Ministry of Forests, showing how the AMP for that quarter was calculated,” van Heyningen said. “To get this part of the remedy, we simply plug in the correct figure for what should have been the volume of Grade 4 on each cutting authority in the spreadsheet, and see how the AMP changes.”

The Grade 4 level from April 2006 to March 2007, he added, would be the starting point for estimating the correct amount of Grade 4.

Canada has 90 days, or until November 9, to file its defense. Madison’s will report on the public document issued from either the Canadian or US government websites in the week following this deadline.

Pat Bell assured Madison’s that “there is virtually nothing in this claim that we didn’t expect”.

Madison’s awaits a similarly well-documented response from the Canadian side in the coming six weeks.

US Proposal for Log Exports to China

The current requirement of debarking or fumigating raw logs and drilling for nematodes, to prepare for export from the US into China, may soon be extended to include keeping logs from resting directly on soil.

In an effort to facilitate lifting China’s ban on all hardwood and softwood log exports, including southern yellow pine, out of South Carolina and Virginia put into place in April 2011, APHIS — the Animal and Plant Health Inspection Service of the US Department of Agriculture — in early August sent a letter to China’s Department for Supervision on Animal and Plant Quarantine.

In the letter, APHIS proposes new requirements to reduce pest risk on raw logs imported by China from the US.

US Log Exports to China

Alyn Kiel, Public Affairs Specialist at the USDA, explained to Madison’s in a phone interview Friday that “for now this is a just a proposal which would apply to all log shipments” from the US to China.

“Industry is required to follow those mandated by China. At the moment we are waiting for a response, China may accept our proposal or may come back with a different set of requirements. Our goal at the USDA and APHIS is to mitigate pest risks into China,” detailed Kiel.

US Plant Protection Service officers on the west coast are scrambling to clarify a change to phytosanitary rules after a new “Excerpt” was posted on the Chinese government website August 4.

Intrepid US customs broker Michael Jones, of Jones & Jones Custom Brokers in Blaine, WA, provided Madison’s with a contact at the Washington State Department of Agriculture.

“The Excerpt indicated that logs can not be placed on the ground; they must either be lifted on skids, or stored on asphalt or concrete. Logs can’t have any dirt on them when loaded on a ship. They must also be tarped,” explained the US Plant Protection Officer who did not want to named, referring Madison’s to a media representative at the WSDA.

“Our goal at APHIS is to reduce the number of pest interceptions in China,” concluded Kiel. “We are expeccting a visit by experts from China in September, when we will take them on a tour of our ports so they can see for themselves the process US logs undergo.

“Once there is agreement on any new requirements, the USDA will outreach with industry and look at the ports to make sure that logistically any changes are possible.”

Housing Starts, US

The US Commerce Department said Tuesday that builders began work on a seasonally adjusted 604,000 homes in July, a 1.5 per cent drop from June. Single-family homes, which represent 70 per cent of home construction, fell 5 per cent. New apartment building rose more than 6 per cent.

The number of homes under construction is the fewest in 40 years., at just 413,000 homes, after accounting for seasonal factors. A decade ago, roughly 1.6 million homes were built.

Though new homes represent just 20 per cent of the overall housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and about US$90,000 in taxes, according to the National Association of Home Builders.

US Housing, Real Estate

Building permits, were also down in July — an annual pace of 597,000 compared to 617,000 — but also above the six-month trend and 3.8 per cent up from a year earlier.

The regional breakdown saw huge swings among two of the four areas. Starts plunged 38 per cent in the Midwest and jumped 35 per cent in the Northeast. They rose 5.6 per cent in the South and fell 3 per cent in the West.

Housing starts so far this year are running on a 566,000 pace, according to Bloomberg calculations. The result compares with last year’s tally of 587,000 starts, the second-fewest on record. Home construction totalled 554,000 units in 2009, the lowest since record-keeping began in 1959. During the past decade’s housing boom, starts reached a peak of 2.07 million in 2005.

Meanwhile, existing-home sales declined 3.5 per cent from a month earlier to a seasonally adjusted annual rate of 4.67 million, the National Association of Realtors said Thursday.

The median existing home price in July was US$174,000, down 4.4 per cent from US$182,100 a year earlier. Housing continues to be more affordable than it has been in years.

Conifex Posts 2Q Loss

Conifex Timber had a $3.6 million net loss in 2Q, up from a $2.4 million loss a year earlier. Revenue was $26.9 million, a 27 per cent increase from $21.2 million in the 1Q of 2011, and more than double the $12.6 million achieved a year earlier.

The company’s lumber segment, which contributed most of the revenue, shipped 81.5 million board feet — up 138 per cent from the same quarter last year. However, lower unit prices limited the increase in revenue to 105 per cent.

August 22, 2011

First Nations and China

After Russia’s announcement of a 25 per cent raw log export tax in the summer of 2008, a major British Columbia First Nations forestry delegation embarked on a trade mission to China. At that time trade representatives with the BC First Nations Forestry Council signed a letter of intent with Qingdao Liangmu, the largest forestry remanufacturing company in China’s Shandong province, and a memorandum of understanding with Zhongchuan International Mining Holding Ltd. Please see the July 18, 2008 issue of your Madison’s Lumber Reporter for details.

This week the BC First Nations Leadership Council — which represents numerous native groups in the province — set out a seven-point action plan to take advantage of new opportunities in China. The strategy includes promoting trade missions, expanding market opportunities and setting up a China trade desk to help First Nations respond to business opportunities. BC First Nations say they are getting unprecedented inquiries from Chinese companies to develop projects on their territories.

BC Forestry

The new China strategy is aimed at cultivating stronger relations with China and responding to growing commercial interest in BC’s natural resources sector. The First Nations-China: Transforming Relationships strategy was launched jointly with the Asia Pacific Foundation of Canada as part of the Foundation’s new initiative called the National Conversation on Asia.

The action plan aims to: build the internal capacity of First Nations’ awareness and understanding on China; promote reciprocal annual missions between First Nations/Canada and China; establish a China Desk to assist First Nations to respond to and develop business opportunities; develop best practices to help Chinese investors understand the consultation and collaboration process with First Nations; expand market opportunities for First Nations in China; urge the creation of a joint First Nations/Provincial and Federal technical working group; and, create a branding strategy to promote First Nations opportunities in China.

Also aware of new opportunities in China, several federal Canadian government Ministers and a Member of Parliament on July 13 participated in a round table on business prospects between Canada and China with Asia-Pacific stakeholders and Chinese business community leaders from the Vancouver area.

Canada’s Minister of International Trade and Minister for the Asia-Pacific Gateway, Parliamentary Secretary to the Minister of Fisheries and Oceans and Parliamentary Secretary for the Asia-Pacific Gateway, and Wai Young, Member of Parliament for Vancouver South together recognize that “one in five Canadian jobs linked to trade [ . . . ] it is important that we further develop our trading relationship with China to create opportunities for Canadians”, according to a federal government press release.

Yuen Pau Woo, President and CEO of the Asia Pacific Foundation of Canada, was also in attendance at the round table.
“China is increasingly in need of natural resources to fuel its rapid urbanization and economic expansion. Under the right circumstances, Chinese investment has a great deal to offer First Nations in Canada, who claim millions of cubic kilometres of resource rich lands. However, Chinese government officials and business owners are generally unaware that First Nations have rights and title to specific lands in Canada. Furthermore, provincial and federal initiatives to market Canada’s natural resources in Asia do not adequately assist First Nations in accessing markets. BC has spent millions promoting the forest industry in Asia and China is now the province’s #1 forest export market. First Nations in BC are sitting on millions of cubic metres of wood, but without access to markets they do not benefit,” wrote Woo on the Foundation website late last week in a piece co-authored with First Nations Summit Grand Chief Edward John.

In an opinion piece July 27 to the Vancouver Sun, Guangyu Wang, Director of Asian programs at UBC’s Faculty of Forestry, Guangping Miao, Director of Forest Tenure Reform and Transfer Division in China, and Jack Saddler, former Faculty of Forestry Dean at UBC, together commented on investing in forestry in China.

China’s rapid economic growth has catalyzed a significant increase in its wood consumption. There is also increasing awareness of the environmental impact that logging has had in areas such as headwater regions of the main rivers where China
has traditionally sourced much of its timber. For these and several other reasons China is now highly motivated to increase its local timber supply. At this time the gap between supply and demand for the wood is heavily dependent on imports. In 2010 alone, China imported C$45.5 billion worth of wood.

“The biggest concern for investors is that China and Canada do not have any type of formal agreement on cooperative investigations and inspections in the field. The forest resources data in China are often difficult to access because they’re classified as national security information and are not readily shared with the public,” the writers explain.

China is undergoing continuing forest tenure reform to relocate its traditional collective-owned forests to individual farmers under a ‘forest contract responsibility’ system. It has been largely acknowledged that these reforms have created an excellent opportunity for foreign capital investment in Chinese forestry. It is also largely recognized that the Chinese government continues to gradually improve the policy environment for foreign investment, while acknowledging that many of the current forestry policies and systems still need to be improved.

The writers continue, “By the end of 2010, 23 Chinese provinces had implemented forest tenure reform and the farmers had been allocated their forested lands. At this time, China has completed the transfer of more than 149 million hectares of forestland user rights, accounting for 82 per cent of the total forested area. About 64 million forestland user right certificates have been issued to 61 million farmers with a combined area of 120 million hectares of forestland, accounting for 66 per cent of the total area.

“Owners of purchased forests cannot be sure that they will be able to harvest the timber. As in many parts of the world, forest harvest practices are subject to an Annual Allowable Cut which in the case of China is set by the central government. They also issue harvesting permits, through the local forestry bureau, as well as a transportation permit after the trees have been logged. The AAC is established over a five-year term, based not only the company’s forest inventory and the fiveyear management plan; it must also consider local economic development, while the harvest permit itself is subject to the applicants and regional forest management practices.

The acquisition of forest and forestlands has to go through a legal process. The State Forestry Administration has established a bureaucracy to handle the administration of forest ownership and user right leases, and has urged foreign companies to use this platform to complete forest acquisitions. Currently, 26 provinces and autonomous regions have established 850 Forest Tenure Management Services and 618 Forest Asset Evaluation Agencies.”

Clearly this new culture of investment in forestland within China and efforts by BC’s First Nations to reach out to this growing market will result in strong business relationships far into the future.

Madison’s Timber Preview

This week’s issue of your Madison’s Timber Preview is dedicated to the latest movements and developments in the financial structure of North American’s forest products companies, and also takes a look at company executive’s moods and predictions.

Contact us any time for a subscription.

Canada Housing Starts

Canadian housing starts unexpectedly climbed 4.3 per cent in July, setting 3Q new home construction off to a strong start and maintaining its role for now as a key support to the economy.

Starts, elevated by a big jump in construction of multi-residential buildings such as condominiums, rose to a seasonally adjusted annualized rate of 205,100 units, Canada Mortgage and Housing Corp said on Tuesday.

That is up from a downwardly revised 196,600 units in June, which were originally reported at 197,400 units.

Housing Starts, Canada

Home building activity has been increasing through the first seven months of 2011, but starts are still down 4.6 per cent from a year ago.

Economists believe the recent strong construction activity is the result of increased demand last year.

The seasonally adjusted annual rate of urban starts was led by a 13 per cent jump in multiple urban starts, such as condos, to 120,200 units. CMHC said Ontario, BC and the Atlantic region showed the most strength in the multi-residential sector.

Partly due to shifting demographics, Canada has seen a boom in condominium construction which has filled the skylines of its biggest cities with cranes.

But the closely watched measure of starts of single-family homes decreased 7.8 per cent in July to 65,000 units.

Economists at IHS Global Insight noted single-family new construction activity was 22.2 per cent below their level last year, compared with multi-family starts, which are now at their highest level since October 2008.

Rural starts were estimated at a seasonally adjusted annual rate of 19,900 units in July.

CN Rail Transportation Deal

Canadian National Railroad announced this week it will increase the lumber transload capacity at the Prince George Distribution Centre to more than 30,000 containers a year.

This announcement is surely welcome by western Canada’s forest industry, which was significantly hampered by transportation delays in shipping product to Asia for the first five months of this year.

That increase comes as CN announces it has a new agreement with China’s CNBM Forest Products Trading Ltd. The agreement calls for the use of CN’s new lumber transload facility in Surrey which can handle 10,000 containers per year.

New CN Transload Facility

CN is scheduled to start operation of the lumber container export facility at its Thornton Yard in Surrey, BC, this autumn.

It will have an initial footprint of eight acres, with room to grow up to 20 acres. The facility, supplied with rail cars of lumber originating in communities in the BC Interior, will make it easier to transport lumber to export markets in China.

“Lumber exports to China now account for close to 25 per cent of the western Canadian total and are expected to continue to increase at a fast pace in the years to come,” said Jean-Jacques Ruest, CN’s Executive VP and chief marketing officer.

“CN aims to foster a world-class export supply chain for Canadian lumber in cooperation with CNBM Forest Products Trading, lumber producers in BC, and ocean shipping lines serving Port Metro Vancouver.”

Housing Starts, Japan

June housing starts in Japan grew for the third month in a row to 72,687, a 5.8 per cent increase over June 2010. Gains were seen mostly in the building of new rental and for-sale homes, while those of owner-occupied homes decreased slightly, according to the Japan Lumber Journal.

Condominiums again showed the largest gain, of 47.9 per cent, also a three-months consecutive increase.

The seasonally-adjusted annual rate was 817,000 units, up from 800,000 units in May.

The construction of new wood-framed homes fell by 1.2 per cent compared to May, to 40,249 units. Wooden homes were 55.4 per cent of total new home construction.

Japan Housing Starts

Non-wooden homes, largely condominiums, increased by 16.1 per cent, to 32,438 new units, says the Japan Lumber Journal.
Prefabricated homes also increased for the third straight month, to 11,811 units, or 2.8 higher than May.

2×4 units fell by 0.5 per cent to 8,809 new units. This was the first decrease in seven months.

The floor area of new home building ran up to 6.6 million square metres, a 4.6 per cent increase over May and also representing the third month of straight increases.

August 16, 2011

Carbon Credits

An international study released in mid-July has concluded that forests suck up a third of the carbon pumped into the atmosphere each year from the burning of oil, gas and coal. The world’s forests gobble up so much carbon they are protecting the planet from the worst impacts of humans’ staggering fossil fuel emissions.

The new report, published in the journal Science, is the most comprehensive assessment yet of the global forest “sink” and shows trees from the tropics to the boreal play a huge role in controlling the global carbon credits budget by sucking up vast amounts of carbon from the air and locking it away in wood and soil. It says that the forests have been a major carbon sink since 1990, when data collecting first began, and shows the changing dynamics of the world’s trees.

Forests as a Carbon Sink

The report also found that fire and insects hit Canada’s forests so hard between 1990 and 2007 that the carbon sink in Canada’s managed forest was “reduced by half”. On the other side of the Atlantic, the carbon sinks grew in fast-growing new forests in Russia and northern Europe. Though the world’s trees took up close to four billion tonnes of carbon a year between 1990 and 2007, the report says almost three billion tonnes a year were lost back to the atmosphere due to tropical land clearing and deforestation.

Tally those numbers up and the planet’s forests were still a major carbon sink, despite the deforestation loss taking up a net 1.1 billion tonnes of carbon a year over the 17-year study period.

Co-author Werner Kurz, of the Canadian Forest Service, explained to Postmedia News in an interview that the oceans suck up another 20 per cent of the emissions, which means “we have basically been getting a 50 per cent discount on all our fossil fuel emissions.”

Kurz said to the CBC that the amount of carbon dioxide being absorbed by forests is “good news” and reinforces what scientists had previously estimated — that forests are the biggest carbon sinks among land ecosystems.

In order to make their calculations, the researchers gathered data from sources around the world such as the Canadian national forest carbon monitoring, accounting and reporting system, which is headed by Kurz. The system combines data such as logging records, measurements of trees and forest litter, remote sensing data on wildfires and insects, and computer simulations that estimate the effects of carbon-emitting events such as forest fires and carbon-removing events such as forest growth.

It provides that information on Canada’s 230 million hectares of “managed” forests to the United Nations each year as part of annual greenhouse gas reporting under the United Nations Framework Convention on Climate Change. The data is also used by researchers around the world.

(please see image this page)

Separate research, published in Nature also mid-July, found that a gradual increase in atmospheric carbon dioxide in the past half-century has accelerated the release of methane and nitrous oxide in the soil. These gases are respectively 25 and 300 times more effective at trapping radiation than carbon dioxide, the principal greenhouse gas, by volume.

Additional carbon dioxide affects the capacity of different soils -in forests, grasslands, wetlands and agricultural fields -to either absorb or release methane and nitrous oxide. More carbon dioxide increased nitrous oxide levels in all soils, but soils in rice paddies and wetlands in particular released more methane.

The culprits in both cases are microscopic soil organisms that breathe in carbon dioxide and “exhale” methane. The more carbon dioxide in the air, the more these single-cell greenhouse gas factories thrive. If the calculations are right, the carbon “credit” that is attributed to faster plant growth driven by extra carbon dioxide in the air must be revised, say the researchers. This “credit” helps to offset the negative effect of greenhouse gases -but the new data suggests it should be written down by a fifth.

“This feedback to our changing atmosphere means that nature is not as efficient in slowing global warming as we previously thought,” said Kees Jan van Groenigen, a professor at Trinity College Dublin and the paper’s lead author to
Agence France-Presse. “By overlooking the key role of these two greenhouse gases, previous studies may have overestimated the potential of ecosystems to mitigate the greenhouse effect.”

In the third study, published in the journal Nature Geoscience, US scientists highlight evidence that global warming is eroding the ability of the ocean to soak up carbon dioxide. The world’s seas take up roughly one-third of all human carbon emissions, but how this “sponge” responds to rising carbon dioxide levels is a tough question, mainly because data has been spotty geographically and didn’t cover long time periods.

Galen McKinley, a professor at the University of Wisconsin at Madison, worked with a team that looked at three decades of observational data from the North Atlantic. They found rising air and water temperatures were slowing the pace at which carbon is absorbed across a large portion of this ocean’s subtropical zones. Warmer water cannot hold as much carbon dioxide as colder water. As a result, as the ocean’s temperature rises, its “carbon capacity” decreases.

Increases in atmospheric carbon dioxide have largely been matched by corresponding increases in dissolved carbon dioxide in the seawater. The gases equilibrate across the air-water interface, influenced by how much carbon is in the atmosphere and the ocean and how much carbon dioxide the water is able to hold as determined by its water chemistry.

Madison’s will examine various burgeoning carbon credits markets and how they are being applied in a future issue of your Madison’s Lumber Reporter.

EACOM Closes Deal

EACOM Timber Corporation announced Friday that it closed the previously announced acquisition of the remaining one-third of the Elk Lake sawmill from Liskeard Lumber Limited for a consideration of $15 million. EACOM currently owns two-thirds of the sawmill.

The Elk Lake sawmill is located in Ontario.

Bioenergy Project Approvals, British Columbia

$300 million in biomass energy projects have been approved by BC Hydro in the Interior and north-central BC. The power plants will be fuelled by sawmill waste, logging debris and fibre from standing timber left in the wake of the mountain pine beetle infestation.

Western Bioenergy will build plants in Fort St. James in northern BC and Merritt, near Kamloops. West Fraser will build two smaller plants at its sawmills in Chetwynd and Fraser Lake.

The power projects, scheduled to be complete by 2016, will produce enough electricity to power 70,000 homes annually.

Wildfire Update, Ontario

Ontario’s provincial officials say there are still more than 100 forest fires burning in northwestern Ontario, despite some recent rainfall. All of the more than 3,500 evacuees have returned to their homes, many in remote communities, but smoke can still be seen above many areas in the region.

The Ministry of Natural Resources says new fires are occurring daily, with three new ones reported Thursday. More than 2,000 people and 100 aircraft are fighting the fires, including about 500 firefighters brought in from other parts of Canada and at least 40 from the United States. There are currently 112 active fires burning over 582,912 hectares — about 5,800 square kilometres.

The ministry says about 26,000 lightning strikes occurred across northwestern Ontario over the past two days, which will likely lead to more fires being discovered.

“With little rain and continued hot temperatures, we are expecting additional fires throughout (Friday) and into the weekend,” said Art Osborne, spokesperson for Ontario’s ministry of natural resources.

About 116 blazes are burning as of Friday, including eight new fires.
Osborne said it’s the third largest area destroyed during a fire season in Ontario in 50 years.

Wildfires, Canada and US

As northern Ontario communities work to fight several large forest fires in the area, they’ll receive a little help from the prairies. Fifty Saskatchewan fire fighters were deployed Friday to Ontario to help in the efforts.

Steve Roberts, from Saskatchewan Wildfire Management, says the organization has more resources standing by if Ontario should need them. “If Ontario needs more resources they will put in a request through the Canadian Inter-Agency Forest Fire Centre, and they coordinate resources and they coordinate resources across Canada so our folks will be joining BC, Alberta, and even firefighters from the USA.”

Elsewhere, Fire Crews in Central Oregon turned their attention to a rash of fires after lightning passed though the region Thursday.

Fire officials say the largest blaze may have been caused by humans. The Brown Road Fire is burning about 10 miles north of Maupin along the east side of the Lower Deschutes River. Its estimated size is 5,600 acres.

Lisa Clark, fire information officer, says the Lower Deschutes River is one of the most heavily used rivers, and attracts a lot of visitors to BLM land.

Highway 216 remains closed after the fire jumped the road. Clark says another fire North of Madras, the Deadman Canyon fire is winding down. Fire crews hope to have that blaze fully contained by Friday evening.

About 450 fire personnel were involved in battling a blaze that is burning in the Hull Mountain area northeast of Covelo, CA, in the Mendocino National Forest.

A large vegetation fire five miles east of Covelo has grown to 800 acres and is not expected to be contained until Saturday, the California Department of Forestry and Fire Protection reported Thursday morning.

As of Friday morning, a crew compliment of 450 people were battling the blaze with 15 engines, 17 crews, two bulldozers, three helicopters, and one air tanker.

The cause of that fire is under investigation.

Prince Albert Reopens

Provincial and municipal dignitaries were on hand for the reopening of the Prince Albert Pulp Mill in Saskatchewan Wednesday.
Ed Roste, vice-president of operations for Paper Excellence, the company that bought the mill, which was shut down in the spring of 2006, explained the mill is in the process of being converted to produce pulp for rayon, and is expected to be completed by September 2012.

There are currently six contractors working on cleaning up the plant.

However, Roste admits there could be delays to the $30 million project.

He says once those availabilities are in place, Paper Excellence will begin to hire trades people and operators, then begin production once a full staff of about 250 people is in place.

August 09, 2011

Freight Transportation

Canadian stocks rose slightly mid-week on positive data of jobless claims and home sales, and on and optimism that US lawmakers can resolve a standoff over raising its debt limit, according to the San Fransisco Chronicle Wednesday.

Canadian National Railway reported a 4 per cent increase in quarterly earnings on Monday as freight volumes rose and revenues increased across commodity groups. The increase in earnings came despite difficulties including floods in Western Canada, forest fires and mudslides, CN Chief Executive Claude Mongeau stated. Revenues at the Montreal, QC-based company rose 8 per cent to $2.26 billion from just under $2.1 billion a year earlier.

Higher freight volumes were a result of modest improvements in North American and global economic conditions, while the strong Canadian dollar versus the greenback kept the quarter’s net income in check, CN said.

Canada’s biggest railway said its net earnings rose to $538 million, with diluted earnings per share of $1.18, in the three months to the end of June. That compared with earnings of $534 million, or $1.13 a share, in the same period a year earlier.

North America Update

Meanwhile, Canadian Pacific Railway, out of Calgary, AB, said on Wednesday that its profit in 2Q fell to $128 million, or $0.75 a share, from $166.6 million, or $0.98 a share, a year earlier. Widespread spring flooding, which shut CP’s main US-Canada line for nearly a month, cost the company $16 million in 2Q, Canada’s second-biggest railroad said. CP’s revenue rose 2 per cent, to about $1.26 billion, compared to one year ago.

The company saw operating expenses rise to $1.03 billion from $960.1 million a year earlier. Average fuel prices rose 37 per cent, to $3.50 US per gallon.

Also on Wednesday, Statistics Canada reported that total rail traffic–consisting of loadings both originating in Canada and received from the US–was up 3.7 per cent year-on-year in May, to 26.1 million metric tons.

Non-intermodal freight loadings, which represented the majority of total domestic cargo loaded in May, rose 2.7 per cent year-on-year, to 21 million metric tons. Intermodal freight loadings, which involve the movement of cargo between two or more modes of transportation, fell 0.2 per cent year-on-year, to 2.3 million metric tons in May.

The Canadian railway’s main domestic transportation systems, non-intermodal and intermodal, accounted for about 89 per cent of the total traffic carried in May, and their combined freight rose 2.4 per cent from May 2010, to 23.3 million metric tons.

Geographically, 58.6 per cent of the freight traffic originating in Canada was loaded in the Western Division of Canada, with the remainder loaded in the Eastern Division. Freight loaded at Thunder Bay, ON, is included in the Western Division while loadings at Armstrong, ON, are reported in the Eastern Division.

Total rail freight traffic in May, consisting of loadings originating in Canada and received from the United States, was up 3.7 per cent from the same month in 2010, to 26.1 million metric tons.

From an international perspective, rail freight traffic received from the United States into Canada rose 16.3 per cent from May 2010, to 2.8 million metric tons. The gain stemmed from non-intermodal traffic, which increased 17.5 per cent from the same month a year earlier, to 2.7 million metric tons in May.
In mid-July, the US Department of Transportation reported its Bureau of Transportation Statistics Freight Index fell 1.8 per cent in May compared to April, to its lowest level since November 2010.

Shipments declined 15.7 per cent in the 15 months following February 2008, and rose 12 per cent over the 25 months since May 2009. For the first five months of 2011, freight shipments measured in the BTS Index fell 1.2 per cent.

However compared to the recent low of April 2009, US freight shipments rose 12 per cent in May 2011, according to the BTS.
In Canada, 43,131 metric tons of logs and rough wood were moved by non-intermodal traffic in May compared to 28,394 metric tons one year earlier. 726,650 metric tons of lumber and 760,523 metric tons of pulp were transported by rail in May compared to 517,419 metric tons and 440,241 metric tons respectively in May of 2010.

For the first five months of 2011, 3.8 million metric tons of lumber and 3.9 million metric tons of pulp were moved, compared to 2.6 million metric tons and 2.5 million metric tons respectively for January to May 2010.

In the US, which measures rail car loadings in dollar value rather than by weight, US$292.2 million in wood and articles of wood was imported from Canada in the first four months of 2011, compared to US$252.9 for the same time period one year earlier. US$802.3 million in wood pulp was imported by rail from Canada from January to April 2011, compared to US$685.5 million one year ago.

[Please see tables on this page]

The Association of American Railroads has reported a 2.7 per cent increase in carloads for the first 26 weeks of this year, which is considered testimony to the upswing in demand for rail-based transportation. That figure can be expected to improve further as the economic recovery gains traction.

Union Pacific, the largest publicly held railroad company in the US, reported Thursday that revenue for 2Q rose 16 per cent to US$4.86 billion. Freight revenue rose across all categories, with revenue from energy being the largest contributor, jumping 14 per cent. The company reported a profit of US$785 million this quarter, a 10 per cent year-on-year increase.

Norfolk Southern, meanwhile, reported also on Thursday that the quarter-to-date volume was up 3 per cent due to strength from the automotive, intermodal, and coal segments. Echoing similar sentiments, competitor CSX recently reported a growth in overall freight volume alongside a 22 per rise in 2Q per-share profits.

“Although prudent price increases and effective cost-cutting efforts added quite a bit to the profits, the key driver remained higher volume,” said Debarati Bose at the Motley Fool Thursday in a piece on US transportation. “The transportation industry started to witness a turnaround last year despite the fact the US economy continues to hurl quite a number of challenges at freight companies. A compressed yet intensified peak season is expected ahead and Union Pacific is ramping up for it by increasing hiring.”

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Japan Update

Heavy arrivals of plywood ordered immediately following the March earthquake and tsunami in Japan are clogging port facilities, according to the Japan Lumber Reports. More than five ships are cuttently waiting to unload at Senboku Port, south of Osaka.

Please refer to the April 15 issue of your Madison’s Lumber Reporter for details of plywood price gouging on the part of Indonesian plywood exporters into Japan.

Several ships have been declined authority to unload at other ports due to lack of warehouse space, says the Reports. With unloading capacity at about 1,000 cubic metres a day, the high-priced cargo is now paying additional demurrage.

Japan Lumber, Economy

The plywood market in Japan continues depressed, says the Japan Lumber Reports, as wholesalers are carrying considerable inventory.
Both 12mm structural panel and JAS concrete forming panel prices are down over 100 yen from June. The sharp increase in prices following the March earthquake and tsunami is now seeing another sharp correction. Wholesalers do not expect plywood prices to fall below levels seen prior to the March earthquake, but agree that digesting the large inventory will take time.

Japan’s government said on Friday it plans additional spending of 13 trillion yen, US$167 billion, to rebuild from the March 11 earthquake and tsunami.

The planned spending comes in addition to a combined 6 trillion yen Tokyo has already set aside in two extra budgets that were compiled without new borrowing, to avoid adding to a huge public debt already twice the size of Japan’s US$5 trillion economy.
The combined spending is aimed at supporting projects worth 23 trillion yen to be carried out over 10 years, with about 80 per cent due in the first five years. That compares with the government’s estimate of direct material damage from the disaster at 16.9 trillion yen.

Meanwhile, factory output rose 3.9 per cent in June from the previous month as supply chain concerns eased, while household spending increased by 0.8 per cent, according to government data released Friday.

This data comes a day after Japan reported a rise in retail sales for the first time since the 11 March quake.

US Home Prices, Sales

The US Commerce Department said Tuesday that prices for new single family homes rose to a five-month high in June even as sales slipped. The median sales price for a new home increased 5.8 per cent last month to US235,200, and 7.2 per cent compared to June of last year. New home sales fell 1 per cent to an annual rate of 312,000 units in June. At the current sales rate, it would take 6.3 months to sell through that inventory, the report said.

Also Tuesday, the S&P/Case-Shiller index of home prices in 20 major US cities was down 4.5 per cent in May from a year earlier.

Friday the National Association of Realtors’ released its seasonally adjusted index for pending sales of existing homes, showing a rise of 2.4 per cent on a monthly basis to a reading of 90.9 in June.

It was the third increase in the past four months for the index, which tracks signed agreements to purchase homes. It remains to be seen, however, whether those contracts will turn into sales. Real estate agents have noted an increase in cancelled sales in recent months, although some past cancellations may be “nothing more than delayed buying decisions rather than outright cancellations,” said Lawrence Yun, NAR’s chief economist.

Real Estate, US

“Pending home sales had been trending up without a tax stimulus, but a variety of issues are weighing on the market including an unusual spike in contract cancellations in the past month,” said Yun.

The reasons behind the spike in cancellations are unclear, but may include tight credit and low appraisals, the group said. It found that 16 per cent of NAR members reported a sales contract was cancelled in June, up from 4 per cent in May.

The Realtors group says a growing number of buyers have cancelled contracts ahead of closings after appraisals showed the homes were worth less than they bid.

A spokesperson for the Appraisal Institute says banks may be growing even more cautious of the lending process.

“Banks have been hammered they have had bad loan after bad loan,” says Ken Chitester, a spokesperson for the Appraisal Institute. “The bank doesn’t want your house, they want your money. If they can’t get your money, then they end up with your house. In order to prevent that, lenders have become more cautious in this distressed economy.”

The NAR’s June Pending Home Sales Index, a housing measurement tool, of 90.9 for sales agreements for previously occupied homes, is more than 9 points below a reading of 100, which is considered healthy by economists, according to the Associated Press.

US Lumber Exports to China

In the first four months of 2011, the value of lumber exported from the US into China increased by almost 50 per cent, reaching US$190 million, compared to US$128 million the same period of last year, according to China Wood via the Japan Lumber Journal.

China’s Jiangsu Province imported 1.08 million cubic metres of logs in May, a 30.1 per cent increase year-on-year, with the value reaching US$222 million, a 22.1 per cent year-on-year increase. Specifically, imported white pine (spruce and fir) logs were 113.5 thousand cubic metres, a 48.3 per cent increase compared to one year ago, with a value of US$21.12 million, a 122.8 per cent increase.

Imported radiata pine logs were 127 thousand cubic metres, an increase of 46.6 per cent, or US$19.82 million, up by 62.6 per cent compared to the same time period last year.

Compared to data from 2009 to 2010, the value of the hardwood lumber from the US to Vietnam, Indonesia, Thailand, Malaysia, Singapore, the Philippines and other Southeast Asian major markets in 2011 also grew.

Demand from Vietnam alone increased by 70 per cent, as the import value climbed from US$59.7 million to more than US$1 million, says the Journal.

August 02, 2011

Reforestation and NSR

The debate over timber supply and inventory of the land base in British Columbia has resurfaced this week with BC’s Chief Forester, Jim Snetsinger. issuing a clarification in the latest issue of BC Forest Professional magazine to comments previously made. That publication’s May/June issue contained a two-page conclusion by retired Registered Professional Forester Anthony Britneff, who has 39 years experience of senior professional positions in the inventory, silviculture and forest health programs in BC. Britneff laid out technical data and analysis, stating that “this area known in forestry parlance as NSR or Not Satisfactorily Restocked is nearly three times greater than it was 25 years ago.”

British Columbia

Specifically, Britneff maintains that, “The estimated areas for inventory gross NSR and silviculture net NSR are 9.1 and 2.3 million hectares, respectively. And the public interest is not being served through the provincial government’s wholly inadequate responses to forest inventory and reforestation.”

Please refer to the May 6 issue of your Madison’s Lumber Reporter for Britneff’s assertions about the stewardship obligations of the BC Ministry of Forests, Lands and Natural Resource Operations. Also please see the May 13 issue for further comments by Bill Bourgeois, also a retired RFP, and Bob Peart, a biologist with decades of experience working with the BC provincial government.

In a response published this week in BC Forest Professional magazine, Chief Forester Jim Snetsinger answers Britneff’s challenge regarding the scope of NSR in BC, saying the previous article “over-estimates the NSR situation in British Columbia. [ . . . ] It will take a collective effort on the part of forest professionals to address stewardship issues such as reforestation and addressing NSR.”

Snetsinger closes his piece by saying more details will be forthcoming in a future issue of BC Forest Professional.

Madison’s contacted Snetsinger this week for those details, which were provided in a phone interview Thursday.

Snetsinger expanded, “After harvesting activity and disturbance, reforestation takes place to minimize NSR. Catastrophic disturbance in the wake of the mountain pine beetle infestation and wildfires make calculating NSR more difficult. In determining the numbers, a proper definition of NSR must be understood. Of the 715,000 hectares in this province currently identified as NSR, 479,000 were recently harvested and are being managed and reforested according to the legal obligation. This area is only technically viewed as NSR because it has not yet been reforested, it might take two or five years for a forest company to restock a harvested land base, therefore there is always a rolling inventory of areas logged and not yet planted. Generally speaking this area is approximately 200,000 hectares per year on an ongoing basis as forest companies log and produce lumber, then replant.”

Snetsinger continued, “The other 236,000 hectares of the total 715,000 hectares include a backlog from wildfire activity to 1987, when the restocking law was changed to create a legal requirement to replant. Of the remaining 236,000 hectares, 149,000 hectares was disturbed prior to 1987, and 87,000 was disturbed by wildfire after 1987. These quantities have been identified from surveys which are continuing, so this amount of NSR is going to increase [once more data comes in]. Under the Forests for Tomorrow program, 400,000 hectares of mountain pine beetle and wildfire impacted area has been surveyed, which contributes to post-1987 NSR.”

BC forest inventory and NSR

“From 1990 to 2001 the Ministry of Forests did a complete summary of the status of productive forestland, or stocking statistics. It was determined there are 2.1 million hectares of low productivity sites, which do not contribute to the timber harvest or Annual Allowable Cut. Of that 2.1 million hectares, 300,000 were deemed low productivity on the coast, 930,000 were non-commericial brush, and 970,000 were non-productive brush. As an overview, there is 96 million hectares of land in BC, of which 55 million hectares is forested, and 23 million hectares is productive forests, which does contribute to the harvest or to AAC. Stemming from that complete summary, the 2.1 million hectares deemed non-productive is a very low priority for reforestation because these areas are scattered and often remote.”

“In 2010 the scope of the mountain pine beetle infestation was determined to be 17.5 million hectares with some level of tree mortality. Of that, 9.9 million hectares is on the timber harvesting landbase, and of that 5.1 million hectares contains a tree population of more than 50 per cent pine. This means that 4.8 million hectares of beetle infested landbase contains less than 50 per cent pine, and that forest will continue to grow. The non-infested trees will have more light and more water, however there will be less volume of timber available [in the aftermath of the beetle infestation].”

“Regarding the 5.1 million hectares of beetle infested forest containing more than 50 per cent pine, 2 to 2.9 million hectares will be harvested and will regenerate. Which leaves 2.2 million hectares having potential to become NSR. A forest with 70 to 80 per cent pine population has advanced regenerative properties due to the secondary stand structure. We estimate that a significant portion of this area will not be replanted due to conditions of steep slope, remoteness, and worker danger. There may be 525,000 to 775,000 hectares of 2.2 million which could become NSR.”

“In review, NSR in the system as harvested and surveyed is 715,000 hectares, with included current activity and the backlog. 2.1 million hectares is outside of NSR, and should not be included in calculations because it is low productivity sites. Post-mountain pine beetle infestation, what will the forest look like? There will be more harvesting and more obligation to replant, and there will be more surveys done on the areas that are left. As lumber markets improve and there is an increase in salvage for biomass fuel projects, total harvest could reach 2 to 3 million hectares and natural regeneration could account for 5.1 million in the wake of the beetle,” Snetsinger summed up.

An important point the Chief Forester made is that “we don’t know exactly how much NSR there is because we don’t know how much industry is going to harvest. It is too early to determine as harvesting of the dead pine stands will continue for several years.”

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Kitwanga Reopens

The Kitwanga sawmill start-up in northwest British Columbia is significant because it will be only the second manufacturing facility to operate in a vast area west of Smithers following a series of mill closures in the past decade. There are no large operating sawmills in the area, and West Fraser’s linerboard plan in Kitimat, which employed more than 500 people, was shut down last year.

The Kitwanga sawmill is owned by Prince George-based Pacific BioEnergy, which plans to eventually open up a wood pellet mill adjacent to the sawmill. Purchased by Pacific BioEnergy in 2009 out of receivership, the sawmill will employ 45 people on a one-shift basis. The other operating mill in the area is a small venture producing railway ties.

US Housing Starts

New-home construction in the US popped to a five-month high in June, surprising economists and fueling hope that the long-struggling US housing market could at last begin to add strength to the economic recovery.

Work started on 629,000 houses in June, an increase of 15 per cent from May and nearly 17 per cent from the corresponding period last year, according to data released Tuesday by the Commerce Department.

Sales of previously owned US homes unexpectedly fell in June to touch a seven-month low as cancellations of pending contracts surged. The National Association of Realtors said Wednesday sales fell 0.8 per cent month over month to an annual rate of 4.77 million units, the lowest since November.

US Home Building, Real Estate

Housing starts for single family homes rose 9.4 per cent in June to 453,000 units per year, and the construction of apartment buildings jumped 31.8 per cent to an annual rate of 170,000 units.

Building permits increased last month by 2.5 per cent to an annualized rate of 624,000, the highest since last December.
These numbers are used as an indicator of future economic activity due to their implications for consumer spending, hiring, housing inventory, prices and other factors.

The key reason for optimism, said Brian Wesbury, chief economist at First Trust in Illinois to the Washington Post with Bloomberg, is that June was the first month since January 2006 that saw an increase in the total number of homes under construction, meaning more new homes were being started than being completed.

The survey also showed that completion of new homes took place at a rate of 535,000, which was 1.7 per cent higher than in May.
New home inventories are actually near historic lows in absolute terms. Used homes are pretty good substitutes for new homes, so that is a bit of a distinction without a difference, according to MarketOracle. Housing Starts peaked in June of 2006 at an annual rate of 2.273 million, so are currently 72.3 per cent off of the peak levels.

Sales of existing homes declined 0.8 per cent to an annual rate of 4.77 million units in June. The cycle low for sales of existing homes, excluding the swings related to the first-time home buyer credit program, is 4.5 million units, recorded in November 2008. Effectively, sales of existing homes have risen 6 per cent from the cycle low mark. Sales of single-family homes held steady at 4.24 million in June, up 5.5 per cent from the cycle low reading of 4.02 million in November 2008.

In June, 30 per cent of existing homes sold were distressed properties according to the National Association of Realtors, which is a nearly steady reading compared with 31 per cent in May 2011 and 32 per cent in June 2010.

Wildfires Ontario

As of Friday morning there were 112 forest fires burning throughout northern Ontario. Hot, dry weather prompts fire officials to say more fires will ignite.

Ontario Wildfires

On Thursday Ontario Premier Dalton McGuinty left the Council of the Federation meeting in Vancouver, BC, in order to survey the more than 300,000 hectares of burned devastation in northern Ontario.

Ontario’s Emergency Medical Assistance Team, essentially a mobile hospital, has been deployed to Thunder Bay.

Severe storms in the area provided temporary relief to firefighters.

Dave Manol, the ministry of natural resources fire management supervisor in Thunder Bay, said the storm and wind changes late Wednesday provided some relief. The sudden storm was so intense it blew half the roof off of the Thunder Bay Airport.

About 19 plane loads of people have been evacuated by the Canadian military to points all over the province.

Nearly 2,000 firefighters in the air and on the ground from at least five different provinces are battling harrowing conditions to fight the lightening-caused fires.

Once the flames get to be about 1.3-metres tall, firefighters on the ground must retreat and call in air support from water bombers, said Ian Clark, a fire ranger based in Thunder Bay.

West Fraser Closes Sale

West Fraser announced Wednesday that it has completed the sale of its Skeena Sawmills division to Roc Holdings Ltd.
The Skeena Sawmills division includes the Terrace sawmill and related Crown timber tenures to hundreds of thousands of cubic metres of wood a year.

The Terrace sawmill has a single shift capacity of 90 million board feet per year.

The sale conclusion effectively ends decades of West Fraser involvement in this part of the province.

The sawmill closed in mid-2007 during a labour dispute and never did fully re-open when that dispute ended in autumn 2007. West Fraser cited poor American markets as the reason for not re-opening.

There are expectations Roc Holdings, which is part of a massive Chinese construction conglomerate, will restart Skeena Sawmills, producing lumber to be used by partner companies in China.But the company to date has not released details of its plans.

Roc president Teddy Cui did say the company is looking forward to operating in the area.

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