Home:  Global Wood p01.gif (127 bytes) Industry News & Markets

Timber shortages cause Canfor B.C. mill closure
[May 13, 2024]

Canfor Corp. (TSX:CFP) has announced Thursday (9 May)  it is permanently closing its Polar sawmill in Bear Lake, B.C., shutting a production line at its Northwood Pulp Mill in Prince George, and suspending its "planned reinvestment" in Houston, B.C.

The company says in separate news releases that the closures will impact 400 jobs, 180 at its Polar mill and 220 at the Northwood facility.

The company says a shortage of fibre is the reason behind the indefinite curtailment of one production line at the Northwood pulp mill, while Canfor president Don Kayne says timber is critical for its sawmill, but the harvest level has "declined dramatically."

He says the decline is partly due to natural disturbances, like beetle infestations and wildfires, but also to policy and regulation changes that have "hampered" Canfor's ability to access enough fibre to support its facilities, forcing the closures.

Canfor announced last September that it was planning to spend $200 million on a state-of-the-art mill in Houston, west of Prince George, shortly after it had announced the closure of its sawmills in Houston and Chetwynd.

The Polar sawmill, about 70 kilometres north of Prince George, had an annual production capacity of about 300 million board feet, but has been shut since January.

Kayne says in a news release that the company's ability to reliably access enough timber to run the facilities is critical for the business.

"Unfortunately, while our province has a sufficient supply of timber available for harvest as confirmed by the allowable annual cut set by B.C.¡¯s chief forester, the actual harvest level has declined dramatically in recent years.

"In 2023 the actual harvest was 42 per cent lower than the allowable cut, a level not seen since the 1960s," Kayne says.

Canfor Pulp, a subsidiary company, says it currently operates two pulp production lines out of its Northwood facility, which will continue to operate for the next few weeks, followed by an "orderly wind-down process" of one line.

Call to stabilize timber supply

The Council of Forest Industries (COFI) estimates 10,000 jobs (direct, indirect and induced) were lost in 2023 as a result of a shrinking timber supply and subsequent mill closures and curtailments, and is now calling for immediate measures to halt the decline.

¡°Escalating closures and curtailments of lumber, pulp and paper mills in B.C. mean the provincial government needs to move faster to stabilize timber supply,¡± COFI president Linda Cody said.

¡°Additional transition measures are needed within the next 60 days to address current challenges in approval and permitting systems, and changing land use policies that are leading to dramatic declines in harvest levels.¡±

B.C.¡¯s timber supply fell from 60 million cubic metres in 2018 to 35 million cubic metres of actual harvest in 2023. And the most recent provincial budget forecast it would fall even further this year to just 32 million cubic metres.

A substantial amount of the annual allowable cut in B.C. was lost to a Mountain pine beetle infestation in the late 1990s. But that¡¯s no longer an excuse, Girvan said.

What¡¯s been limiting the timber supply lately is government policies, he said, including a moratorium on logging old growth stands, First Nation tenure transfers, a 30 by 30 conservation goal, and eco-system based land management.

¡°All of those things, doesn¡¯t matter which way you cut it, it¡¯s going to reduce the supply,¡± Girvan said.

¡°This isn¡¯t about the Mountain pine beetle anymore. The industry rationalized to the forecast for annual allowable cut by 2018 and early 2019. The industry was in balance in British Columbia.

¡°Anything that¡¯s happened since then is because they¡¯re looking at the long-term supply and going, ¡®this ain¡¯t going to work.¡¯¡±

Ralston disagrees that B.C. policies are to blame for the series of mill closures in B.C.

¡°Some of the objections I understand, but I don¡¯t accept them,¡± Ralston said.

Source:  biv.com