The B.C. government can’t say it wasn’t warned.
When Jim Girvan, an independent forestry consultant, spoke at the Truck Loggers Association conference in January, he warned that B.C. government policies that continue to limit access to timber would ultimately result in the closure of four or five Interior sawmills.
So when Canfor Corp. (TSX:CFP) announced Thursday it will permanently shutter a sawmill in Bear Lake, B.C., indefinitely curtail one production line at its Northwood pulp mill, and suspend a planned $200 million investment to bring back its shuttered sawmill in Houston, B.C., no one – certainly not the minister of Forests – should have been surprised, Girvan said.
“It’s not like the government wasn’t aware of this,” Girvan said.
"We are disappointed by the business decision made by Canfor today and the impacts that will be felt by families and communities in northern British Columbia,” B.C. Forests Minister Bruce Ralson said in a press release Thursday.
"Workers shouldn't bear the brunt of commodity cycles as they have been forced to for years.”
In an interview with BIV 撸奶社区 Friday, Ralston suggested Canfor's decisions were in response to market conditions -- i.e. lower lumber prices.
"The American market is depressed as well," Ralston said. "Southern yellow pine, which is a staple of a lot of the mills -- Canadian mills that are in the states -- has come down by a hundred bucks over the last eight weeks.
"Market conditions enter into the decision that they've made."
Though softwood lumber prices have been depressed in recent months, that’s not the reason for the mill closures, said Canfor CEO Don Kayne.
“This has got nothing to with market conditions,” he told BIV 撸奶社区. “It’s about certainty of supply -- economic supply.
"Clearly these decisions that we made are 100 per cent the inability to reliably access economic timber and the uncertainty that we have around that, which dictates our future operating conditions.”
The Canfor closures will mean the loss of 400 jobs. It also means the loss of a $200 million investment to bring the shuttered Houston mill back to life.
When the Houston mill shut down, 330 workers lost their jobs. Modernizing the mill would have brought another 200 workers back, Canfor said. But that investment has now been shelved.
"Frankly, I'm disappointed that they made that decision," Ralston said.
He said there had been negotiations between Canfor and his ministry to assure Canfor of a long-term fibre supply for the Houston mill.
"You can't hundred per cent guarantee it, but it was a very, very certain access of fibre supply for that mill for the long term," Ralston said. "That's the assurance that they wanted and that's the assurance that we gave to them."
Kayne said Canfor has tried to keep up with a “myriad” of policy changes in B.C., but the reality is that it can't invest in new mills when it can't be assured of a timber supply.
“The problem is it makes it real, real hard, if not impossible, to know what kind of operating environment we’ll be faced with, which has given us pause about investing such a huge sum,” Kayne said.
Canfor’s announced closures follow several other announced closures and curtailments throughout B.C. in 2023.
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.
