Last week Conifex announced it would be stopping production at its sawmill in Fort St. James for two weeks due to poor market conditions and an increase of 15 per cent on import dues on lumber exports to the United States. This temporary closure comes close on the heels of the announcement of the closure of the Tl’oh lumber mill last month.
In 2014, increased housing starts in the United States propelled forestry industry growth in the Nechako, according to a report by the Chartered Professional Accountants of BC (CPABC). Although the US market continues to recover, timber supplies are dwindling.
With declining timber supplies and salvage efforts to recover mountain pine beetle damaged trees coming to an end; poor market conditions and the impending expiration of the Canada/U.S. Softwood Lumber Agreement in October, the region’s operators sit in limbo unsure of the future of exports to the United States.
The 2006 trade agreement was a solution to US industry claims that Canadian forest policies subsidize sawnwood production. The agreement specifies higher duties on Canadian exports when softwood sawnwood prices are low.
The $235-million Western Bioenergy project in Merritt, once in operation, will consume approximately 200,000 metric tonnes of biomass fuel annually and provide more than 40,000 homes under a 30-year purchase agreement with BC Hydro. Fort St. James and the Nechako region will provide the bulk of the biomass to that and other plants currently under construction.
With Conifex Power Limited Partnership completing a continuous 72 hour run test at its 36 Megawatt biomass power plant at Mackenzie, B.C. in April this year, there seems to be some future for the lumber industry, but what will happen to the sawnwood side of the industry remains to be seen come October.