West Fraser buys closed sawmill in Fort St. James
Written by GORDON HOEKSTRA, Citizen staff
Tuesday, 16 September 2008
West Fraser has reached an agreement to buy Stuart Lake Lumber, which owns a sawmill in Fort St. James shut down since the spring of 2007.
West Fraser said the sawmill does not currently have any operational employees and no logging has been done on the company's forest licence since the mill was closed. A price for the transaction was not revealed.
The company said it had no immediate plans to restart the sawmill in Fort St. James, located about 160 kilometres northwest of Prince George.
The opportunity to buy the mill through a share purchase came up recently, so the company will now have to take a close look a the operation, said West Fraser senior vice-president Larry Hughes.
While he said the mill will not be operating any time soon because of market conditions, he said West Fraser would consider all of its options.
Hughes says the purchase does not meet the threshold for a federal competition review and there is no requirement for the province to approve the share purchase.
West Fraser official Wayne Clogg added he expected the purchase to enhance the company's long-term fibre supply in the face of the expected mountain pine beetle-related supply effects. The Stuart Lake sawmill holds 202,000 annual cubic metres of long-term timber rights, more than 4,000 logging truck loads of timber.
The pine beetle epidemic is forecast to bring a decrease in the timber supply of 40 per cent in the Interior.
Forest industry analyst Paul Quinn said West Fraser is making a smart move by buying the mill for its long-term timber rights. "They are trying to make sure, when the beetle impact is felt, they have enough timber to run their mill," said Quinn, an analyst with RBC Dominion Securities Inc.
Quinn noted West Fraser made a similar strategic move in the Southern Interior, where it entered into an agreement earlier this year to buy a portion of timber rights from Weyerhaeuser Co. of about 400,000 cubic metres a year.
Quinn said he wondered why a company like Canfor -- with more exposure in the Interior and fewer assets in the U.S. -- was not making similar moves.
West Fraser, a Vancouver-based forestry company, has extensive operations in north and central B.C., Alberta and the U.S. south.
Its closest sawmill to the Fort St. James area is Fraser Lake, about 120 kilometres by road from Fort St. James.
Stuart Lake Lumber, owned by the Goodwin family, traced its routes back to the 1940s. The mill has been at its current site sine the 1970s.
It was one of the first Northern Interior victims of a forestry downturn led by a collapse in the U.S. housing market. The mill had an estimated 85 employees.
The mill's workers were among thousands of forestry workers who have been laid off in northern B.C. through indefinite sawmill shutdowns and shift reductions, as well as being impacted by reduced work weeks.
