The StarPhoenix (Saskatoon)
2006.10.04
James Wood
REGINA -- The closure of two more sawmills in Saskatchewan comes at a time when the forestry industry in the province is already under siege.
Weyerhaeuser announced Monday it's shutting down production indefinitely at its Hudson Bay and Carrot River sawmills.
The move comes a year after Weyerhaeuser announced it would cease operations at its Prince Albert pulp and paper operations.
Meanwhile, the provincial government continues to try to unload its 50 per cent stake in the Meadow Lake pulp mill. That operation, the biggest money-losing government investment in Saskatchewan history, is currently under court protection as it tries to stave off bankruptcy.
For smaller forestry players, it's a time of uncertainty because of the sheer interconnectedness of the industry in Saskatchewan.
"We're just so nervous," Vern Bachiu, director of planning and development for the Meadow Lake Tribal Council, said in an interview last week before the latest closures were even announced.
"This is such a perfect storm in the forestry industry. It's just hard to imagine any circumstances worse than this. Lumber prices are . . . incredibly low because of a softening of demand. The exchange rate is killing us. Energy costs are high. Road conditions up here are terrible, which really affects hauling costs, and then this quota system with the softwood lumber agreement with the States really curtails how much lumber we can ship to the States."
The Meadow Lake Tribal Council owns the NorSask Forest Products sawmill.
In turn, NorSask is the joint owner of Mistik Management, a forest management company that supplies the fibre for both NorSask and Meadow Lake Pulp.
Bachiu said the closure of Weyerhaeuser's P.A. operation has had a major impact on softwood sawmills across the province, including NorSask and the mills in Hudson Bay and Carrot River. That's because it was the only market in Saskatchewan for softwood chips.
"A lot of it hinges on P.A., what happened at Weyerhaeuser," he said.
"For any sawmill to be profitable . . . in the sawmilling process one of the byproducts is wood chips and no matter how efficient you are, there are always wood chips left over. So you have to get some value for wood chips."
The future of Meadow Lake pulp is also key because it takes hardwood chips. Mistik harvests both hardwood and softwood.
"Even though we don't have any ownership in the Meadow Lake Pulp Mill, we're also integrated because the forest doesn't only grow softwood trees over here and hardwood trees over there; it's a mixed-wood forest. So our harvesting operations are all integrated, even though the two mills are totally separate from an ownership point of view. The costs of harvesting only one species are just prohibitive. You just can't do it. So we need a hardwood user out here in order for us to get our softwood."
The forestry task force appointed by Premier Lorne Calvert will report on Thursday in Prince Albert.