Canada’s Competition Bureau will review plans by two forestry companies to swap timber harvesting rights and close two sawmills in the B.C. Interior.
Canfor Corp. announced last week it plans to close its Quesnel sawmill next March, while West Fraser Timber Co. Ltd. is aiming to shut down its Houston plant by next May. The deals would also entail West Fraser keeping its Quesnel mill open, aided by acquiring Canfor’s Crown forest licence for the area in an effective change of control. Canfor’s Houston mill wants to pick up West Fraser’s harvesting rights in that area.
“We can confirm that we will be reviewing this proposed transaction,” bureau spokesman Phil Norris said Thursday. “The bureau will examine the transaction in its entirety to determine if it raises competition issues.”
Vivian Thomas, a spokeswoman for the B.C. Ministry of Forests and Lands, said the provincial government is focused on the forest licences and will co-ordinate its review with the bureau. She emphasized that the ministry has no legal authority in influencing or reversing the business decisions to shutter the mills.
Mr. Norris declined to comment on details of the B.C. Interior review, but hypothetically, he said if the bureau has competition concerns, it could enter into a “consent agreement” with companies to amend a transaction to address any issues.
Canfor and West Fraser say the mill shutdowns will be necessary because of the ongoing ripple effect from mountain pine beetles that damaged timber in the B.C. Interior. The supply of that beetle-infested wood has been declining over the years.
Canfor chief executive officer Don Kayne said the company is working with the B.C. jobs ministry and the United Steelworkers union to help place the Quesnel mill’s 209 employees. The affected staff could transfer into positions at other Canfor sites or potentially find work elsewhere within the community.
“After 18 months of searching for a different solution, we announced last week the permanent closure of our sawmill in Quesnel with closure anticipated in March of 2014,” Mr. Kayne said during a conference call Thursday with industry analysts. “The decision was based solely on fibre availability in the Quesnel area and there’s simply not enough timber remaining following the mountain pine beetle epidemic to support all of the mills in that community.”
Canfor chief financial officer Alan Nicholl estimated that costs related to severance and closing the Quesnel mill will be between $18-million and $20-million.
West Fraser officials said earlier this week that they will be distributing relocation packages to its 225 Houston employees, encouraging them to transfer to positions elsewhere in the company’s B.C. and Alberta operations.