A new law that gives the B.C. government the ability to veto a forestry company’s sale of logging rights following a mill closing is about to be tested by one of the province’s largest forestry companies.
Canfor Corp. plans to shut down its mill in Vavenby, B.C., and sell the tenure tied to that facility – the right to harvest publicly owned timber – to another major forest company, Interfor Corp.
The union representing the Vavenby mill workers argues the province should use its new legislation to ensure that doesn’t happen. “I wish they would say ‘no,’ but I don’t think that will happen,” said Jeff Bromley, chair of the United Steelworkers union wood council.
The mill is the main employer in Vavenby, a town about 150 kilometres northeast of Kamloops, and the gates will be permanently locked in July. As many as 11 mills in the B.C. Interior are expected to follow suit as the industry adjusts to a shrinking timber supply.
As mills close in one town, companies attempt to gain efficiencies by moving timber supply to other area mills. But changes to the province’s Forest Act, passed at the end of May, allow the provincial government to scrutinize, and possibly veto, any efforts to swap timber rights in the midst of this shift.
The mill closings are inevitable: The only question, Mr. Bromley said, is whether the government can mitigate the impact on forestry-dependent communities. “Bill 22 establishes more oversight, but whether it will have any teeth, we’ll just have to wait and see."
Canfor wants to sell its tenure tied to the Vavenby mill to Interfor for $60-million. But under Bill 22, Interfor must convince the Minister of Forests that the transfer is in the public interest. However, the public interest is ill-defined, and the forest sector says that is creating more uncertainty during an especially difficult time.
“In many respects, our transaction is potentially setting the template for how [Bill 22] is going to be enacted,” Martin Juravsky, Interfor’s chief financial officer, said in an interview.
Interfor argues this deal will be in the public interest. The Vavenby mill will close anyway, but Interfor can ease the pain by ensuring a supply of fibre to a more viable, albeit non-union, mill in Adams Lake. The additional timber supply would keep two shifts running at the company’s Adams Lake sawmill and, if the transfer is approved, the company promises to invest in additional value-added processing at the mill and seek partnerships with local First Nations.
Doug Donaldson, Minister of Forests, Lands and Natural Resource Operations, said Bill 22 aims to ensure that communities, including First Nations, benefit from publicly owned timber resources. It also seeks to prevent further market concentration: Just five companies now own most of the public timber tenures in B.C. He can now compel companies that are proposing to sell their tenures – timber harvesting rights – to disclose details of their operations so that he can gauge the impact of such changes.
“I think the people of British Columbia would find it unusual that as government, we haven’t been able to access this information in the past,” he said. "Because of the changes we made in Bill 22, I’ll at least be able to access the information that is required to determine the impact on market concentration.”
Susan Yurkovich, president and CEO of the Council of Forest Industries, said Bill 22 is introducing uncertainty at a time when the industry is struggling with multiple challenges.
The amount of timber available for harvest in the Interior is in sharp decline because of mountain pine beetle infestation and massive forest fires that have consumed 2.5 million hectares of land in 2017 and 2018. At the same time, lumber prices and demand have fallen, while the price of fibre – the logs going into the mills – is going up.
“It is the perfect storm,“ she said. “But the fundamental thing here, is that we have too much milling capacity for the available fibre.”
Ms. Yurkovich said industry will be watching how Mr. Donaldson handles the proposed sale of Canfor’s Vavenby timber rights to Interfor, to determine if Bill 22 is going to add to industry’s woes. “This transition needs to happen. A natural disaster occurred and we need to be able to respond, so we need to allow transactions like this to occur,“ she said.
Justine Hunter