NORTHERN BC – After thorough analysis of the persistent shortage of economically available timber and challenging operating conditions in northern British Columbia, Canfor Corporation (TSX:CFP) announced the permanent closure of its Polar sawmill in Bear Lake, BC and the suspension of its planned reinvestment in Houston, BC. This follows the announcement by our subsidiary company, Canfor Pulp, that one line of production will be indefinitely curtailed at the Northwood Pulp Mill.
The Polar sawmill, with a production capacity of about 300 million board feet annually, has been curtailed since January 2024. The permanent closure will impact approximately 180 employees.
Don Kayne, President and CEO, Canfor Corporation made the following statement today:
“The ability to reliably access enough economic timber to run our manufacturing facilities is critical for our business. Unfortunately, while our province has a sufficient supply of timber available for harvest as confirmed by the Allowable Annual Cut set by BC’s Chief Forester, the actual harvest level has declined dramatically in recent years. In 2023 the actual harvest was 42 percent lower than the allowable cut, a level not seen since the 1960s.
While this decline is partly the result of natural disturbances – beetle infestations and wildfire particularly – it is also the result of the cumulative impact of policy changes and increased regulatory complexity. These choices and changes have hampered our ability to consistently access enough economic fibre to support our manufacturing facilities and forced the closure or curtailment of many forest sector operations, including our Polar sawmill.
With the policy and regulatory landscape in BC continuing to shift, it’s difficult to predict the operating conditions that we will face going forward. As such, we have made the difficult decision to suspend our plan to build a new state-of-the-art sawmill in Houston, as we are not confident that an investment of this magnitude can be successful at this time.
These decisions are heartbreaking for our company that has been proudly headquartered in BC for more than 85 years. More importantly, these decisions have a profound impact on our employees, First Nations partners, contractors, customers, suppliers, and communities that rely on a healthy forest industry.
In the weeks ahead, we will work with our union partners to develop a transition plan that considers severance provisions and other means to support our impacted employees. We will also seek opportunities to divest our associated tenure to support other local manufacturing operations, who are facing the same challenges accessing fibre, in the hope of preventing another operation from being closed or curtailed.”
The Northwood facility in Prince George curtailment was also due to the decline in availability of economic fibre in the northern BC region. The curtailment will result in the reduction of approximately 300,000 tonnes of market kraft pulp annually. This reduction in capacity will impact approximately 220 jobs across Canfor Pulp.
“The persistent shortage of economic fibre, particularly in the Prince George region, has led to the closure or curtailment of a number of sawmills, which in turn has dramatically reduced the volume of chips available to meet the needs of our pulp operations. Despite exhaustive efforts, including expanding well beyond our traditional operating region, there is simply not enough residual fibre to supply the current production capacity of all our operations,” said Kevin Edgson, President and CEO, Canfor Pulp.
“Canfor Pulp currently operates two pulp production lines at its Northwood facility and one production line at its nearby Intercon facility. The Company will continue to operate both lines at Northwood over the next few weeks, followed by an orderly wind-down process of one line at the beginning of the third quarter,” said Kevin Edgson, President and CEO, Canfor Pulp.
Edgson continued, “We are frustrated and disheartened to have to make this decision and know it has a significant impact on our employees, their families, local businesses and the community. We have set up a transition team and will work with our union to support our employees as we plan an orderly wind-down.”
With the reduction of one line at Northwood, Canfor Pulp will have total annual capacity of 480,000 tonnes of market pulp. Canfor Pulp’s Specialty Paper facility in Prince George will continue to operate with a total annual capacity of 140,000 tonnes of kraft paper.
The Company has a 70% stake in Vida AB, Sweden’s largest privately owned sawmill company and also owns a 54.8% interest in Canfor Pulp Products Inc.
SOURCE: Canfor Corp
