Increasing lumber demand brings hope to Northwestern Ontario sawmills

November 05, 2012

By: The Chronicle-Journal

The Ministry of Natural Resources is ready to help open idled sawmills in Northwestern Ontario should U.S. demand for lumber continue to grow.

“I am pleased to see signs of improving markets for forest products that are made in Ontario,” Natural Resources Minister Michael Gravelle said Saturday.

“This will have a positive impact on businesses, communities and First Nations across the province.”
Gravelle noted that the “MNR will certainly continue to work with any sawmill owner who comes forward with a plan to reopen their mill.”

After being battered by the deep recession and financial crisis, the Canadian and Ontario forest industry is seeing positive signs from the gradual improvement in U.S. housing starts.

And, the head of Resolute Forest Products said Friday that the destructive wrath of hurricane Sandy will help boost recovery in Canada’s forest products industry next year as communities in New York City area and along the New Jersey coast rebuild.

“When you look at the devastation it’s mind boggling and it’s going to have an impact,” CEO Richard Garneau told The Canadian Press.

“They’re going to have to rebuild but it always takes some time for the cleanup to be done so I think the impact on demand of wood consumption is probably going to materialize in the second and third quarter of next year with the rebuilding efforts,” Garneau said.

Garneau said he’s also optimistic about regular housing demand for lumber and said the additional impact of the hurricane will help to support higher prices, which are expected to be pushed up by a decline in wood availability due to the pine beetle epidemic in British Columbia.

But he said it’s too early to know the level of impact. Although the hurricane is believed to have caused more than US$50 billion in damages, there are no estimates yet about the value of forest products that will be used in the rebuilding effort.

Resolute’s wood products segment reported operating income of $6 million in its third quarter, $6 million lower than the second.

While continued improvements to North American housing starts led to a nine per cent increase to average transaction price, shipments fell 11 per cent as a result of a drop in September lumber shipments, a company report said. Costs also increased because of higher log costs and higher transportation costs.

“We expect pricing in the wood products segment to remain near the higher levels we experienced recently as a result of positive momentum building in U.S. housing starts,” Garneau added.

Resolute is planning to add a third shift to its sawmill located on the Fort William First Nation near Thunder Bay due to the turnround in the lumber industry.

U.S. builders spent more on home construction in September, a gain that helped offset weakness in nonresidential building and government projects.

Construction spending grew 0.6 per cent compared to August when spending had fallen 0.1 per cent, the Commerce Department said Thursday.

New home sales in September jumped to the highest annual pace in the past two and a half years.
Back in Northwestern Ontario, Gravelle said that “it is true there are sawmills that have shutdown in the past couple years and it would be great to see them restart, but I would like to point out there are some significant mills that are currently operating.

“Companies like Resolute Forest Products (Thunder Bay), Tembec (Hearst, Kapuskasing), EACOM (Nairn Centre, Elk Lake, Gogama), and Olav Haavaldsrud (Hornepayne), to name a few, are currently producing lumber and are ready to meet growing demand,” he said.

As far as available wood supplies to support existing operations and mill restarts, Gravelle said, the ministry now posts that information on its Available Wood Report webpage within website. The site identifies currently unused wood supplies in the province. Users of the Ontario Available Wood Report are encouraged to contact Sustainable Forest Licence (SFL) Holders who are generally licensed the right to allocate available wood supplies through business to business arrangements.

Gravelle explained that the ministry’s wood report is intended to help facilitate “these business to business arrangements” between SFL’s who have wood available and mills, or potential mills, who need wood.

West of Thunder Bay, three idled sawmills could very well resume production with the growing demand for lumber.
Resolute has outlined plans to restart the company’s sawmill in Ignace in 2014, and efforts are underway to possibly restart the former MacKenzie Forest Products’ mill in Hudson and EACOM Timber Corp.’s sawmill in Ear Falls.

“I look forward to the (Hudson) mill’s restart based on the plans provided to support (the recent) issuance of the Forest Resource Processing Facility Licence (for the plant),” Gravelle said, noting that “I certainly believe there are adequate (timber) supplies to support the restart of the Ear Falls facility at past production levels, and perhaps even more if they can secure wood through business arrangements.”

The Chronicle Herald

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