$17.2 million to relocate Kenora mill

April 25, 2022

By: The Working Forest Staff

A $17.2 million loan will be used by GreenFirst Forest Products Inc. to support a proposal to relocate, improve and expand the former Kenora Forest Products mill site.

In a prepared release, GreenFirst says they plan to relocate all existing mill equipment and infrastructure to a new location in the Kenora area, which is currently unspecified. The sawmill sits on a 42-acre site, leaving over 72 acres of undeveloped lakefront land on Lake of the Woods.

Kenora Mayor, Dan Reynard says the relocation of the former mill site will have many positive economic impacts on the 114 acres of land.

“I’m not a visionary, but because it has access to the water, you think of housing,” said Reynard.  There are so many possibilities because it’s such a huge track of land. The property is so large that there is a combination of multi-use that they could put on the property that won’t have a negative impact.”

“The land value as a well-planned development far exceeds its value as a sawmill site. We believe the relocation of the mill will unlock the land for redevelopment that would become a source of pride for the community,” explained Paul Rivett, Chairman of GreenFirst Forest Products

Greg Rickford, Minister of Northern Development, Mines, Natural Resources and Forestry, says the success of the forestry sector depends on local projects such as this.

“By supporting GreenFirst Forest Products, we’re creating local jobs and investing in prosperity in Kenora – ensuring a strong and prosperous forest sector which can provide for communities across Northern Ontario,” said Rickford.

These improvements would increase production and create up to 85 new direct jobs and potentially more than 135 indirect jobs at the mill. This performance-based loan is conditional on Ontario and the company finalizing a contract and completion of key project milestones.

Ricford, and GreenFirst note they included within the numerous jobs, they will be working with the Indigenous community through Miisun Integrated Resourse Management Inc. to secure fibre thresholds they will need. GreenFirst will also be working with local logging companies to look for the best fibre sources. 

Along with moving the former mill site in Kenora, GreenFirst is looking at changing the facilities layout, while modernizing and updating its operations.

Prendiville Industries had invested about $22 million in upgrades, before the restart back in 2016. They first purchased the property in 1994. Owners spent another $4 million for upgrades, after a fire in the drying kilns in December of 2017.

Kenora Forest Products sat idle for about eight years during the forestry crisis of 2008, before its restart in 2016. The sawmill had been doing well – adding shifts to reach full production in November 2016 – but the impact of American tariffs on softwood lumber could no longer be ignored by the end of 2019.

The softwood lumber tariffs caused KFP to declare bankruptcy back in December of 2019, with estimated debts of just under $30 million, including about $10 million in disputed tariffs at the American border.

More than 125 mill workers were laid off after the mill had to close its doors, following filing for bankruptcy in 2019. In September of 2020, hopes of a restart become more of a reality after Itasca Capital bought the mill for $11.5 million.

At the time of the sale, Itasca noted the sawmill had the capacity to produce about 100 million board feet a year, but they hoped to expand the capacity to 150 million board feet a year, with hopes of reaching 200 million board feet a year.

The Ontario government says northwestern Ontario communities depend on forestry for their livelihood, and employment dependency on forestry in Kenora is six times higher than in the rest of Ontario.
The forest sector generated $18 billion in revenue from the sale of manufactured goods and services in 2020 and supported more than 148,000 direct and indirect jobs in 2021.

If completed, this project is expected to generate over $75 million in GDP and annual stumpage revenue of $4.3 million.

 

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