Smaller mills in the southern Interior are speaking out against a proposal from the Mercer Celgar pulp mill in Castlegar that asks the province to restructure how it charges for logs destined for the chipper.
Mercer Celgar’s managing director Bill MacPherson said that the company is currently charged a blended rate at the scales, which accounts for the mill’s use of pulp wood (25 cents per cubic metre) and saw logs (around $15 per cubic metre). Depending on the mix on the truck, the bill comes out to around $8 per cubic metre, MacPherson said. He’s asking the province to charge a flat rate of $2 per cubic metre of wood brought into his mill.
The Interior Lumber Manufacturers Association, meanwhile, have expressed concern that Mercer Celgar’s ask could hamper the economic viability of local lumber mills’ own operations.
“We agree that they’re part of this picture, but they’re not the only picture,” Dan Battistella, president ILMA, told the Regional District of Kootenay Boundary board of directors on June 25, speaking against a Celgar letter asking for the local government’s endorsement.
The ILMA represents mills such as Vaagen Fibre Canada in Midway and Kalesnikoff Lumber in Thrums.
Battistella said that many Kootenay-Boundary mills are feeling the impacts of a market downturn, but prioritizing logs for pulp would be ill-conceived.
In a letter to the RDKB, MacPherson asked for the board’s endorsement of its proposal to temporarily designate logs harvested and destined to a pulp facility as “pulp wood.”
“We recognize that if we were a part of that [buying saw logs for pulp] that would definitely diminish the viability of our sawmill counterparts,” said Mercer Celgar’s vice-president of sustainability and innovation, Bill Adams.
“This is not about lowering the stumpage for Mercer, it’s about structurally redoing it so we can source more low-quality wood and we can incentivize the sawmills who are harvesting and bringing this wood out not to have to get penalized and end up raising the average wood cost for our mills,” Adams said.
The ask, MacPherson said, came because of a lack of lower value fibre flowing from local mills.
Mercer Celgar announced in June that it would shut down for all of July, citing low fibre stores from its traditional sources. In the Boundary, Vaagen Fibre Canada was shut down for nine weeks between February and April, while Interfor Grand Forks, was down for two months between March and May.
Interfor controls nearly 50 per cent of the annual allowable cut in the Boundary Timber Supply Area, and both mills normally sell their chips to Celgar.
With fewer logs being processed this spring, Celgar’s supply dwindled.
Now back up and running, Vaagen Fibre Canada fibre manager Dan Macmaster said that his mill sends 20 chip trucks per day to Celgar, while Vaagen Brothers in Colville, Wash., sends 60 trucks per day to the Castlegar pulp mill.
If the province were to accept Celgar’s proposal, Battistella said, “a number of saw logs that [that could make higher value products] would end up getting redirected to the pulp mill,” noting that Celgar’s ask may make a lumber-quality log significantly cheaper in stumpage fees if it were bound straight for a pulp mill, and not for a lumber manufacturer first.
“We can’t remain in business if we don’t have access to fibre,” Battistella said. “Everybody makes [chips] available to Celgar, but we can’t be expected to subsidize that. It costs what it costs.
“The fact of the matter is that there is enough fibre in this area to supply all the mills that are operating right now – we just need to make sure that the right logs are getting to the right mill.”
This story was updated July 8 to include more comment from Mercer Celgar.