Train cars loaded with wood chips.

Politicians on the stump over wood chip deal

Kootenay West MLA Katrine Conroy displeased about secretive, "sweetheart" wood chip deal

Kootenay West MLA Katrine Conroy has blasted Steve Thomson, Minister of Forests, Lands and Natural Resource Operations over what she sees as a “sweetheart deal” that Thomson signed off on regarding the long-term export of wood chips, but Thomson fired back saying the deal is “nothing new” and provisions allow for the exports to be curtailed if domestic supply shortages arise.

Conroy joined forest critic Norm Macdonald in raising the issue in the legislature on Thursday, July 4. The following day she issued a release saying the deal (with Fibreco, a consortium which, as part of their business, exports surplus B.C. wood chips to overseas pulp and paper manufacturing markets in Asia) could have “significant implications on B.C.’s pulp mills, including Celgar.”

“We know that mills are having to pay more to get fibre, and we know that as the timber supply problem gets worse, it’s only going to get harder for mills to get chips,” said Conroy. “Yet the minister signed a sweetheart deal just before the election that locks a significant amount of wood chips in for export for 10 years. This puts jobs in B.C. – including here in the Kootenays – at risk.”

Conroy’s release also said Thomson signed an Order in Council on Jan. 30 granting a 10-year export permit for 300,000 bone-dry units (BDU) of wood chips, but it wasn’t until mid-March that the Chip Export Advisory Committee consumers’ sub-committee learned of the order.

Reached by telephone in Kelowna on Friday, July 5, Thomson balked at the suggestion the deal was handled outside of normal channels and that it would have any effect on jobs in Castlegar or anywhere else in B.C.

“It’s two separate permits: 200,000 BDU for three years and 300,000 BDU for 10 years that was approved,” said Thomson. “The concerns raised are what happens if there’s a future chip shortage or supply shortage, but what’s important to recognize is that each of these permits contains a clause that the export may not be allowed if shortages arise. If shortages arise, we have the capacity to not approve the export.

“The application made by Fibreco was reviewed by our advisory committee, the Chip Export Advisory Committee that we have in place. The original application was for a 500,000 BDU per year for ten years. That request was reviewed and we took into consideration both the concerns of the chip export advisory committee and also Fibreco’s request for a longer term contract to help secure their investment in jobs and investment in the facility. What we approved was an export permit for 200,000 BDU for three years and 300,00 for the longer term.”

Conroy’s release noted that Merl Fichtner, chair of the sub-committee, said in an April 19 letter to Thomson it was the length of the deal that was the biggest area of concern. Fichtner said with a looming timber shortage, it’s “impossible to determine today that a volume of chips will be surplus to the requirements of facilities in British Columbia over the next 10 years.”

“There are a number of other operations around the province that have export permits for surplus chips,” countered Thomson. “Fibreco has had an export permit for chips since 1978. They’ve averaged 300,000 BDU since 1978, so this is not new. That’s the reason we also only approved the 200,000 BDU for three years, because it gives us an opportunity to review the supply situation in that three-year period and they will have to come back again with an application for any renewal or extension of that permit.”

Thomson said he plans on discussing the issue further with members of the users group in the “not-too-distant future” and praised Fibreco as an important partner in the forest industry.

“Fibreco employs over a hundred people and supports hundreds of green forestry jobs in B.C.,” he said. “They are also a major service to the industry in exporting wood pellets. About 18 per cent of their volume is wood chips for export and they sell chips domestically as well.”

Thomson added he couldn’t see any impacts to the Celgar pulp mill facility at this point in time.

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