Sawmill sale end of an era

West Fraser’s northwestern BC holdings continue to shrink with the pending sale of its Skeena Sawmills plant and related wood licences to ROC Holdings Ltd.

West Fraser’s northwestern BC holdings continue to shrink with the pending sale of its Skeena Sawmills plant and related wood licences to ROC Holdings Ltd.

When the sale becomes final in two months, all West Fraser will have left in the region is the site of its now-closed Eurocan Pulp and Paper mill in Kitimat and whatever equipment on that site it hasn’t yet disposed of since closing down the operation the end of January 2010.

Just last month West Fraser announced the sale of its Kitimat dock facilities to Rio Tinto Alcan.

Skeena Sawmills hasn’t produced any lumber since it ended up behind picket lines during a lengthy four-month strike in 2007 and it stopped chipping logs for Eurocan in the late fall of 2009.

The company said it couldn’t make enough money compared to the cost of operations and, at the time of the 2007 closure, said an unfavourable exchange rate coupled with a drop in the American demand for lumber made shutting the mill the only thing it could do.

At one time, West Fraser counted Eurocan and Skeena Sawmills and a sawmill in Prince Rupert among its assets. The mill in Prince Rupert closed up years ago.

The Skeena Sawmills sale to ROC included the last of West Fraser’s wood supply in the area – TFL 41 and two forest licences, one of which is in the Nass.

Taken together, the three licences work out to an annual allowable cut of 382,000 cubic metres a year.

Tree Farm Licence 41 stretches south of Lakelse Lake and continues south of Kitimat. One of the small forest licences is located within Kitimat’s municipal boundaries.

West Fraser official Wayne Clogg said it dealt with a number of interested parties since putting Skeena Sawmills and its wood up for sale last year before it struck a deal with ROC, a Canadian subsidiary of a massive Chinese construction and real estate conglomerate.

“The key part for us is we were able to sell everything,” said Clogg of packaging up the Skeena Sawmills plant and wood licences. “Obviously price was important to us and we got a price that was good for the company and for the shareholders.”

Clogg said that normally West Fraser would have waited until a sale was final before announcing it, but in this case it wanted get the word out as soon as possible.

“We’ve tried to be fair and open,” he added.

Clogg also hinted that a sale of West Fraser’s Eurocan site might not be far off.

“With the two sales now underway, the [Eurocan] dock and {Skeena Sawmills] … here, that will be our only asset,” he said. “And right now we’re in the very preliminary stage of doing a sale there.”

Although West Fraser never did put a lot of money into Skeena Sawmills during the several decades it owned the plant, one of its strong points was its natural gas-fired dry kilns.

They improved the ability of the facility to sell its product, one of the reasons it was kept open during periods of down markets.

The natural gas-powered kilns take the moisture out of ‘green’ lumber.

West Fraser had ordered three new dry kilns and planned a $3.2 million replacement program but that was canceled because of the 2007 labour dispute.

Workers belonging to Steelworkers union refused to lift their picket lines temporarily so that the kilns could be installed.

By the time the dispute ended in the fall of 2007, the American lumber market had deteriorated to the point West Fraser made its decision to keep the facility closed.