Hampton Lumber will buy the Conifex sawmill in Fort St.James and its forest license.
The lumber company, which owns the Babine and Decker Lake mills in Burns Lake, will make the purchase for about $39 million, Hampton and Conifex said in a joint press release on June 24.
“Our plan is to dismantle the existing sawmill. In relation to the existing sawmill since some of the equipment may have future value,” as Hampton CEO Steve Zika told Lakes District News.
The timeline specifics were not yet known.
“While economic conditions are extremely challenging right now for the lumber industry in British Columbia, we believe the long-term outlook for Canadian lumber is promising,” said Zika.
“We intend to build a new sawmill in Fort St. James and look forward to building relationships with local First Nations and other community partners similar to a successful joint venture we have with the Burns Lake Native Development Corporation in the Burns Lake area.”
“We will need to meet with First Nations, local government, the United Steelworkers, community stakeholders, members of the Fort St.James community and the provincial government before we finalize plans and are able to discuss them outside of that community.”
Other than the operations in Burns Lake, Hampton runs seven other mills in Oregon and Washington.
“We have known for some time that lumber industry rationalization is inevitable because too little sawlog supply is available to maintain the existing manufacturing base in the Interior region of B.C,” Ken Shields, Conifex’s Chair and CEO said.
“The decision we have taken to sell the mill was extremely difficult; however, we are encouraged by Hampton’s plans for the site. We believe this transaction supports the Province’s objectives for industry rationalization that is mindful of the impacts on people, communities and First Nations. We sincerely thank our employees, contractors, and other stakeholders for their hard work and contribution to the site over the past decade.”
As lumber industry difficulties are ongoing, Conifex does not expect to return to normal operations at the Fort St. James mill prior to the finalization of the agreement. Conifex also operates a sawmill in Mackenzie, and three in the United States.
The Fort St. James mill employs 226 people, Sandy Ferguson, Conifex’ Vice-President of Corporate Affairs and Business Development said.
The closing of the deal is subject to regulatory approvals, including approval of the Minister of Forests, Lands, Natural Resource Operations, and Rural Development and other customary conditions.
The proceeds of the transaction will be used mainly to pay off debt and to enable more liquidity so Conifex can improve performance and value at its other locations.