Lakes TSA commitments to be maximized

Emphasis on previously uneconomical timber supply.

It won’t be until the Dec. 3 meeting of the board of Hampton Affiliates that the decision to rebuild the Babine mill destroyed in an explosion and fire last January is finalized. Hampton CEO Steve Zika’s Sept. 17 announcement was not an unqualified “yes” to the rebuild. Zika cautioned that timber supply agreements have first to be worked out. All parties involved have indicated their support for generating the required agreements before the Dec. 3 deadline.

Minister of Jobs, Tourism and Skills Training Pat Bell delivered three assurances on behalf of the province to Hampton Affiliates: a new community forest license with an annual allowable cut (AAC) of 150,000 cubic metres (m3) in partnership with at least one of the Burns Lake First Nations; an offer to all local six nations of 380,000 m3 AAC sawlog grade from low volume stands; and 64,000 m3 AAC to local First Nations under the First Nations Forestry Program.

These offers of increased volume are provided on the expectation that they be made available to a new Hampton mill locally at fair market value. While it is clear that this new volume will not be available to other mills in the region, Bell emphasized that current license holders and saw mills in the area will not be displaced to accommodate supply to the new mill. “This is volume that we have concluded can flow without taking anything away from other licensees or sawmills in the region,” Bell said.

According Bell, this new volume was not previously counted in the Lakes TSA inventory. Other mills will not be affected by this decision because the majority of new volume is to come from low volume stands of saw grade timber that were not previously thought to be economically viable. According to Bell, it is Hampton Affiliate’s view that, “lumber prices will increase enough that those stands will become economic.” The non saw-log grade timber volume in those stands will also be available as a bioenergy harvest (wood pellet) to help offset the increased costs involved with logging low volume stands.

West Fraser Timber Co. Ltd. is heavily invested in lumber, plywood and pulp and paper mills throughout B.C. At press time a spokesperson for West Fraser said that they were still reviewing the government’s announcement and were not ready to make a comment related to how this decision might affect their operations. West Fraser’s current AAC in the Lakes TSA is 342,194 m3.

Hampton’s existing license in the Lakes TSA is 449,699 m3 AAC. The current total Lakes TSA commitment to all licensees is 1,576,005 m3 AAC. The new volume commitment would have the Lakes TSA committed to more than two million cubic metres AAC, the current ceiling AAC for the Lakes TSA according to the Sept. 21, 2012 Apportionment and Commitment report. Hampton Affiliates is looking for at least 15 years of viable supply in order to justify building the new mill, the cost for which will not be completely covered by insurance.