East Kootenay sawmills have a new owner

Canfor Corporation has purchased Tembec's Elko and Canal Flats sawmills in southeastern British Columbia

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New changes are on the horizon for two of the East Kootenay's largest sawmills.

On November 28, 2011, Canfor Corporation announced an agreement made with Tembec Industries Ltd. that they will acquire Tembec's sawmills in Elko and Canal Flats in southeastern B.C.

Tembec is a leading integrated forest products company, with operations in North America and France. With sales of approximately $2 billion and some 4,300 employees, it operates over 30 market pulp, paper and wood product manufacturing units, and produces silvichemicals from by-products of its pulping process and specialty chemicals.

Canfor is also a leading integrated forest products company based in Vancouver, B.C. It is the number 1 producer of softwood lumber in B.C. and has interests in British Columbia, Alberta, Quebec and parts of the U.S.

The purchase price of Tembec's sawmills and working capital is $60 million. This includes approximately 1.1 million cubic metres of combined Crown and private land. The transaction will include a long-term agreement to provide residual fibre supply for Tembec’s Skookumchuck mill.

"Over the 20 years spanning 2000 to 2020, the world's population will have grown by two billion people," said Alistair Cook, senior vice-president of operations for Canfor. "All of those people need sustenance, energy and housing. With that kind of population growth added onto our existing demand from North America and Asia, Canfor expects growing global consumption of wood products. Acquiring the Tembec East Kootenay assets provides an additional source of high-quality fibre to supply that demand."

Tembec's current employees at the two sawmills, about 455 people, are included in the transaction. This includes the 165 workers at the Elko and Canal Flats sawmills, the 33 forest management workers and about 90 employees at the Cranbrook head office and associated field sites.

"It is important to remember that this deal requires regulatory approval prior to the sale closing, which we expect will occur late in the first quarter of 2012," said Cook. "Until that time, Tembec staff remain on the Tembec payroll and it would be inappropriate for Canfor to comment publicly. When the deal closes, we will work with the USW and Tembec to provide a smooth transition for staff."

According to Tembec, the benefits are great for the East Kootenay. Company officials said that over the next few years, Canfor intends to make capital investments in excess of $50 million to enhance productivity and cost performance in its B.C. Southern Interior mill facilities. The Elko and Canal Flats mills will provide an additional 420 million board feet to Canfor’s annual capacity, bringing Canfor’s total capacity in North America to greater than five billion board feet.

Both companies also have a strong stance on green building practices. Cook said this will continue and grow with the acquisition.

"Canfor is an industry leader in providing certified, green wood building products to markets around the world," Cook said. "We look forward to engaging with FSC (Forest Stewardship Council) and other stakeholders in the East Kootenay, and to continuing to provide our global customers with an array of certified wood products. Green building is a significant and growing trend in North America and around the world, and Canfor is pleased to be able to supply sustainable, green, energy-efficient and climate-friendly building materials to our global customers."

The transaction with Tembec is subject to various customary closing conditions including regulatory approval and is expected to complete late in the first quarter of 2012.

"Tembec was looking to focus on other core business areas, so the time was right to divest their sawmilling operations in B.C.," said Cook. "We were pleased to work with CEO Jim Lopez and their exceptional senior management team in making this deal happen."

Karen Kornelsen

Karen Kornelsen, a writer for Kootenay Business Magazine, has a degree in jounalism. She enjoys finding and reporting the news from the business community. View all of Karen Kornelsen’s articles

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