The BC Pulp & Paper Sector: A Crisis With Solutions In Plain Sight
The Quesnel Cariboo Observer published a short and perhaps low-key article on September 29, 2022, “16-day curtailment planned at Cariboo Pulp and Paper due to forestry challenges.” The announced pending curtailment is expected to affect 160 employees and take affect October 29. According to a spokesperson for West Fraser Mills, one of the joint owners of the facility (the other owner being Mercer International), “the curtailment is necessary to better align… operating capacity with the available supply of wood chips.”
While not a frequent occurrence, occasional hiccups in fibre supply sometimes force pulp mills to slow production. However, rarely do pulp mills shut down temporarily – an action typically to be avoided at all costs as it takes multiple days to take down and bring up a pulp mill to full production in a safe and efficient manner.
All the more concerning when the West Fraser Mills spokesperson conveyed the reasons for this curtailment…
“Timber supply and access has become an increasing challenge in British Columbia. …Infestation, wildfire, forest policy decisions and other considerations have resulted in fewer logs being processed in Interior sawmills, and therefore fewer wood chips and pulp logs are available as feedstock for BC pulp mills.”
These issues are largely specific to British Columbia including decisions made by the provincial government. If fibre supply issues can’t be overcome, there will be consequences - the curtailment for Cariboo Pulp and Paper is indicative of that.
At issue is a four million cubic metre current shortfall in fibre supply for pulp and paper mills according to a study funded by the BC Pulp and Paper Coalition. That study, done in 2021 demonstrated that if all of the forest policies being considered at that time by the BC government were enacted (including old growth deferrals, caribou habitat protection etc.), that up to 10 sawmills and 3 pulp and paper facilities would be at risk.
Since that study, new policies have been implemented including the old growth deferrals which have led to the painful fulfillment of that forecast on mill closures. Multiple pulp and paper mill closure have been announced including Cariboo Pulp and Paper made a couple of weeks ago and Paper Excellence announcing just a few days ago on October 6th that there will be an indefinite curtailment at its Crofton mill’s paper operations starting December 2022.
Also, on the list of mills with a tenuous future may be Canfor Pulp’s Taylor mill which has been curtailed since early 2022 and is apparently now being winterized, with Canfor Pulp saying it will likely be next spring before they could consider restarting the mill.
And, Paper Excellence’s Tiskwat (Powell River) mill was indefinitely closed late last year, coincidently, soon after the recommended 2.6 million hectares of old growth deferrals was accepted by the BC government.
While not always officially ascribed as such, arguably these curtailments and closures can be in part associated with the forecasted fibre short fall. More pulp and paper mills will be added to this list in the next few quarters without immediate mitigation measures.
While insects (mountain pine beetle and spruce beetle) and wildfires have set a downward course for the provincial allowable annual cut (currently at 61.6 million cubic metres and is expected to decrease to around 51 million cubic metres by 2030), the good news is that there are solutions.
BRITISH COLUMBIA’S PULP & PAPER SECTOR
It is important to understand how fibre supply works for the pulp and paper sector in British Columbia. When we think of the BC forest industry, we often are presented with a skewed perspective towards that of sawmills and lumber production. In fact, the industry is highly complex and integrated with fibre from harvested timber flowing between different types of forest products manufacturers. Often a by-product of one manufacturing process becomes the feedstock for another. In that sense, once a log enters the manufacturing value chain, there is essentially zero waste as all the fibre from a log is broken down into various products and uses.
In case of pulp mills, they will take a sawmill’s wood chips as a residual by-product along with sawdust and even the bark. It is for that reason that pulp mills are sensitive to changes in sawlog supply, because less sawlogs means less lumber production which then means less wood chips and other by-products. Conversely, if a pulp mill shuts down, local sawmills will be affected as there are often no alternative outlets for the volume of residual by-products that comes from the log during lumber production.
Pulp mills are not entirely reliant on sawmills in that they will purchase the appropriate log species and grade for whole log chipping. Typically, whole log chipping is a more expensive process than trucking chips in from a nearby sawmill.
When a pulp or integrated paper mill can’t find enough fibre supply or that fibre supply becomes uneconomic with no prospects for improvement in the fibre’s cost structure, a mill will halt operations. The following is a list of all the pulp and paper mills in the province. At the end of October, curtailments and closures will represent 13% of pulp capacity and 58% of paper capacity in British Columbia.
With only 16 pulp or paper mills in total in British Columbia, and 25% already or soon to be curtailed, there is no denying this sector is in crisis.
As of 2021, BC pulp and paper mills represented 6,110 direct jobs. Each mill typically employs between 200 to 600 direct employees. These direct jobs support an equal number of indirect (suppliers of goods and services to pulp and paper mills) and induced jobs (retailers and service providers located in the communities that the mills operate in)
When a pulp mill closes, what is not recognized are the upstream impacts to the mill’s supply chain, including the sawmill, harvest contracting and supplier businesses as well as the multitude of downstream employers, typically within the local communities and First Nations. All those revenues are gone.
Cariboo Pulp & Paper and Crofton are the latest canaries in the coal mine – while their announced status is currently described as “temporary”, if something is not done to address their fibre supply issues, it would be fair to conclude that their respective status could change for the worst.
Fortunately, there are some options available to help ease the fibre supply problem.
Millions of hectares of forest lands have been burnt in this province over the last seven years including the record burn years of 2017 and 2018. Estimates of fire damaged timber are upwards of over 40 million cubic metres (greater than the entire annual harvest for the BC interior over the last few years). Only a small percentage of that damaged timber has been salvage harvested, destined for sawmills, but much of the lower quality timber has been left to nature’s devices.
Pulp mills don’t need the same quality of log that a sawmill requires to make lumber. Could these burnt stands be targeted for expedited harvesting to help fill the gap in pulp mill fibre supply? For whatever reason, there has been not enough attention given to these stands in terms of salvage and future forest management. It seems to me that there is a potential win-win here.
Undoubtedly, even without intervention (including salvage harvesting and reforestation) these stands will eventually recover and grow back into forests. However, that timeline can be hastened through forest management, creating safe areas to be reforested and if harvest openings are planned appropriately, enhance the biodiversity of the area. The sooner these areas are reforested and growing trees, the sooner they are growing back the future timber supply as well as returning these sites’ capabilities for positive carbon absorption – this all starts with salvage harvesting.
Another option that could help is to target harvesting waste, an issue that has gained notoriety with the images of huge slash pile in the media. Typically, the result of offcuts not suitable for lumber production in sawmills, such slash piles might be used by fibre consumers like pulp mills and pellet mills. The BC Pulp and Paper Coalition estimates that recovering logging waste could help close the fibre supply gaps on the coast and interior with upwards of 1.2 million cubic metres deemed as economic and accessible.
Despite being aware of this situation, so far, the provincial government hasn’t taken expedient actions to avert this crisis. Both the Premier and Minister of Forests have fondly spoken about their respective early work histories in BC’s pulp mills – they know first-hand how these facilities operate - yet their decisions today are contributing to this current crisis. Economics have stood in the way as one of the main reasons why these fibre sources haven’t been exploited in the past. Which would be the greater…the expense of doing something about this crisis or doing nothing and accepting the economic, social, and political consequences?
If you are community leader, union representative, contractor, or a pulp mill worker you might want to start asking your MLA what is being done to make sure your local mill has the fibre supply it needs to continue. We are already seeing the consequences of inaction.
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Written By David Elstone, RPF
Publisher, View From The Stump newsletter
Managing Director, Spar Tree Group Inc.