Pacific BioEnergy Buys Kitwanga Lumber

Wednesday, September 02, 2009 12:02 PM

Prince George BC. - Pacific BioEnergy Corporation (PBEC) announced today that it has purchased the assets of Kitwanga Lumber Company (KLC) located in Kitwanga, BC. Transaction details are not being disclosed at the request of the former owners. KLC ceased operations in the fall of 2008. When operating, the mill produces about 36 mmfbm (million board feet) of various dimension lumber products for US and export markets on one shift and consumes about 150,000 m3.

PBEC sees the acquisition of KLC as a strategic move to position PBEC in the Northwest region for the long term to expand its wood pellet and biomass energy business. PBEC plans to develop a new wood pellet production facility in the region that is expected to create considerable employment during construction as well as in excess of 50 permanent new jobs in production, harvesting, hauling and reforestation of additional fibre required for the new plant. KLC will be a cornerstone provider of the fibre required for the new pellet plant.

PBEC Vice President Brad Bennett states “PBEC is pleased a deal could be concluded to acquire the KLC assets. PBEC sees this is as the first step toward the planning and construction of a new wood pellet and biomass energy facility in Northwest BC, a region that has seen a significant decline in forest industry activity over the past decade. We are very pleased to think that the KLC asset acquisition and subsequent planning for the construction of a new wood pellet plant will help stimulate economic activity in the region, as well as the development of a new biomass energy sector with PBEC playing a major role for the long term.

PBEC is also pleased with the support it has received from both the Gitxsan and Gitanyow in purchasing KLC and in moving forward with plans to build a new pellet plant in the region. PBEC sees the project providing opportunities for the company, First Nations and communities, a triple-win for the Northwest.”

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Posted on Wednesday, September 02, 2009 12:02 PM in News by 250 News

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Comments

Posted by: Mercenary on September 2 2009 2:43 PM

I can only hope this creates long term stable employment in the north. Hopefully we have a few more of these deals in the works. How about Abitibi Mackenzie? Good mills for sale here :)

Posted by: DPJ on September 2 2009 3:29 PM

Good news for the natives in the area. Hope they do not screw this one up.

Posted by: borneo60 on September 2 2009 3:59 PM

The Chinese will probably buy P&T mill and Abitibi. It would be good for Mack town.

Posted by: Eagleone on September 3 2009 5:08 AM

This fits with my line of thinking... I figure the reason why we haven't seen mass unemployment the last few years is because the following....

If a mill is getting only 50% efficiency in turning a log into a stick of lumber, for illustration purposes, then the other 50% goes to wood chips, sawdust ect. So if we see a 50% reduction in the lumber market we are really only seeing a 25% drop in wood fiber demand, as the wood chip supply would still be consistent since pulp is not dependent on the lumber markets. If the efficiency ratio is lower than 50% then the impact of saw mill shut down to the total forestry employment becomes even less of an impact.

For me the fact that lumber has dropped off so much and yet overall forestry employment hasn't been effected as bad as the lumber mills... suggests to me that the efficiency of our raw log to stick of lumber transformation process wasn't nearly as high as our forest companies have led us to believe in the past. I would think saw mills for a long time have been grading only the best quality lumber for end product and chipping a lot of sub standard or waste wood. Nothing wrong with that if the end product for sale is of a higher quality and revenue is generated from the wood fiber, but it would be something worthy of further economic and operational investigation IMO.

Now with the slow down in lumber we are seeing more diversification into hog co-gen and pallet plant operations which will in the long run increase the over all utilization of the raw log... and ultimately when market conditions return our industry will be well positioned with a higher efficiency in utilizing the raw log.

In the mean time forestry workers are staying working chipping raw logs and it may be years before the lumber market returns... and when the lumber market does return the efficiency of the raw log for value added maximization should be the issue of the day IMO.

I think this issue is the key to forecasting the economy across the north these days.

Posted by: Born in BC on September 4 2009 8:19 AM

"and when the lumber market does return the efficiency of the raw log for value added maximization should be the issue of the day IMO."

Use the entire log? Wow. Im surprised no one else thought of that! Sheeesh