Conifex CEO Shares Optimistic Message

Wednesday, January 13, 2010 10:06 AM

Prince George, B.C.- Ken Shields the CEO of Conifex, is described as “someone who puts his money where his mouth is”. He bought the former Pope and Talbot mill in Ft. St. James at a time when others were bailing out of forestry.

Shields told a packed room at the Natural Resources Forum in Prince George, that investors say forestry stock is good for dating, but not for marrying. He says the time for investing in the industry is now because transaction prices are at multi decade lows, The other reason is that there are so many good opportunities available to grow business.

“The way we look at it, in North America there are about 3 million people being born each year there are homes being demolished, and at some point in time, the housing market will rebound.” He expects the housing market in the U.S.to hit 1.3 million starts by the middle of the decade, and 1.7 million by the end of the decade.

Although his company is relatively small compared to the major players, Shields says bigger is not necessarily better. He pointed to the fates of Abitibi Bowater, Tembec and Catalyst as examples. He sees Conifex as being a significant regional player.

With 45% of North American lumber being produced in Canada and 75% of consumption in the U.S., the United States simply cannot keep up with demand says Shields, so that will speak well for Canadian producers.

Shields says the mountain pine beetle could mean record high prices for lumber in the not too distant future. He says with there being a decline in merchantable timber, and demand increasing, the price will go higher and that too will speak well for lumber producers. He predicts lumber prices could hit $364 U.S. per thousand board feet.

Conifex is now working with a Chinese Steel producer to see how Conifex can work with that market.

“When it comes to China, it is very easy to under estimate its impact on our industry.” Shields says as China looks for lumber, and pulp, that will drive up the prices for those commodities, and the chip supply.

Shields is very encouraged to hear about the new policies under consideration with the Ministry of Forests, the policies would create receiving licenses where a tenure holder could enter into an agreement with a bio energy producer for the slash “No one would expect a mine to give away its coal for free or for a natural gas company to flare off all its wells, that effectively is what we are doing in this province, that is why I am so pleased to hear of the initiatives that I think will put a bounce in the step of the growth of the bio-energy field.”

Conifex is operating the Ft.St.James mill with one shift, and hopes to add a second shift in August or September of this year.

“The best days of our industry are not behind us, they are yet to come.”

Previous Story - Next Story

Email |

Print |

Facebook |

Twitter |

Digg |

Del.icio.us

Posted on Wednesday, January 13, 2010 10:06 AM in News by 250 News

Return to Home

Comments

Posted by: Palopu on January 13 2010 12:28 PM

Three million people born each year. What he forget to mention is that the death rate in the USA for last year was around 2,500,000 so we have a net gain of 500,000. Not quite as impressive as 3 million but what the hell. If your going to hype, you may as well go all the way.

Also it seems that they **HOPE** to put on another shift at the mill in September. Thats 9 months from now. So can we assume that at least for this year the lumber market is going to stay in the toilet.

Posted by: IMO on January 13 2010 1:00 PM

Well I sure would like to take this information and be happy and positive but unfortunately mills are still closing down. People are losing their jobs still.

Posted by: gus on January 13 2010 2:34 PM

What this smart guys forget is that North America is more than just Canada and the USA............

The question is, where else are they lacking in their education and retention?

Try all the way down to Panama to the south, including most of the island nations in that area for the strictest application of North and South America as Continents. There is one more interpretation which separates the isthmus as Central Amirca.

The CIA Factbook uses the latter definition. Thus, included in North America are:
1. Bermuda
2. Canada
3. Clipperton Island
4. Greenland
5. Mexico
6. Saint Pierre et Miquelon
7. and the USA

The population growth for the three largest countries is ires is USA is over 4.5 million per year.(USA=3million; Mexico=1.25 million; Canada=275 thousand)

That includes births, deaths, in migration and out migration.

Posted by: Mercenary on January 13 2010 2:46 PM

I think it is a good thing that there isn't just one major player in the industry. I believe that Canfor was just getting too large and had too much control over the industry as a whole. Perhaps some of these shuttered mills will be sold to smaller companies who are more willing to keep the money they make within the communities that make the money instead of shipping it south to the US as was the case with Pope and Talbot.

The main drawback of course is that a smaller company just doesn't have the purchasing power that a bigger company like Canfor has in regards to upgrades and marketing.

Posted by: gus on January 13 2010 3:17 PM

"Shields says the mountain pine beetle could mean record high prices for lumber in the not too distant future. He says with there being a decline in merchantable timber, and demand increasing"

Everyone conveniently forgets about Russia. Canada is not the only place from which people buy lumber. Russia needs to sell its resources and products more so than Canada. They have clamped down on raw log exports. Have not heard that they have any MPB. There is no shortage of wood in the world. The suppliers may simply change if Canada cannot provide one or more products.

Posted by: invisableman on January 13 2010 7:55 PM

As a former employee of P&T/ Canfor it is great to hear the can do and not the cant do.If you have stinkin thinking that is the result you are expecting. True not everyone is not back to work but how many are.It is small steps, lets not flood the market the Canfor way.I have seen where two of the Canfor mills north of the divide are or going to be opened.Could this be that Canfor can not supply J grade lumber to Japan?IMO

Posted by: lmorge on January 13 2010 10:32 PM

I think Shields is mistaken. With so many areas of BC under beetle infestation or its aftermath, it only leads certain areas good to log....however these areas are so remote that the cost to get the logs to market will be astronomical. And China can get the wood from it's neighbour, RUssia at a much cheaper cost if need be. (as per gus)