Rumour Mills Working Overtime

Tuesday, February 14, 2006 07:13 PM

The rumour sweeping the region is that Canfor will sell off three pulp mills in the Prince George area to international interests, and release word of the sale after the markets close tomorrow.

The buzzings have been fueled by the fact Canfor will release its fourth quarter 2005 financial and operating results after market closure tomorrow.

Thursday morning there will be a conference call to discuss the results,   and after the discussion there will be an opportunity for media to ask questions. Opinion 250 News has called Canfor's head office for clarification on the rumours, but we have yet to connect with anyone who could provide an answer.

One lumber company boss in this region says he's not surprised by the rumours. " If they were to sell those pulp mills now, likely to mega producers of pulp either from the Scandinavian countries or to the Chinese, they could take that money and put it into an emerging market such as Russia or China where the action will be when the beetle wood has all been harvested. "

Speaking on the condition of being anonymous, he said ,"Look to the south, Canfor picked up three mills in the southern US which, are for the most part, dealing in European wood, mostly Russian trying to establish their presence in that section of the US. If they were to take the money they have invested in the three pulp mills in this city and move that into either Russia or China now, they would have a head start on where the industry is likely to move in the next decade."

Our insider says  "I believe a sale is possible, they would like to concentrate on lumber manufacturing and leave the pulp production, which has cost them money in recent years, to some of the big players on the world stage."

What effect would a buy out have on the industry in this region? He figures it wouldn't be too out of line for a new owner to close one mill, and keep two going. That is of course if all the rumours prove to be true.
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Posted on Tuesday, February 14, 2006 07:13 PM in News by 250 News

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Comments

Posted by: Chadermando on February 14 2006 8:56 PM

I heard a rumour they could shut down the digester at PG Pulp, but keep the rest of the operation going at a cost of 60 jobs.

Posted by: owl on February 14 2006 10:57 PM

There has been discussion around closure of at least one pulp mill, if not two, for decades.

I think this time such rumours may become reality, and if not now, then pretty soon. This is only the start.

The beetle kill as well as the Chinese economy taking off, plus the possible emergence of Russia out of its post cold war sleep, certainly in the wood and energy sectors, all may be aligning themselves to see some drastic move which may not bode well for this part of the province.

In addition, the drop in the USA dollar on the world market and the Canadian dollar keeping up with other western currencies has also played into this, as has the trade conditions which the USA is placing on Canada. For those with the money and with the expertise in the forest industry, it may be time to hedge some bets by diversifying holdings to other countries.

The Chinese are in the market for BC timber rights. There have been people negotatiating such deals. Maybe they are starting to take shape.

The current government appears to have been on a path to allow tht to happen over the past two or so years, unbeknown to the general population. It has not been debated publicly.

Posted by: acrider54 on February 15 2006 6:09 AM

Wouldn't surprize me a bit.