Pacific BioEnergy halts production at Kitwanga sawmill in British Columbia, blaming inventory adjustments in China; Premier says China's potential remains 'mind-boggling' despite reports of cooling economy

Wendy Lisney

LOS ANGELES , November 3, 2011 (Forestweb) – As British Columbian premier Christy Clark departs for her first Asian trade mission on Friday, the Kitwanga sawmill on the province's North coast has halted production, blaming inventory adjustments in China.

Clark attended the grand reopening of the sawmill in July, which was seen at the time as one of the government's successes in its efforts to market wood products to China, The Globe and Mail reported on Nov. 1. At the opening, Clark said the province was "on the cusp in the northwest of British Columbia of something very, very big.”

The sawmill's owner, Pacific BioEnergy, blames the curtailment on inventory adjustments in China, saying these have had a domino effect on the province's forest industry. These market events were comletely unforseen when the company made the decision to restart, Pacific Bioenergy said, as U.S. demand has remained flat and Chinese demand has dropped.

On Tuesday, Clark said she was not troubled by the cooling of China’s economy, telling reporters that an economic growth rate of 9% is still "pretty good" and that the range of needs that China has and British Columbia can supply is "absolutely mind-boggling."

In August, the province's lumber sales to China in the first half overtook sales to the U.S. for the first time, a figure that was seen by many as solid proof of the success of the government's strategy. But Pacific BioEnergy president Wayne Young said sales at the Kitwanga mill were already starting to sag in August.

The sawmill had been closed for two years when it reopened in July, one of around two dozen in the province that restarted this year on the strength of improving sales to Asia. Young said the Kitwanga sawmill was selling most of its products within Canada, but the boost in sales to China had pushed prices higher and helped to create a seller's market.

The Kitwanga mill stopped bringing in logs in September and closed the sawmill in early October after processing the remaining inventory.

Doug Donaldson, the region's New Democratic Party MLA for the region, raised the closing of the Kitwanga mill in Question Period on Tuesday, after laid off workers told him of their concerns that logs are being exported for processing overseas. “The premier got the photo opportunity, and the workers got pink slips," he said, adding: "when will the Liberals get serious about problems facing forestry and ensure B.C. logs for B.C. jobs?”

Clark responded that it was her government’s work in opening up Asian trade that had helped sawmills reopen across the province this year.

The primary source of this article is The Globe And Mail, Toronto, Ontario, British Columbia, on Nov. 1, 2011.

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