Logs sold to Canfor, West Fraser, after explosion, fire at Babine Forest Produdcts in Burns Lake, British Columbia, were fairly priced, says Hampton Affiliates CEO Steve Zika
BURNS LAKE, British Columbia
February 22, 2012
(Lakes District News)
– According to Hampton Affiliates chief economic officer Steve Zika, logs recently sold by Babine Forest Products to Canfor in Houston and Vanderhoof, as well as West Fraser Timber Co. Ltd. were sold at a fair market price.
Zika said to Lakes District News that the logs were sold following the Jan. 20, 2012 explosion and fire at the Babine Forest Products sawmill.
"We have sold cut logs from the woods only, the sale is still being finalized," Zika said, adding that while he couldn't release competitive information such as how much the logs were sold for, he said Hampton Affiliates considered the price to be fair and reasonable, and what would have been expected from the sale prior to the tragedy.
"It was an unusual event ... we don't usually sell logs to each other along the Hwy. 16 corridor, but we feel like we have been treated fairly in the sale of the timber," Zika said.
He went on to say that the logs, which are in various degrees of processing, have been sold through a variety of transactions.
"Richard Vossen, [Babine Forest Products woods manager] negotiated the price ... we were able to negotiate and we received probably the same price that we would have two or three weeks ago [before the Babine Forest Products explosion and fire]."
Zika said the already processed timber currently sitting at the sawmill will likely be shipped out by rail over the next week or two.
"We also have rough lumber that needs to be processed and we will be looking at evaluating the equipment to see if we are able to process the lumber on site, so we can finish and sell it from Babine Forest Products."
He said if this is a possibility, some employees would be called in for the work.
The remaining log inventory that was not already processed in the sawmill is also in the process of being sold. Zika said Hampton Affiliates is currently accepting bids. He said the log inventory is minimal and approximates to a one month supply for the sawmill, or 100,000 metres.
Zika said they are working as quickly as they can and added that what they are able to do at the site, also depends on the investigating authorities, as well as on the equipment and the power to the mill being restored.
“We do need to have some sort of action taken relatively quickly as those logs can’t wait forever,” he added.
If the rough lumber is unable to be processed on site, Zika said the company would then look at selling it to other sawmills.
He said the Babine Forest Products office has now reopened and office staff are back at work, however he said some tough decisions will have to be made about the number of office staff that can be kept on in the interim.
“We will have to evaluate how many people are needed ... as I have said before I am remaining optimistic that we will reopen the mill and that all of this is just a temporary measure.”
Zika said approximately five Babine Forest Products employees have found work at the Decker Lake Forest Products mill.
“It is a small mill so it is not easy to add more shifts,” he said.
Mike Grimm, general manager for Canfor’s Houston operation confirmed the company’s recent purchase of timber from Babine Forest Products.
He said Canfor purchased approximately 60,000 cubic metres of logs and said that there was no special deals or discounts involved in the transaction, but he also declined to comment on the price paid.
“The purchase was good for us, but it was also good for Babine Forest Products and for the contractors ... it works for all parties,” Grimm said, adding that the company purchased the fibre primarily to help.
“We are just trying to help out the guys. There was money sitting out there in the bush in various degrees of processing and the contractors wouldn’t be paid for their work otherwise.”
He said Canfor has reached a tentative deal to haul the logs to its mills in Houston and Vanderhoof
He also wanted to clear up the rumours that Canfor is cutting the trucking rate.
“This is not true,” he said.
He said the approximate 60,000 cubic metres of wood Canfor purchased is just a drop in the bucket compared to the two million cubic metres Canfor’s Houston mill processes annually.
“Any reports that the market is flooded with logs driving the price down are inaccurate. It’s not that many logs.”
However local independent log sellers are concerned about the future of log sales in the area.
Concerns have been raised about the future of the local competitive log market. With the loss of a major player in the area, competition decreases and prices drop.
Babine Forest Products previously processed one million cubic metres of wood annually at the sawmill and independent log sellers say if this wood is dumped on the market annually over the next few years it will drive prices down by an estimated $10 less per cubic metre, and make it difficult for them to compete against other major players in the area.
It wouldn’t be just independent log sellers that will feel the pinch. There is 140 wood lot licensees, three community forests [Burns Lake Community Forest, Houston Community Forest and Smithers Community Forest] as well as a dozen First Nation licenses that could potentially be affected by lower log sale prices.
Zika said to Lakes District News that he doesn’t think any price drop would be as drastic as independent log sellers have said.
“Babine Forest Products don’t need to harvest as many logs if the sawmill is not running, so I don’t think it is going to be a big factor.”
He said Babine Forest Products has a contract to supply timber to Decker Lake Forest Products and fibre to Pinnacle Pellet that they will be fulfilling. “We won’t be logging as much. It is a short term issue and I would be surprised it there is a huge drop in per cubic metre price as a result.”
Zika said lumber prices are also dependent on the lumber market. “If the market is bad, people may not be as desperate for lumber, but if it is good, demand is up. It has been a tough five or six years ... it is a little better now, but it is still a tough market.”
Lakes District News contacted Bob Clark, who is working from Burns Lake and is part of the province’s economic recovery team for comment. Clark said he couldn’t comment but said he had forward the request on to Pat Bell, Minister of Jobs, Tourism and Innovation, who is expected to make an announcement on the topic within the next few weeks.