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Fort Nelson forest tenure sale approved

Forest tenure transfer to faciliate construction of new wood pellet plant in Fort Nelson

The Ministry of Forests says it has approved the sale of forest tenure in the Fort Nelson area from Canfor to Peak Fort Nelson Properties Ltd.

The licence has an allowable annual cut of 553,716 cubic metres, and positions Peak to pursue its plans to commission a wood-pellet plant in the region in partnership with the Fort Nelson First Nation, the ministry said in an information bulletin on Wednesday.

"The transfer follows comprehensive engagement and considered input from the public, local governments and Indigenous Nations," the ministry stated. "It is supported by Fort Nelson First Nation, which has been working with Peak Fort Nelson Properties Ltd. to institute a land management framework that will guide operations under the licence."

Last year, Canfor Corp. announced the planned sale of its Fort Nelson Crown tenure to Peak Renewables, a startup backed by Brian Fehr, Order of BC recipient and founder and former owner of the BID Group, for $30 million.

Peak plans to build a wood-pellet manufacturing plant on the old Canfor site in Fort Nelson, which still has buildings, a log pond and a biomass energy plant. It would produce 600,000 metric tonnes of pellets annually, to be exported to Asia, where pellets are burned, as an alternative to fossil fuels, to produce heat and power.

"Expectations of the decision are that Peak Fort Nelson Properties Ltd. will continue engagement with all area First Nations," the ministry stated. "Harvesting will occur, with the objective that each part of the total forest-stand profile will be used for its highest and best use. Fibre will be made available to local wood-product producers to the extent local demand exists."

A truck of logs rolled across the weigh scale in Fort Nelson for the first time in 12 years in January.

Peak had already earlier purchased the old Canfor sawmill and oriented strand board (OSB) assets in Fort Nelson, which have been shut down for more than a decade.

As a result, Fort Nelson is one of the few regions in B.C. with a surplus of harvestable timber. But since 60% of the trees in the region are deciduous – mostly aspen – Fort Nelson has not had much luck attracting investors to restart the sawmill, since aspen is not suited for making lumber.

Last year, Peak CEO Brian Baarda said that should the tenure sale be approved, the new pellet plant could be up and operating by 2022.

There is a growing demand for wood pellets in places like the UK and Japan, where they burned to produce power instead of coal. Bioenergy, as it is sometimes called, is considered renewable, since trees grow back, taking up the CO2 that would have been produced when pellets are burned.

Baarda said that other value-added manufacturing could develop around a revived logging industry. Furniture manufacturing is one possibility, since aspen is good for making furniture.

“Somebody might want some of that high-grade aspen and turn it into, probably, the best furniture around,” Baarda said. “Once you’ve got somebody that’s out there harvesting, it creates all those secondary opportunities.”

About 40% of the trees in the Fort Nelson are coniferous (spruce, pine and fir), which are suitable for sawmilling. Coniferous trees harvested in the area will be sold to other sawmills, at least initially.

“It will supply mills probably as far down as Prince George with some of those coniferous logs, at least in the short run, as we get the pellet plant built,” Baarda said. “Phase 2 would be looking at other value-added activities.”

A typical pellet plant costs about $100 million to build, although Baarda said there is already about $70 million worth of assets at the old Canfor site.

Peak has stated the new pellet plant would employ about 50 people, with the woodlands operations employing 300 to 400. The investment has the backing of the Fort Nelson First Nation, will have an equity stake in the plant, Baarda said. 

Fort Nelson First Nation Chief Sharleen Gale said last year that she expected the pellet plant, as an anchor to the local forest industry, will benefit the First Nation by helping it develop its own forestry businesses and tenures. Peak will also conduct logging operations according to the Fort Nelson First Nation’s land use plan.

“It won’t replace the hundreds of good forestry jobs that were lost a decade ago with Canfor pulling up their stakes and leaving the area, but we believe this will be good for the community,” she said.

Previously, tenure swaps and sales did not need ministerial approval. But in 2019, the NDP government introduced new rules requiring the Forests minister to sign off on tenure sales and transfers – a move driven by concerns that the most of the forestry tenure in B.C. is held by just a handful of large companies.

— with files from Business in Vancouver

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