With a mission to inform, empower, celebrate and advocate for British Columbia's current and aspiring business leaders, BCBusiness go behind the headlines and bring readers face to face with the key issues and people driving business in B.C.
Issue link: http://digital.canadawide.com/i/1296256
30 BCBUSINESS SEPTEMBER/OCTOBER 2020 potential could go a long way to offset the job losses in the primary sector, if not cover them completely," Hawrysh says. "It's where the growth is going to be in the future. When you look at the mature forest sector around the world, there's always a large value-added component." Looking overseas is a good strategy, says John Innes, dean of UBC's faculty of forestry. In particular, adopting Finland and Sweden's more agrarian approach to forest management could help yield more value, explains the professor, who is Forest Renewal BC Chair in Forest Management. Rather than leave the forest for 60 to 100 years between harvests like in B.C., those countries treat trees like a crop, thinning and tending them throughout the life cycle. Cutting some trees when they're big enough but not full-size provides income for the tim- ber company. Selective logging thins the for- est, which encourages the trees left behind to grow faster and bigger. This approach is more productive, Innes notes, and it would mean we're not harvest- ing forest that the public views as having high ecological or environmental value, like old-growth and sensitive habitat. "I think it could achieve more of what we as a society are looking for from forest," he says. In some places, B.C. could double pro- ductivity, Innes thinks. He's starting to hear interest in the idea, especially from com- panies that own private land. "They have a longer-term vision." No. 1 with a pellet That brings us back to Terrace. Skeena bought the mill operation in the centre of town from Vancouver-based West Fraser Timber Co. in 2011. The mill had sat idle since 2007, while raw logs rolled by on their way to the Port of Prince Rupert and Asian sawmills. Roc Holdings, an invest- ment firm owned by Vancouver business- man Teddy Cui, saw the potential to do things differently. Cui bought the property, changed its name to Skeena Sawmills and invested $40 million to restructure and upgrade its operations. There was more work to do. Until last year, Skeena had a waste problem: what to do with the sawdust, bark and other unusable fibre? Most mills would sell it to a pulp or wood pellet plant, but in the isolated northwest, president Roger Keery's only option was to dump it. "Not only was it not sustainable, we were los- ing 20 percent of the value of the log and were paying to get rid of it," Keery recalls. Building a pellet plant at the mill "was nec- essary to continue to operate, practically and economically," he adds. "It was a game changer." The $20-million plant, which started operating in the first quarter of 2019, went into full 24-hour, seven-days-a-week produc- tion in December. It compresses the waste products into pellets, loads them on rail cars and ships them to Japan, where they're burned to produce electricity. It's part of a long-term sales agreement with another B.C. pellet producer, Vancouver-based Pacific BioEnergy Corp. The wood pellet, or biomass, niche might be the best-performing part of forestry industry in B.C. More than 13 new wood pel- let plants have opened since 2000, and the province is the country's largest bioenergy exporter, producing 70 percent of Canadian pellets shipped overseas. Wood chips are an increasingly vital part of the business, too, and things only look better with the pandemic. One of Skeena's customers, Harmac Pacific, has doubled output at its Nanaimo plant to make a unique grade of medical pulp to supply a mask maker. Skeena boosted wood-chip shipments to help Harmac meet that need. Maybe the most surprising aspect of Skeena's success, though, is the species of tree it's working with. Western hemlock dominates the forest around Terrace. Most think it's only good for chipping for pulp and paper or exporting to China for milling. "The old model of picking what you want and leaving what you don't in the woods doesn't work anymore," Keery says. "Our strategy is to work with what we have and make it work." And it is working. Japan and China con- sider hemlock a desirable wood; 85 percent of the mill's lumber goes to Asian buyers. As China emerges from the COVID crisis earlier than many other nations, demand for Skee- na's wood is recovering while other markets remain in decline. The chips are the highest- value in the pulp and paper industry. Even the pellets stand out. Skeena took a chance as the only company producing hemlock pellets, but testing shows that they produce more energy with less ash. "Being a hemlock specialist is part of how we differentiate ourselves," Keery says. The success of the pellet mill and solid demand for Skeena's other products give Keery and the executive team room to plan their next move—replacing the mill's small log line, upgrading its big log line and adding kilns for drying the milled wood. COVID is making finding a lender or other kinds of finance for the $30-million project even more difficult than when the company was just a bright spot in a busting industry. But Roger Keery and his team at Skeena Sawmills remain optimistic, and for good reason. They keep proving that some- times the best way out of hard times is to go against the grain. n Out of the Woods In its recent report Smart Future: A path forward for B.C.'s forest products industry, the Council of Forest Industries makes 60 recommendations. Here are a few: • Define the working forest land base. Like conservation areas, designate the area that will be available for harvesting and lock in the commitment. • Convene an expert working group, including government, industry and academic experts, to develop innovative and flexible approach- es to climate-affected forests to ensure a more stable, fire-resilient and sustainable timber supply. • Maintain B.C.'s position as a leader in sustainably managed, certified forests by achieving an industry target of 100-percent third-party certification. • Streamline permitting processes, eliminate re- dundancy, and work with industry to find ways to reduce time, cost and complexity without jeopardizing environmental protections. • Obtain federal support for communities and workers in transition. • Continue existing efforts to build and diversify overseas markets and forestry trade missions, including ongoing support for government agency Forestry Innovation Investment. • Make B.C. the global centre of excellence for green building. Bring together companies, technical and academic expertise, along with government, to drive this initiative. • Increase the use of B.C. wood in the province –commercial, public and residential–by 20 percent over current levels within five years.