BUSINESS IMPACT
Sawmill faces uncertain future as owners have yet to reveal plans.
BURNS LAKE — There’s no question this small community — which has relied on Babine Forest Products as an economic driver since 1974 — desperately wants its sawmill rebuilt.
But Portland, Ore.- based Hampton Affiliates, which owns about 90 per cent of the mill ( the rest is owned by the Burns Lake Native Development Corporation), has not said what the future holds for it.
The sawmill was destroyed in an explosion and fire Friday night, but the planer mill ( which puts a smooth finish on the boards), the drying kilns and other buildings remain intact. There are piles of snowcapped logs in the mill as well.
“At this time our focus is on caring for our injured and grieving employees. We are not speculating on the cause of the accident and will let the proper authorities complete their investigation,” Hampton CEO Steve Zika said in a statement on Monday.
“No decisions will be made on restarting the planer mill or rebuilding the sawmill until more facts are known and our employees are properly cared for,” Zika added.
It could cost $ 80 million to rebuild the sawmill, but the key issue will be the future timber supply in the area, said RBC Capital Markets forest industry analyst Paul Quinn.
The timber supply is expected to decrease as much as 30 to 40 per cent in the near future because of the mountain pine beetle epidemic, noted Quinn. “Have they got the fibre [ timber] going forward? I don’t think they have it,” he said.
However, others believe the mill was probably doing relatively well, so chances of its survival may be good.
At a capacity of 355 million board feet of lumber, it was one of the larger mills in British Columbia’s interior, said Gerry Van Leeuwen, vice- president of International Wood Markets Group Inc. And the fact it was running an evening shift — the explosion occurred just after 8 p. m. — suggests it was doing well compared to other mills in the Interior.
“Exactly how well, I don’t know but I would say better than many of them,” Van Leeuwen said.
In the meantime, the mill closure will be a huge economic blow to Burns Lake, which has little other industry, he said. Loggers will also be affected “because a mill of this size consumes a huge number of logs.
“I would guess there would be another 100 or so in the logging industry that will be put out of work,” Van Leeuwen said. “No mills, no logs required.”
Keta Kosman, publisher of Madison’s Lumber Reporter, believes even if Hampton does not want to rebuild the mill, another investor may step up.
The mill is in a good location, far enough away from the beetlekill wood to not be totally reliant on it, Kosman said. Other mills may have to shut down when that wood supply dries up. Also, the first nations in the area will want to build a mill of some kind there, she predicted.
“But by all accounts, it’s a couple of years away, even if action is taken quickly, because it is a total rebuild.”
But two years in the future coincides with when the lumber industry will start recovering, she said. So it could attract other investors if Hampton isn’t interested in rebuilding.
“There are people circling around looking for where the next value investment is and the forest industry is looking pretty good because it is undervalued by a lot,” Kosman said.
The Burns Lake Native Development Corp. that holds a minority stake in the mill includes six first nations, including the Lake Babine Nation. The nation has a lot at stake, with 40 per cent of the workforce at the mill.
Lake Babine Nation chief Wilf Adam said they are in discussions with the provincial government on finding a way to ensure the mill is rebuilt, perhaps with a secure timber supply. “The end goal is to rebuild that plant,” said Adam.
The future of the mill — which provided 250 jobs in the community of about 3,600 — was the talk of the town on Monday.
At Legends Lounge diner, mill worker Trent Benson said it’s not an option not to rebuild. “It’s a must,” he said firmly.
His daughter Shelby said if the sawmill isn’t rebuilt, there is no one in the community who won’t be affected. “People would have to commute, people would leave town,” she said.
Logger Chris Paulson, also seated at the table with the Bensons, said his firm that employs about 20 people spends $ 80,000 a month on fuel and supplies in Burns Lake.
Hampton owns another mill in the community, but it is much smaller, noted Paulson.
Vanessa Sadleir, who works at the diner, said a permanent mill closure would send ripples everywhere, affecting even the restaurant, which hosted the mill’s safety meetings.
At the Irly Building Centre, manager Trennis Wiens said he’s already planning for the effects of Friday night’s disaster. The mill supplied lumber to the store.
“It’s going to be different,” he said, noting he’s already had a call from a logger looking for work.
International Wood Markets Group’s Van Leeuwen noted that last year, the mill entered into a contract to sell its sawdust and shavings to Pinnacle Renewable Energy Group, which built a mill nearby to make wood pellets, another factor in Babine’s favour.
“Obviously being able to sell your sawdust and shavings is much more financially rewarding than burning it,” Van Leeuwen said.