Kruger Voices Opposition to Quebec Wood Supply Cuts

Dec. 13, 2006 - Montreal-based Kruger Inc. said it is surprised and dismayed to learn that the company's forest supply on the North Shore will be reduced by 42% as a result of the Chief Forester's new annual allowable cut calculations.

The company said its decision to set up on the North Shore (Quebec), investing nearly $170 million to date and creating 750 jobs in the area, was made on the basis of a contract giving it rights to forest supplies that it believed were stable and predictable.

On Dec. 8, the province's chief forester announced the wood harvest in Quebec's forests will be cut back by another 3.8 percent between 2008 and 2013. The reduction is in addition to the 20 percent cut announced in March 2005.

Pierre Levac also reduced the harvest of leafy hardwoods by 15 per cent. The total volume of harvested wood will decrease by 21.9 per cent in 2008 compared with 2005.

Jean Majeau, vice president, Corporate Affairs at Kruger, said, "“This disproportionate reduction in volumes is all the more surprising as we have only been conducting forest activities on the North Shore for 8 years. This is an area where there was previously no forest activity.

"In addition, we have never harvested in excess of our allocation," he said.

Kruger said the situation could very well deteriorate as other reductions in volume are expected on the North Shore to take into account various factors that alter the rights of the use of the territory.

“These new disastrous conditions add to the uncertainty related to the many successive litigations affecting the industry that Kruger has had to face since 2004," Majeau added.

The Quebec Forest Industry Council echoed Kruger's concerns and said the new reduction will hit the Lower St. Lawrent and North Shore regions hard.

Council president Guy Chevrette said it's difficult to say what impact the decision will have on the thousands of jobs in Quebec's forestry industry.

But he said the impact on the hardwood industry will be "major."

Kruger in late-2003 started up a new LWC/ULWC paper machine, PM 4, at its Wayagamack mill in Trois Rivières, Quebec. The installation of the new machine was a C$400 million investment and wood chips produced on the North Shore supply the mill.

"It is clear that this massive and unilateral reduction of our supplies as well as the various constraints imposed, will have a highly significant impact on the activities of our three North Shore sawmills (Forestville, Longue-Rive and Ragueneau) as well as at the Kruger Wayagamack mill in Trois Rivières. We must therefore evaluate all our options in every respect, in cooperation with our regional partners and the government representatives,” Majeau said.

Kruger is calling for the government to reevaluate the impacts of the reduction of its timber supplies and find solutions that will allow the company to maintain the viability of its operations.

SOURCE: Kruger Inc., and CBC.ca

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