B.C. Forest Industry Eyes Major Transformation

Feb. 19, 2009 - British Columbia's forest industry, which turned in one of the world’s worst performances in 2006, is on the verge of a historic transformation as pulp and lumber production gives way to bioenergy, one of the province’s leading industry consultants said Thursday.

The volatile industry tumbled from the world’s top performing region two years ago when it had $1.5 billion in profits to the bottom in 2006, losing $500 million when $2.5 billion in duty refunds is not included, said findings released today by PricewaterhouseCoopers.

Further, return on capital employed—a key indicator of financial health—dropped to -1.8 per cent as the industry fought against the mountain pine beetle infestation, a depressed U.S. housing market and a soaring loonie, partner Craig Campbell said at PWC’s annual Global Forest and Paper Industry Conference.

But despite the bad performance, Campbell said huge changes are already underway—a consequence of the mountain pine beetle infestation—that will transform the province’s wood products industry from reliance on the notoriously cyclical pulp and lumber markets to more stable energy production.

“The next five years in the B.C. forest industry are going to be without a doubt the biggest transformation we will ever see,” Campbell told the 500 people attending the conference.

He said the Interior already has 15 million cubic metres of timber—enough lumber to fill half a million logging trucks—going to waste in huge roadside piles because it can't be converted to lumber.

And the province will continue to produce six million cubic metres of waste wood into the foreseeable future.

Further, the ownership of the industry is changing rapidly with new investors coming in who see potential, the industry has $2.5 billion in duty refunds, and carbon credits trading is just over the horizon.

It all adds up to “big opportunities for biomass energy using beetlewood,” he said.

In a later interview, Campbell said the industry is buzzing over the potential of electrical generation.

“We are getting phone calls to do studies for energy companies vis a vis the wood supply. There is a lot of momentum and interest. That’s where I see we are going to shift: from traditional lumber to energy.

SOURCE: Canada.com

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