Wood supply crucial for Northern forest industry, says mill

Wood supply is a more immediate issue for the Northern Ontario forest industry than moving to biomass renewable energy, says one Northern player.

Dave Jennings, general manager of independent lumber producer Dubreuil Forest Products Ltd., said he thinks biomass has "potential," to help the industry.

But he said an ongoing effort by the province to divvy up the wood supply is the more pressing issue for his idled mill and the utterly forest-dependent community it supports.

Dubreuil's wood supply is part of about 11 million cubic metres of wood that the Ministry of Northern Development Mines and Forestry has put up for grabs. Business plans have to be in by March 4.

"They're saying to us you've got two months to put together a plan to basically make or break the survival of the community," said Jennings.

Some have hailed the move as a potential boon to new players looking to set up plants and create jobs, but Jennings said he believes the most sensible thing to do economically, is to support existing industry.

Meanwhile, the federal government pledged this week to sink $292.5 million into Canada's sagging forest sector to help it develop renewable energy from biomass. At the same time, the Forest Products Association of Canada has released a study saying the industry needs to make dramatic changes in order to remain viable.

FPAC says the integration model would allow the industry to extract the maximum value from every tree harvested.

The study found that an integrated mill – one that produces wood, pulp or paper as well as bio-energy and bio-materials – would also provide five times as many jobs as a stand-alone operation.

Jennings said Northern Ontario mills face issues, like high electricity costs, that need to be dealt with first, and questioned the wisdom of government subsidizing an energy source.

"I personally believe they have to support the existing industry, and a lot of our problems aren't caused because we aren't integrated, or producing biomass, and I don't believe that's going to be the saviour," said Jennings.

The Dubreuil mill, which can employ as many as 450 direct workers, is waiting on changes in the market for a restart, said Jennings. He said "positive signs," in the economy make a 2010 start possible.

Maury O'Neill, CEO of Wawa's Economic Development Corp, said the wood supply competition has seen several potential investors examining business opportunities in the area, largely in focused on biomass and wood pellet plants.

But O'Neill said settling the wood supply issue is crucial.

"From our perspective it's critical that a company like Dubreuil (Forest Products Ltd.) be guaranteed the supply they need to reopen," said O'Neill.

Besides, "To make pellet mills or any of the other technologies work, you have to have a supply of biomass, and you have to have a supply of biomass that is ready and affordable, and that is somewhat close to communities, to make it economical," said O'Neill.