Frustration with Ontario’s wood supply competition

When the province of Ontario announced a plan in November 2009 to free up 11 million cubic metres of unused wood fibre in the province through a wood supply competition, over 100 value-added wood projects submitted an application.

The wood supply competition for the unused wood fibre has been called a “short-term” opportunity by Ontario’s Minister of Northern Development, Mines and Forestry, Michael Gravelle to attract new investment in the forest sector, by supporting new and innovative ventures.

A longer-term goal of the province is to reform its forest tenure system. The province plans to launch two pilot models, known as Local Forest Management Corporations (LFMC), to better manage Crown forests and oversee the competitive sale of Crown timber. The models will test some new principles of allocation, licensing and the pricing of wood over a five-to-seven-year period.

The biggest driving force behind the forest tenure reform is the goal of the province to stop companies from hoarding wood.

The wood supply competition is causing frustration, both because of its delays, and because of its secrecy. Applicants to the competition were told when they applied to keep quiet about their application.

Gravelle originally said announcements on wood applications would begin in October. He later pushed that time-line back to the end of this year.

Protocol Biomass Corporation, a biofuel company from Toronto, is one of the companies voicing their frustration with Ontario’s slow progress on its wood supply allocation.

The company wanted to take over the vacant pulp mill in Marathon, Ontario and had plans to begin retrofitting the facility this fall to manufacture wood pellets and ship them to European markets.

If the company can get a large enough wood supply, it would like to spend $100 million dollars installing new equipment in the mill, and hire up to 125 people to manufacture the pellets.

Tom Logan, President of Protocol Biomass, said no bank will give them financing with only a two-year wood supply, so he is left to wait for word from the province.

Marathon’s mayor, Rick Dumas, is also voicing his frustration over the wood supply, and is upset over Gravelle’s failure to make allocation announcements within the time lines he had originally set out.

Gravelle is now apologizing for raising false expectations over the wood supply competition and has said no announcements will be forth coming until sometime in 2011 because of the need for due diligence. While he said he appreciates Dumas’ eagerness to move things forward, Gravelle said the province has already received 115 applications for wood supply and his ministry is working as quickly as it can to process them.

Sources:
BioFuel Project Delayed (CKDR Dryden)
Still waiting (TbNewsWatch)
Northern communities, companies wait for wood tenure (Northern Ontario Business)