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WHEREAS:
A. The Chief Forester in 1982 invited applications authorizing the harvest of 125,000 m3 from within the North Coast Timber Supply Area under section 11 of the Forest Act at that time,
and
B Wedeene River Contracting Company Ltd. (Wedeene), the successful applicant, and the Regional Manager consequently entered into Forest Licence A 16820 effective April 1, 1983 which, among other things, required the establishment of a timber processing facility in accordance with the proposal upon which the award was based, and
C. On November 20,1989, Forest Licence A16840, controlled by Williams Resources Ltd.,parent company of Wedeene, was amalgamated with Forest Licence A16820, and ).
D Wedeene eventually established a timber processing facility at Prince Rupert in May 1988 and operated it until November 30, 1990,
E. In response to Wedeene being under receivership since September 1990, the licensee was exempted from timber processing requirements for a period of up to two years commencing November 21, 1990, and
F Wedeene was ordered into bankruptcy on April 30, 1991 and subsequently sold to West Fraser Mills Ltd and Enso Forest Products Ltd. effective August 30,1991, subject to the minister's consent under the Forest Act, and
G. The minister consented to the assignment of Forest Licence A 16820 conditional upon the licensee making its "very best efforts to reopen the Wedeene sawmill in Prince Rupert ...no later than November 1992", and
H. On July 28,1993, the minister accepted West Fraser's custom milling and chipping proposal for Prince Rupert stating that "Its implementation -- ..will satisfy the milling requirements of Forest Licence A16820, specifically the original intent of the 1983 award, the 1991 conditional consent to assignment and the "equivalent volume" milling condition in the current licence.", and
.
I West Fraser fulfilled their timber processing commitment by constructing and operating the proposed mill since April 1995, and
J. Enso Forest Products Ltd. assigned its half interest to West Fraser Mills Ltd. Effective September 17, 1993 without a 5% AAC reduction, and
K The allowable annual cut (AAC) for Forest Licence A16820 was originally set at 125,000 m3
in 1983, then reduced to 118,750 m3 in 1988-1989 (section 33 of the Forest Amendment Act, 1988), then increased to 169,946 m3 on December 1,1989 (51,196m3 from Forest Licence AI6840), then reduced to 161,449m3 effective September 1,1991(5% reduction for assignment to West Fraser Mills Ltd. and Enso Forest Products Ltd.), and
L. Forest Licence A 16820 was replaced under the Forest Act on April 1 , 1989 and April1 , 1994 and West Fraser Mills Ltd. was offered a replacement forest licence in September 1998,
M. The parties have entered into this Licence pursuant to section 15 of the Forest Act.
July 1983”Site preparations” after awarded 125T M3 Forest Licence
August 1987 opening imminent—after missed 2 previous deadlines
May 24th 1988 officially opens
1990 Bankrupt
1991 West Fraser acquires licence which requires company to operate a sawmill.
1993 West Fraser threatens to not reopen mill; Dan Miller invokes “terms and conditions of license” – So west Fraser plans new facility.
Feb 20, 1979—Sawmill reports ‘premature’
Feasibility depends upon selling hog fuel.—A smokerless burner would be too large of an added expense. Log chips on other hand could be sold to Ketchikan pulp mill
Dated July 6 1983
Site preparations for a $20million sawmill at Butze Bay Industrial Park will begin at the end of the month.
--
The company which was awarded a forest licence for 125,000 cubic meters of wood per year this spring is now re-appraising markets and timber supply
The company is looking for openings in the Japanese and Chinese
markets and is expected to produce cuttings and 2 x 4s as well.
Turning out 50 million board feet per year the mill will employ 46 people on a one-shift basis as well as an unspecified number of jobs in the woods and during the construction phase said Lachland. ,
It is estimated it will take. About one year after the final design stage to have the mill in operation. The company has acquired 52 acres bordering Butze Bay from the B.C. Development Corporation.
March 10th 1987 – August Opening---- The MOF imposed Aug 1st deadline for the opening.
Workers are laying the foundation for 100 ton crane that will lift log bundles from barges in Butze Bay to the mills log yard. The yard where logs will be sorted and scaled and crane operational by April.—The chipping operation will be ready by early May.
--- Will allow north coast logs that are now exported or shipped to southern BC for milling to be milled here. Equipment at the new mill is designed to cut the type of wood harvested here he said. --- missed 2 previous deadlines for mill completion 1) financing 2nd “because provincial government ban on log exports slowed business for the company”
May 24th 1988 –PHOTO--
It was a proud day for the Williams family Friday afternoon, as the Wedeene River Sawmill officially opened before a crowd of well over 100 people. Intermittent rain did not dampen .spirits at the ceremonies, which included an appearance by B.C. Forests Minister Dave .Parker. Pictured above, at the unveiling of the plaque commemorating the occasion...'Are (left to right) : Father Gerald Kelly of the Annunciation Church; Forests Minister Dave Parker, Wedeene department vice-presidents Clayton and Kelly Williams, Mayor' Pete Lester, and Wedeene President John Williams. At left, a Wedeene conveyor stretches into the mill.
McRae Report 1990 Report (available here)
November 23 1993
The new 24M$ mill is actually going to be built on a piece of property that we in fact don't own; We've only recently reached agreement with the Ministry of Lands on the purchase of that property," MacNicol explained. The company, in dealing with the land issue, also dealt with Prince Rupert city council for the agreement. Settlement of the issue is expected to be concluded in two weeks, MacNicol said.
;
The other issue is a land fill site for the mill. 'We are expecting a meeting with the Ministry of Lands later this week, hopefully to conclude discussion regarding waste disposal." he said.
Controversy surrounding Wedeene began earlier this year when the company which purchased the bankrupt facility announced it would not reopened the Prince Rupert mill.
Eurocan (West Fraser) had said the reason for the announced closure was the lack of wood supply for the mill. The company had hoped to transfer its North Coast harvesting licence to its Terrace mills.
(MacNicol said Monday the wood supply situation had not changed). In response to the local job loss -and opposition by the Prince Rupert city council to the closure and proposed transfer of licence -the provincial government intervened and held the company to the terms and conditions of the forest licence to provide economic benefits and jobs to the North Coast. The mill is expected to employ about 55 people. The sawmill will produce value added end products for export to the Asian market.
WEDEENE RIVER CONTRACTING COMPANY LTD.
Wedeene River Contracting Company Ltd. of Prince Rupert
went into receivership on September 20, 1990. Wedeene
holds Forest Licence A-16820 and has operated a sawmill in
Prince Rupert since May 1988. The Minister of Forests has
asked for an independent assessment of the viability of the
operation and the options for maintaining a sawmill in
Prince Rupert.
In the time available, I have discussed and examined inform-
ation given to me by the Ministry of Forests, Wedeene and
others. I have visited the site on three occasions and met
with the Receiver, Wedeene personnel, Noranda sales personnel
and Forest Service staff in Prince Rupert and Smithers.
The short period in which an opinion was to be formed pre-
cluded the conduct of new indepth studies, nevertheless based
on what I have seen and heard and on my experience, my invest-
igation leads me to conclude certain salient points.
I. The
sawmill, as designed, is not a viable operation.
The
omission of a large log breakdown system does not
allow
the manufacture of the full spectrum of available
logs. The debt load is severe.
To manufacture the full spectrum, major changes would
need to be made in the mill at considerable cost.
It should be noted however, that the installation of
just the large log breakdown system will not materially
increase the viability of this plant.
2. The
timber supply (quota) currently available is not
adequate
to justify major sawmill operations particularly
in the face of the debt load.
3. There are, however, a number of positive points or
strengths.
a. From all reports, Wedeene has carried on a reasonably
efficient logging operation;
b. The lumber marketed through Noranda to this point
has been very acceptable on the market -they make a
good product;
c. The sawmill is on a well developed site, good dewater-
ing system for log sorting and is close to Repap pulp
mills; and
d. Repap can utilize the chips and hog fuel.
Page 2
If no action is taken to assist this operation, I believe
the repercussions will be;
I. The Receiver will try to dispose of the operation as
a package (meaning consent to transfer forest licence).
(Note paragraph 11.00 of the Forest Licence document. )
Failing this
2. The Receiver will sell the assets piece-meal with
a. a loss of approximately 150 full time jobs from
the area, and
b. the unsecured creditors will recoup very little of
their investments. Should bankruptcy proceed, I am
of the opinion that the realization of figures quoted
in the M.R.E.D. report of october 12, 1990 (page 3)
are optomistic and that recovery may be as little as
50 percent of those quoted in that report or in the
range of 6 to 7 million dollars.
c. it would
likely be a long time, if ever, that a
sawmill is reestablished in Prince Rupert.
The prospect of a purchaser stepping forward is likely limited
to those who already have quota in the area. There are three
major licencees in the area: West Fraser, Repap, Interfor.
At least two have held discussions with the owner and/or
Receiver.
As a note of interest, there are currently three major
licencees in the general area: Eurocan/West Fraser, Inter-
national Forest Products, and Skeena Cellulose Inc. All of
these
companies have shipped their oversize logs to Vancouver.
A quantity
of these logs have been exported offshore. In the
future, a
volume of these logs could be committed to the saw-
mill. (For
any mill to survive the North Coast, it must
produce a high grade and value added products.)
It is my view that faced with the current market conditions
and the daunting job of turning the mill around, the prospect
of a quota holder stepping forward is remote. The likely
result is a breakup of the assets and the loss of a mill in
Prince Rupert.
Page 3
I recommend the Ministry of Forests consider the following
points:
I. Because of the present severe downturn in the forest
industry, discuss with the Receiver the possibility of
closing the sawmill and delaying the sale for a period
of up to one year.
2. Wedeene to liquidate existing lumber inventories,
assuming the sawmill is closed.
J. Wedeene to continue logging operation under Receivership,
stumpage on this logging to be kept current.
4. Ministry of Forests release stumpage holdback to enable
Receiver to continue logging operations.
5. Freeze current stumpage liablility of approximately
1.2 million dollars.
6. Freeze current B.C.E.C. debt of approximately 1.0
million dollars.
7. Award
Kwinimass non-replaceable Forest Licence to Wedeene
as a market logging opportunity.
8. Government consider reinstating export for this company
for a percentage of log production for up to two years.
(I
suggest that the reinstatement of export include all
North Coast .licencees with the exception of Tree Farm
Licences owing to currect market downturn.)
I believe these steps would result in:
I. Cessation of further losses in the sawmill operation.
2. Recapturing some of the current debt (losses) by the
continuance of logging operations.
3. Maintain the logging and longshoring employment and
increase other employment opportunities for the other
licencees in the area.
4. Create a more attractive time element for possible
investors or partners, and
5. Create a more attractive package for possible purchasers.
If the Government wishes to maintain
sawmill operations in
Prince
Rupert, I suggest that the Ministry of Forests form
a committee
of interested major licensees, Forest Service,
et al to
find a long term strategy for such an operation
focussing,
among other things, on the important issue of an
adequate log supply.
William H. McRae
October 1l, 1990