Finding a new way in the woods

Ailing forest economy unites first nations and businesses in B.C.'s northwest to create value from low-quality wood. A federation of first nations and independent loggers is forging a new type of forestry in northwestern B.C. by rebuilding their economy from the bottom up.

Called the Northwest B.C. Forest Coalition, 11 companies operating along Highway 16 have joined forces, marketing their individual timber resources as one giant pool of available timber. They have been driven together by the stalled forest economy. Their names are unfamiliar and most do not have enough timber on their own to support a mill.

But combined, these independent loggers have a timber supply of 2.7 million cubic metres of wood a year, the largest unassigned timber reserve in North America, according to Forests Minister Pat Bell.

It's enough timber to rival the production of the province's largest forest companies, enough to supply a dozen sawmills in China, to send a steady stream of wood pellets to European power plants or to generate enough carbon credits to bring energy companies courting.

The major forest companies don't want the timber; there are too many small tenure holders to deal with and too much low-quality hemlock to make saw-milling profitable. One by one, they have closed their plants and left. The last to go, West Fraser Timber, shut down its sawmill at Terrace three years ago and its pulp mill at Kitimat in January.

"We have no economy to speak of," said Elmer Derrick, chief negotiator for the Gitxsan Treaty Office and leader of the new coalition. "We have no customers to sell our fibre to, so we have no choice but to work together."

The coalition is not looking for investment in another sawmill or pulp mill. Instead, its members are looking at the low end: a biofuel plant that would consume all the poor-quality timber that is uneconomic to harvest, Derrick said.

If they can develop a long-term demand for their low-value wood for biofuel, then they can afford to log it and the higher-quality wood growing with it in the mixed stands, making logging profitable once again.

"We are trying to find a way to enable our communities to make a living from the wood we have," Derrick said.

The largest licensee in the region, Coast Tsimshian Resources, has joined the coalition, putting its cut of 565,000 cubic metres a year into the basket.

"I haven't seen anything like this anywhere in British Columbia," Coast Tsimshian president Wayne Drury said. "We are trying to create something instead of competing."

By working together, he said the coalition is able to save on costs. There are no big offices so fixed costs are low.

The coalition's first step has been to launch its own website -- www.nwbc-forestcoalition.org-- to market itself as a single entity, making it easier for a potential manufacturer to engage the fibre suppliers.

Terrace economic development officer Sam Harling said in an interview that the independent loggers are learning to work together and have already attracted interest from biofuel companies.

"The coalition is really finding itself as it goes along. But it is very promising because it's a transition in thinking and approach to economic development in the forest industry. They are used to decades of certain models and that's all changing," Harling said.

Instead of looking only at the value of sawlogs, they are focusing on extracting all the value from a tree, beginning at the stump, he said.

Land in Terrace has been set aside for industrial development and together with the licensees, Harling is working on clustering potential manufacturers in one central location.

The regional forests ministry office is acting as the information hub. District manager Norm Parry said that so far, three meetings have been held with "significant investors" who are interested in the concept of accessing the northwest's fibre. It's a new approach, he said, to attract investors who can use the low-end wood.

"We've never had to go out and market ourselves before. We just assumed the forest companies would come and build the mills," Parry said.

Derrick said not all members share the same forest types or the same issues in finding a market for the logs, but they are united by one over-riding fact: The forests of the northwest have been logged for decades. Many, like the Gitxsan lands, are in poor condition and a large portion of the wood is often filled with rot. The best investment opportunities are for wood that can be used to make pellets for energy.

The coalition was the brainchild of Forests Minister Pat Bell, who saw that the small tenure holders did not have the resources on their own to attract an end-user for their wood.

"There are no tenure holders that are large enough to support the variety of end-users that are needed for that fibre supply," he said.

"Also, you have such a variety of species ... that even if you had 400,000 cubic metres of tenure, first you knock off half of it because it's pulpwood, then you start dividing up the rest into the other species and you very quickly discover that you don't have enough of any specific species to maintain a manufacturing facility."

It's going to take a wide variety of manufacturers to restore the forest industry in the northwest, he said.

The consortium, with its 2.7 million cubic metres of timber, has developed a breakdown of how much of each specific species is available, giving any potential manufacturer a clear grasp of the volume of timber available.

Bell said the coalition is on the right track but it is only halfway to where he wants it to go. Bell wants to see a stronger alliance among the licensees, in which they act as a single, large licensee with the ability to sign one long-term contract to supply fibre. If the coalition had the look, feel and taste of a single entity, it would make financing easier for any potential manufacturer, who could then use the security of a guaranteed timber supply to access financing, he said.

He called the northwestern forest the last available timber supply in North America, a fact that makes it extremely valuable and under-appreciated by the industry as a whole.

The loggers in the region see the value in their forest. The problem is that the logs they bring out have to match the species profile of the forest. They can't for example, just take out high-valued cedar or fir and leave behind the decadent hemlock.

Logging the whole forest profile but having a market for only some of the logs is what makes logging economically challenging, said Dave Martin of A&A Trading.

A&A is one of the smaller licensees, with only 13,000 cubic metres a year of timber. Its logging operations are now idle, Martin said.

By contrast, the Gitxsan have an annual allowable cut of 388,000 cubic metres. They also are doing little logging, Derrick said. The cost of logging the low-quality stands, which they need to do to regenerate the forest, eats away the profit from the high-quality wood, he said.

Without forest revenues, the Gitxsan communities are struggling, Derrick said. Unemployment is high, as is the suicide rate among the young.

Derrick believes it's going to take the introduction of carbon credit programs to make Gitxsan forests valuable enough to log again, with the poor-quality wood going into pellets and the carbon credits being sold to Alberta energy companies. Already, energy companies have come courting, he said.

"There will be a market for carbon credits," Derrick said.

"We will have customers once we get out of the gate."