BC - Pacific BioEnergy buys Kitwanga mill

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Pacific BioEnergy vice-president Brad Bennett says Pacific BioEnergy intends to restart the mill and build a new pellet plant

Web Site: http://www.bclocalnews.com/business/57004317.html

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By Arthur Williams - Prince George Free Press

Prince George-based Pacific BioEnergy announced Wednesday it purchased the Kitwanga Lumber Company.

The Kitwanga Lumber Company closed its single sawmill in the small community of Kitwanga, at the intersection of Highways 16 and 37, in the fall of 2008. The company was in receivership when Pacific BioEnergy bought it, Pacific BioEnergy vice-president Brad Bennett said. Pacific BioEnergy intends to restart the mill and build a new pellet plant in the region to use the wood waste from the mill and associated forest license.

We have been looking in the northwest for over a year now, Bennett said. In our view, (the pellet market) is at the precipice of an exponential growth curve. The pellet business is completely driven by the European market demand for carbon-neutral fuel. The demand in Europe is growing, and the demand worldwide is growing.

Pacific BioEnergy is not disclosing what it paid for the company. When it operated, the Kitwanga mill produced 36 million board feet of hemlock, western red cedar and dimensional lumber on a single shift.

The mill consumed an average 150,000 m3 of timber per year.

Bennett said the northwest is an ideal location for a pellet plant, because there are large quantities of decadent hemlock suitable only for pellet production. In addition, there is not a large pulp industry to compete with for mill residues.

Pacific BioEnergy is currently seeking financing and a location for the new pellet plant, which will create an estimated 50 full-time jobs in the region. The saw mill location isnt suitable because it doesnt have rail access, but it will be in the area, Bennett said.

Logging and milling may begin before the new pellet plant is constructed.

Im not giving anyone any false hope that were going to start right away. But we didnt buy the assets to sit idle, he said.

The company is in discussions with West Fraser Timber to send chips to their Kitimat pulp mill in exchange for material from the timber companys Houston operation. The Houston chips would be sent to Pacific BioEnergys Prince George plant.

Bennett also said the company might look at the idea of burning pellets it produces to create electricity to feed into the province power grid.

One of the key factors in making the deal was the acquisition of the forest license held by Kitwanga Lumber, Bennett said.

The pellet industry has traditionally relied on mill residues from other companies to produce its product. As the industry grows it will need to control its own timber supply, he said.

We recently purchased a forest license in the Nazko area. Well begin doing something with that soon, Bennett said. Were going to continue to aggressively pursue growth.

Kitwanga Lumber was part of Kitwanga Mills, which is based in Surrey. The mill was started by the Hobenshield family in 1963 and its owners at one time owned Skeena Cellulose, the former northwestern forestry giant which has now disappeared.

Gitxsan chief negotiator Elmer Derrick said the Gitxsan support the Pacific BioEnergy arrival in the northwest.

We think theyll bring some stability to the northwest and these guys have deep pockets, said Derrick. As you know, it is hard to attract investors up here.

Our woods not too good, added Derrick generally of the quality of wood under Gitxsan license. When you have someone who can use it, that would be good.

Derrick did say the Gixsan might consider a formal business relationship with Pacific BioEnergy should it be beneficial.

Additional Information

Web Site: http://www.bclocalnews.com/business/57004317.html

Category: Forestry>Biomass Energy

Region: BC - Canada

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