Canfor Agrees with Tembec to Purchase Two Eastern British Columbia Sawmills for $60m

Canfor Corp. Has reached an agreement with Tembec to purchase Tembec's two eastern British Columbia sawmills for $60 million, including working capital. The deal gives Canfor Tembec's mills at Canal Flats and Elko along with 1.1 million cubic metres of timber in the form of Crown licences. The sale to Canfor will boost the forest company's capacity to 5.2 billion board feet of lumber, establishing it clearly as the country's largest producer of softwood lumber. The deal is expected to close near the end of the first quarter of 2012. The company said in a news release that it intends to spend over $50 million over the next few years to improve productivity at the mills. Canfor president Don Kayne said in an interview Monday that the company had been looking at how it can best expand its fibre basket. Most of Canfor's production is the central and northern Interior of B. C. — areas that have been harder hit by the mountain pine beetle than the southern Interior. "The southern part of the province has some of the best fibre anywhere...It will help us considerably on our whole prime strategy that we have had for several years, " Kayne said, referring to Canfor's strategy of producing higher quality lumber that is in demand in both North American and Asian markets. "We believe as a company we really need to strengthen our fibre first of all, that's the key part of this. " he said. "We always were impressed with this fibre and the quality of it. "Second of all we want to make sure that the fibre we do acquire aligns 100 per cent with our customer base, not only today, but also where we see it going in the future, both in Asia and in North America with the heavy dependency on the home centre business. " The return of the U. S. Lumber market is "still aways away, " Kayne said. However, in the meantime, the development of the Asian market has helped the industry through the worst of the downturn. Tembec president Jim Lopez said in a news release that the sale makes sense to the Montreal-based forest company as it is "an important step in the ongoing reshaping of our business portfolio and geographic footprint. " Tembec's southeastern B. C. Operations employ 455 people. The Elko and Canal Flats sawmills employ 165 people on each site. The remaining employees include 33 forest management workers and 90 staff located in Cranbrook head office and associated Tembec field sites. Tembec acquired the Elko and Canal Flats sawmills in 1999 when it acquired Crestbrook Forest Industries. Source: vancouversun.com