Fort Nelson Area Forest Industry Revitalization Threatened by Rail Logistics Issues

The Fort Nelson First Nation (FNFN) and local politicians have been trying to pull themselves out of a 15-year regional recession by revitalizing the region’s forest industry, which was shut down in 2008 when Canfor Corp shuttered its plywood and OSB mills. Those closures were proceeded by the shuttering of the Tackama sawmill in 2005.

Fort Nelson is one of few BC regions that have an undercut—an abundance of annual allowable cut (AAC) because there has been virtually no logging in the area for more than a decade. The FNFN now has a significant amount of that timber because the BC government recently transferred a number of forest tenure licenses—totaling 1.26 million cubic meters per year—to the FNFN.

Fort Nelson also has an industrial partner willing to invest in the community to help revitalize the local forest sector. Peak Renewables bought Canfor’s tenure (553,712 cubic meters per year) for $30 million (CAD) and has said it is willing to invest $100 million to build a wood pellet mill on the old Canfor mill site.

The idea is to try and restart the logging sector with an “anchor” industry—a pellet mill—with sawlogs sold to other sawmills and OSB mills outside of the Forest Nelson area and lower value timber and waste used to make wood pellets for export.

But therein lies the problem. The provinces transfer of tenure to the FNFN may have little value, if any, unless the Canadian National Railway agrees to upgrades on the line between Fort St. John and Fort Nelson. Currently, a single train operates once a week on that line. A pellet plant and a revitalized logging industry would require 4,000 railcars for logs and 8,000 railcars for pellets annually.

It is estimated that the additional rail traffic would require upgrades estimated between $60–75 million. Until those upgrades happen, Peak Renewables cannot make a final investment decision. While the Canadian federal government has said it would provide funds, it would require the BC province to offer matching funds, and the BC government remains firmly opposed. There is an ongoing fear that the CN will petition to have the rail line delisted due to such limited usage, and that would end the hopes of a forest sector revitalization for the FNFN.

FEA compiles the Wood Markets News from various 3rd party sources to provide readers with the latest news impacting forest product markets. Opinions or views expressed in these articles do not necessarily represent those of FEA.