Vancouver, British Columbia, Canada 24 October 2013 -- West Fraser today announced a comprehensive Mountain Pine Beetle Plan (the “MPB Plan”) to address the effects of the mountain pine beetle infestation in the interior of British Columbia (“B.C.”). The infestation has killed vast portions of the interior pine forest, resulting in a continuing deterioration and loss of merchantable timber available to wood products producers in the interior of B.C. The goal of the Company’s MPB Plan is to ensure the viability and competitiveness of its B.C. operations in response to the lack of available timber supply following the beetle infestation.
The three‑part MPB Plan consists of the exchange of certain timber rights which will help maintain the competitiveness and viability of several of West Fraser’s B.C. interior mills, the closure of West Fraser’s Houston, B.C. mill and the announcement of significant investments in two major mill upgrades in Smithers and 100 Mile House, B.C.
Under an agreement entered into with Canfor Corporation (“Canfor”), West Fraser has exchanged a portion of its existing timber harvesting tenure in the Morice Timber Supply Area (“TSA”) for Canfor’s tenures located in the Quesnel and Lakes TSAs. The Quesnel tenure will provide additional timber security to West Fraser’s largest and recently‑rebuilt sawmill located in Quesnel, B.C. which has over 400 employees. The Lakes tenure combined with the remaining Morice tenure will provide additional timber security for the Company’s sawmills located in Smithers and Fraser Lake, B.C. which together have over 500 employees.
Regrettably, the MPB Plan also includes the permanent closure of West Fraser's Houston mill. Closure of the mill will be completed in the second quarter of 2014 and will affect 225 employees. Where possible, the Company will be assisting employees to transition to other West Fraser operations in B.C. and Alberta.
The timber exchange provides access to additional timber in key areas that will support a capital investment plan aimed at ensuring the Company’s B.C. mills are modern, efficient and well‑capitalized. Under the MPB Plan the Company will proceed with major rebuilds of its 100 Mile House and Smithers sawmills. West Fraser has recently completed a rebuild of its Chetwynd sawmill and is currently modernizing the planer at its Williams Lake sawmill. West Fraser is also proceeding with two previously announced bioenergy projects expected to improve the profitability of its Fraser Lake and Chetwynd sawmills. When completed, each bioenergy plant is expected to generate approximately 90 GWh of power produced from wood biomass, enough energy to power over 8,000 homes annually.
Ted Seraphim, West Fraser’s President and CEO, said: “The mountain pine beetle devastation has and will continue to undermine the availability of merchantable timber in the interior of B.C. The shutdown of our Houston mill has been a difficult decision and we will work closely with the affected employees to support them through this process. Our first priority is to explore opportunities to transition Houston employees to one of our other operations and we will provide assistance in finding new employment.”
Mr. Seraphim added: “The competitiveness of our operations in B.C. will be significantly improved with the completion of the projects announced today, which are part of a $350 million B.C. capital investment program.”
Additional important information about the MPB Plan is included in a backgrounder released concurrently with this news release. The timber rights exchange may be subject to customary competition‑related government or regulatory reviews and any such review could result in a requirement to make changes to the exchange.
West Fraser is an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint. The Company has operations in western Canada and the southern United States.
This news release contains certain forward‑looking statements about potential future developments or events, in particular those relating to a timber rights exchange, a mill closure, future capital investments and the two bioenergy projects and the expected outcomes or results of the foregoing. These are presented to provide reasonable guidance to the reader. Their accuracy and the actual outcomes or results of such developments or events will depend on and are subject to a number of assumptions, risks and uncertainties and other factors that could affect the ability of West Fraser to achieve such outcomes or results or execute its business plans, including those matters described in West Fraser’s 2012 Annual Management’s Discussion and Analysis under “Risk & Uncertainties” and may differ materially from those anticipated or projected. Accordingly, readers should exercise caution in relying upon forward‑looking statements and West Fraser undertakes no obligation to publicly revise them to reflect subsequent events or circumstances except as required by applicable securities laws.
West Fraser shares trade on the Toronto Stock Exchange under the symbol: “WFT”.