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Sawmill owner warns of end of industry Thandiwe Vela Northern News Services Published Monday, January 9, 2012
Unable to operate due to overdue stumpage fees owing to the GNWT, Patterson Sawmill Ltd., the only commercial sawmill in the territory, will be forced to shut down if a market to use the wood waste does not develop, president Daniel Patterson told News/North. Stumpage fees are set amounts charged to companies harvesting timber on public lands.
"If a pellet mill or some way to use biomass does not develop, and if there is nothing on the horizon in two years, then I truly believe the forest industry is dead in the territories," Patterson said.
The struggling sawmill has asked the territorial government for an abatement of the owing stumpage fees and an extension for two years, to see if such an alternative energy business does develop for the business, located about 20 km south of Hay River.
The company has had the support of Hay River South MLA Jane Groenewegen, who in December, brought the plight of the sawmill to the legislative assembly.
"They're the only business of this type in the Northwest Territories," Groenewegen said. "We're in the middle of a forest here in our part of the North and we would like to keep this business operational in Hay River. It's extremely important to us."
Michael Miltenberger, minister of Environment and Natural Resources, said he has been working closely with the Patterson's operation for the last number of years, offiering deferred payments, reduced payments, and "any number of things that we could try to think of to allow both interests to have their needs met in terms of the business and the role and responsibility of government and as the administrators of the public purse.
"There is still some work to be done, but clearly there are challenges in terms of the revenue that they can generate, the costs that they are incurring and the simple things like stumpage fees and such that they have difficulty generating enough revenue to cover," Miltenberger said.
Patterson, who would not disclose a figure of the stumpage fees owing, said the company had no problem paying its stumpage fees of about $8.75 a metre, until the sawmill's timber supply in Cameron Hills was cut in half about 10 years ago, due to land claims issues.
Since then, the sawmill has had only 5,000 cubic metres to log on, compared to 10,000 cubic metres of logging area in the past.
"We continued to operate on that, but the cost of doing business just keeps increasing and we're stuck at 5,000 metres," Patterson said.
The 2008 recession did not help, with commodity prices dropping about $100 per 1,000 wood feet, remaining at about $350 since.
In addition to low commodity prices, the company markets its wood in Edmonton, resulting in high freight costs.
"We can't maintain the business on 5,000 cubic metres and we don't have a market for our waste wood," Patterson said, boiling down the company's troubles. "Being able to sell our waste wood would help us considerably. We're pretty much going to have to shut down if there isn't a market developed for this waste wood."
Patterson has heard rumours of biomass start-ups in the area, and Groenewegen said in the legislature, "There are bright things on the horizon that may improve the fortunes of this company," alluding to a Hay River businessman she has met with who hopes to have a business opportunity developed that would make use of waste biomass for a pellet and briquette mill in Hay River.
Groenewegen did not responded to messages by press time, but commented in the legislature that the business "could potentially enhance the business enterprise of the Pattersons."
As of last Thursday, the sawmill was still waiting to see if its operating permits will be granted, in time to salvage this year's logging season.
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