Conifex Timber Inc. plans to add second shifts at its sawmills in Fort St. James and Mackenzie in 2011, which is expected to improve the company's bottom line.
The company, which bought the shuttered sawmills out of bankruptcy, restarted the Fort St. James mill in 2009 and the Mackenzie mill four months ago.
Adding the second shifts -- starting in Fort St. James this week and and a hoped-for start in Mackenzie in April -- will improve efficiency and reduce the per-unit cost of lumber.
The company will also benefit from a recently completed $30-million upgrade at its Fort St. James sawmill that will produce more high-quality lumber.
With lumber prices forecast to remain robust, the changes should improve the company's financial results.
"With the benefit of the capital expenditures at Fort St. James behind us and a smooth start-up now at Mackenzie, we expect to show [improved results]," said Conifex Timber president and chairman Ken Shields.
A REBOUND YEAR
In 2010, the company posted a loss of $10.8 million, similar to its $10.3-million loss in 2009. The company has been hampered by operating at about 20 per cent of its capacity, noted Shields.
By the second half of 2011, the company should be operating at about 70 per cent capacity, producing approximately 500 million board feet of lumber on an annual basis, said Shields.
In releasing its financial results, Conifex also unveiled it plans to spend $45 million on a bioenergy project at its Mackenzie sawmill site.
Conifex said it has entered into arrangements with Dresser-Rand Canada Inc. for a 36 megawatt steam-turbine for $10.5 million.
Conifex is still in discussions with B.C. Hydro on an energy-purchase agreement necessary for the project to go ahead.
"The development of bioenergy in conjunction with our traditional operations will diversify existing revenue sources, counteract some of the volatility inherent in the commodity lumber sector, and provide additional stable employment opportunities within the community of Mackenzie," said Shields.
He said the bioenergy plant would produce about $25 million annually.
Shields said the company is close to completing an agreement with B .C. Hydro.
However, the company noted that as no agreement has been reached yet, and the deal would be subject to regulatory approval, there can be no assurance the bioenergy project will proceed.
Conifex is a new entrant to the northern B.C. forest sector.
Conifex bought the Fort St. James sawmill from Portland, Ore.-based Pope and Talbot mill in 2008. The mill was closed at the time, a victim of the forestry downturn led by a collapse in U.S. housing.
The company then purchased AbitibiBowater's assets in Mackenzie, which included two sawmills and a shuttered newsprint mill. The newsprint mill is not being re-opened.
Conifex has a positive long-term outlook on the lumber sector for a number of reasons: Constrained supply in Eastern Canada linked to a permanent drop in newsprint demand; the eventual rebound of the U.S. housing sector; and a potential, emerging market in China.
