Count on change: Ramsay: natural resources minister discusses impending growing pains for sector.

Ontario's forest industry is moving to a new value-added economy, and while the sector is enduring some agonizing transitional pains, changes are inevitable, says Ontario's natural resources minister.

In mid-June, David Ramsay's likeness was burned in effigy outside the closing Excel saw mill in Opasatika, and later he faced 600 angry mill workers in Thunder Bay to deliver the government's response to the Minister's Council on Forest Sector Competitiveness.

The Timiskaming-Cochrane MPP realizes he is under the gun to act upon the 26 recommendations outlined by a body of forestry stakeholders.

The provincial industry is being battered on a number of fronts with a surging Canadian dollar and high energy and fibre costs. Many in the industry also say there is a growing crisis in wood supply to feed proposed regional mega-mills at the expense of smaller localized mills.

In a phone interview with Northern Ontario Business, Ramsay wouldn't commit to implementing any particular recommendation except to say his Ministry staff will move swiftly in studying the report to prepare an action plan to address many industry issues.

"We're going to start work on this immediately and we need to start to show results in the next few months.

"There are some good ideas in the report that we can move on."

Starting with a $350 million program of loan guarantees, Ramsay says the government wants to provide incentives for industry to make better use of harvested wood, create more value-added opportunities, bring about energy efficiencies or go into co-generation.

MNR needs to change, too

The Ministry of Natural Resources is also in store for some "administrative changes" to streamline requirements and update the regulatory regime to be more "business friendly."

Addressing the industry's primary complaints of energy and wood costs with the co-operative efforts of other provincial ministries, says Ramsay, namely, Finance, Transportation and Energy.

Critics, including NDP Leader Howard Hampton, have demanded the McGuinty government give direct investment to the forestry sector, similar to the $500-million aid package for Ontario's auto industry.

But Ramsay answers there's "not a mountain of cash" in provincial coffers to deliver that.

"We are being very disciplined in our budget and expenditures in wanting to hold the line."

Ramsay says there are other ways Queen's Park can help, as 0outlined in the council's report.

The province is agreeable to creating larger forest management units with licences shared by many operators.

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Some already exist in the North, such as the Timiskaming Forest Alliance, which Ramsay calls one of the "most efficient forest operations in the province."

Multiple small operators equally share the resources and the proceeds. Ramsay says moving forward on co-operative SFLs (Sustainable Forest Licences) will reduce delivered wood costs.

He wouldn't rule out calls for an independent forest audit to address an Ontario-wide log shortage.

But he says in some forests in north-western Ontario, only 73 percent of the allowable cut was harvested, yet some companies say they need more wood. "You still have (the wood). You didn't go get it."

He supports an inventory using the best technology available to give stakeholders confidence in the numbers. In the mid-1990s, the previous Conservative government downloaded that responsibility to industry as part of their forest management plans.

"Maybe we need a third party to do it, because nobody seems to trust the companies or the ministry."

Though he understands some forest producers are financially hamstrung in their ability to build access roads, he wouldn't commit to a council recommendation of a fuel tax credit.

Ramsay says it's something that must be investigated with other ministries.

"I'm working on it."

In painting a picture of the near future of the North's forest industry, Ramsay described a landscape of fewer, but larger sawmills, supplemented by many value-added producers with pulp and paper operations producing specialty papers.

Ramsay admits he has no control over what mills stay open or close, but "we're in for a change.

"We'll have a sustainable forest industry, but it will look a little different."

Mills close, value-added plants open

Ramsay adds for every sawmill in Opasatika that closes, a new value-added mill in Hearst (Industries LacWood) opens, which produces furniture components for IKEA.

He remains excited about the possibilities of creating new industry to convert wood waste into fuel for cheap heat and power.

His ministry was expecting to make an announcement this month about a bio-energy test project using wood waste as part of the government's push to develop an alternative energy program.

Because of the sometimes great distances to haul forest slash, Ramsay says it is more economical to extract bio-oil rather than move waste.

Having recently returned from a Scandinavian forestry trade mission, Ramsay says in that Sweden, industry has determined the outermost economical range for transporting slash and other wood waste is roughly 120 to 130 km.

In Ontario, an estimated 10 million cubic metres of unused forest waste remains behind on the forest floor after harvesting. Only about one million metres in the form of bark and sawdust are utilized as hog fuel.

"There's much more we can do there to create a lot of jobs."

www.mnr.gov.on.ca

By IAN ROSS 

Northern Ontario Business