Thunder Bay sawmills scramble to find buyers for surplus of wood chips created by mill's closing.

Thunder Bay sawmills scramble to find buyers for surplus of wood chips created by mill's closing

The decision by Abitibi-Price Inc. to mothball its Thunder Bay division could turn out to be the last nail in the coffin for several area sawmills.

The Toronto-based company announced in June that it would be shutting down the 450-ton-per-day newsprint mill for at least two years. Company officials said the move was intended to remove a portion of excess capacity from the market until conditions improve.

The closing of the mill has flooded the market with wood chips which accounted for a substantial portion of the revenue of several sawmills.

"It (the mill closure) has had a devastating effect on us," said Ken Buchanan, owner of Buchanan Forest Products in Thunder Bay. "It's threatening all the mills in Thunder Bay."

The Abitibi-Price mill was Buchanan Forest Product's primary customer for wood chips.

Buchanan, who also operates Northern Wood Preservers Inc. and Great West Timber Ltd. in Thunder Bay as well as McKenzie Forest Products Inc. in Hudson, said that Abitibi-Price has not purchased any wood chips since about the beginning of the year because of work stoppages and periodic shutdowns at the mill.

In addition, the company's remaining Lakehead operations are utilizing the inventory of the mothballed facility.

Buchanan noted that the effect has been lessened by some sales to Boise Cascade, Canadian Pacific Forest Products and Kimberly-Clark mills in northwestern Ontario.

However, the effect of the mill closure goes beyond the Thunder area and will likely result in a shakeout of the industry.

"When one mill goes down, it will only take one or two more (mills) closing or even just shutting down for a while before there's trouble," said Pierre Lafreniere, vice-president and controller of A & L Lafreniere Lumber Ltd. in Chapleau.

Buchanan had stockpiled more than 16,000 tons of chips as of mid August and reduced production levels at the Thunder Bay mill.

The company has also started searching for new customers elsewhere in Northern Ontario, where other sawmills already enjoy relationships with the area's pulp and paper producers.

"You're interfering with each other, and the pulp mill isn't able to help everyone," admitted Buchanan.

There are already rumblings from some northeastern chip producers who have enjoyed relationships with the pulp and paper mills along the north shore of Lake Superior from Red Rock to White River.

"If something isn't done it's going to be the end of Chapleau and Hearst," said one lumber company official who declined to be identified.

Chapleau Forest Products closed for two weeks last month because of an over supply of chips, while A & L Lafreniere Lumber has "stockpiles all over the place," according to Lafreniere.

"Smaller mills like ours are in trouble," said Lafreniere. "Everyone's in the same boat."

Lafreniere said the sawmill could receive some relief if Spruce Falls Power and Paper Company opts to utilize 100-per-cent chip content in its paper.