by EVAN MATTHEWS
The insurance company has given BKB Cedar the go ahead to re-build, but the new mill’s construction remains in limbo due to uncertainty around fibre supply.
BKB owner Raj Basran says with the current long-term purchase agreement between BKB and McBride Community Forest Corporation (MCFC) set to expire in 2019, the business needs a longer-term log supply agreement. Basran says without a long-term agreement, BKB will not re-build.
“If the logs are there (long-term), we’re ready to re-build at the same location,” says Basran.
“If there isn’t enough wood or if they can’t commit to the long-term agreement, we probably won’t proceed with the re-build… And away we go,” he says, noting if an agreement doesn’t come through for him, logging for a company like Carrier could be a future option.
Basran says BKB is looking for a 10 to 15 year commitment dependent on wood supply available from the MCFC, which would also dictate the size of the new mill.
“At this time there is uncertainty about the sustainable Cedar supply available to support local mills. Currently MCFC is reviewing the inventory for the community forest to estimate the economical sustainable supply of Cedar available to local mills over the next 15 to 20 years,” — Jeff McWilliams, MCFC general manager of B.A. Blackwell and Associates.
Though MCFC is in support of BKB’s re-build, MCFC cannot make any guarantees about wood supply as of now, according to General Manager Jeff McWilliams of B.A. Blackwell and Associates.
McWilliams says MCFC will happily support the BKB re-build provided MCFC’s contribution of wood supply to the new mill is biologically and financially sustainable for MCFC in the long-term.
“At this time there is uncertainty about the sustainable Cedar supply available to support local mills,” says McWilliams.
“Currently MCFC is reviewing the inventory for the community forest to estimate the economical sustainable supply of Cedar available to local mills over the next 15 to 20 years,” he says.
Estimates should be available within about a month, according to McWilliams, and the Ministry of Forests, Lands and Natural Resource Operations is completing a similar project for the whole Robson Valley, he says.
McWilliams says MCFC will fulfill its obligations to BKB through 2019 under the current log supply agreement, however Basran — who also owns a logging operation — does not intend to log any more timber without being certain he has a mill to process his product.
However, MCFC is dealing with matters at hand, and McWilliams says unless MCFC and BKB agree upon the cut blocks and terms for the remaining years of the current long-term contract, MCFC cannot be sure what supply it will be delivering to BKB in the future.
Going back to 2015, MCFC ran a deficit of $200,000, while also settling a lawsuit with former manager Marc von der Gonna for $95,000, the equivalent of one year’s salary.
Interestingly, MCFC Board Chair Joseph Rich says in the short-term, logging different species, such as spruce, means more immediate income for MCFC.
McWilliams says MCFC plans to offer BKB the cut blocks and terms for 2018 consistent with the current long-term log supply agreement, but Basran says he won’t be moving forward without a more long-term security.
The current long-term purchase agreement sees MCFC offer 15,000 cubic metres to BKB with greater than 50 per cent of it being Cedar, according to McWilliams. The agreement sets the purchase price of Grade 4 Cedar, but allows MCFC to set the administration rates it charges for other species and grades of logs harvested under the agreement, he says.
MCFC sold BKB roughly 1,215 cubic meters of these logs in 2016 prior to the fire, McWilliams says.
With BKB having satisfied its own market last week, Cedar 3 purchased 95 cubic metres Grade 4 Cedar from BKB’s current inventory, and Cedar 3 will have purchased a few more loads within the next week, Basran says.