West Fraser selling Quesnel, B.C., pulp mill to Edmonton-based company

Quesnel River Pulp in Quesnel, B.C., is one of two mills being sold by West Fraser Timber Co. Ltd. (West Fraser - image credit)
Quesnel River Pulp in Quesnel, B.C., is one of two mills being sold by West Fraser Timber Co. Ltd. (West Fraser - image credit)

West Fraser Timber Co. Ltd. has signed a deal to sell two pulp mills in Western Canada to Atlas Holdings for $120 million US ($162 million Cdn).

The sale includes West Fraser's Quesnel River Pulp mill in Quesnel, B.C., and its Slave Lake Pulp mill in Slave Lake, Alta.

The agreement also covers related woodlands operations and timber holdings in Alberta and a long-term fibre supply agreement for the Quesnel mill.

The mills will be operated by Edmonton-based Millar Western Forest Products, which is part of the Atlas family of businesses.

The transaction is subject to customary regulatory reviews and closing conditions.

Challenges, changes to B.C. forestry industry

The announcement reflects a shifting tide in B.C.'s forestry industry, as companies consolidate their plans amid a dwindling timber supply.

This year, West Fraser halted operations at Cariboo Pulp & Paper in Quesnel as the Vancouver-based company came up with a plan for its future.

At the time, the company said the decision was the result of a decline in availability of sawmill residuals, which it says is due to infestation, fire and government policy decisions.

Read more on B.C.'s changing forest industry:

On Friday, West Fraser CEO Ray Ferris said the sale of the pulp mill will help the company focus on its wood building products business.

The company operates and sawmill and planer mill in Quesnel, and a lumber and plywood operation in neighbouring Williams Lake.

Stability for employees: CEO

The investment also marks a continued sense of optimism in the industry, following news from Canfor that it plans to invest $200 million to build a new mill in Houston, B.C., following a series of closures.

Still, it is widely expected that employment in the industry will not reach levels seen in past decades as fibre supply dwindles after a post-pine beetle boom. In response, the B.C. government is providing resources to help workers transition to new careers as well as creating a $90-million manufacturing jobs fund.

Ferris said the company will continue to supply wood fibre to Quesnel River Pulp under its new owners.

David Anderson, CEO of Millar Western, said his company plans to keep employees at both the Quesnel and Slave Lake locations.

"This transaction will provide the dedicated and skilled teams at Quesnel River and Slave Lake with a solid future," he said in a statement.