Wood pellet firm Peak Renewables buys Canfor forest tenure, idled mills in for Nelson

·2 min read

CALGARY — The CEO of wood pellet maker Peak Renewables says deals to buy forest tenure and mill assets in the Fort Nelson area of northeastern B.C. from Canfor Corp. are part of its plan to build a new 600,000-tonne-per-year pellet plant there.

Canfor announced on Tuesday it had sold its forest tenure in the region in a multi-year $30-million deal with Peak that requires provincial government approval to proceed.

Peak also bought the idled PolarBoard oriented strand board panel plant and Tackama plywood plant in the town earlier this year for about $10 million, the company confirmed. The plants were closed in 2008.

In an interview, Peak CEO Brian Baarda said the company is working to bring in the Fort Nelson First Nation as an equity partner in the proposed pellet plant.

He said he couldn't say when those deals will conclude or give a capital cost for the project.

"We're just knocking off a few things, one of which was getting the site and one of which was getting access to the fibre, the tenure, from Canfor," said Baarda.

He declined to confirm or deny comments in a research note from RBC forestry analyst Paul Quinn that suggested Peak plans to move the equipment from Canfor's closed OSB plant in Fort Nelson to establish a new manufacturing facility in Prince Albert, Sask.

"We're contemplating a pellet plant in Fort Nelson and, obviously, we don't need the (OSB) equipment there," said Baarda. "There's opportunities to do other things with that equipment."

On its Oct. 23 conference call to discuss third-quarter results, Canfor CEO Don Kayne confirmed the mill had been sold to an unnamed party, but said its equipment would be moved to a new plant site by the buyer, not restarted at the existing site.

In his note, Quinn pointed out that the mayor of Prince Albert said in October the city was close to finalizing a deal that would see a group of investors build a new forest product manufacturing plant there, creating about 750 jobs.

He also said Saskatchewan has ample wood fibre to support an OSB mill because the province has only allocated about half of its allowable wood harvest.

This report by The Canadian Press was first published Nov. 18, 2020.

Companies in this story: (TSX:CFP)

Dan Healing, The Canadian Press