Pellet plant won't benefit forest industry

The province's plan to save the Northern Peninsula's forest industry isn't getting much local support.

A wood pellet plant, which would turn pulpwood into wood pellets for electricity generation or home heating, is planned for Stephenville. The plant is the province's apparent solution to the recent closure of Corner Brook Pulp and Paper's number one machine and the company's consequent announcement that, effective Dec. 21, 2007, it won't take any more pulpwood from the Northern Peninsula.

Trees used for pulpwood, those too small for sawmills, and sawlogs are interspersed on the peninsula and if forestry contractors can't find a buyer for their pulpwood, they can't afford to cut sawlogs. The result, if an alternative isn't found, will be the biggest layoff on the Northern Peninsula since the cod moratorium, beginning four days before Christmas.

Immediately after Corner Brook Pulp and Paper's Oct. 22 announcement, Innovation, Trade and Rural Development (INTRD) Minister Trevor Taylor began emergency meetings with industry and government departments to find a buyer for the peninsula's pulpwood.

At the time Mr. Taylor referred to a pellet plant as the only option to save the peninsula's second largest industry.

On Nov. 16, a company named Canada Pellets Inc. signed up on the North Carolina Wood Residue Inventory. According to the website, Canada Pellets intends to begin production "during the last quarter of 2007" from a plant in Stephenville.

Canada Pellets spokesperson Michael Maher told the Pen the proposed plant is backed by German investors who own another undisclosed pellet plant.

"We would reduce the pulpwood to sawdust ourselves," said Mr. Maher of the plant capable of condensing 150,000 tonnes of sawdust into wood pellets annually. "We'll build the plant as soon as we get the wood question settled."

The 'wood question' is the access to affordable pulpwood and Canada Pellets is "talking to government right now" about that supply. Roddickton, the heart of the peninsula's forest industry, is more than 500 km from Stephenville. Corner Brook Pulp and Paper, stopped taking the area's wood because shipping costs were too expensive.

According to John Swaan, president of the Wood Pellets Association of Canada, the concept of shipping any amount of wood waste from Roddickton to Stephenville is unprofitable without massive government subsidies.

"That's just about the stupidest thing you could ever do," said Mr. Swaan, whose organization is comprised of 24 wood pellet-related companies in Canada and Europe. "The concept of pelletizing is biomass refining, increasing your calorific value, not dragging around all that water with you."

Mr. Swaan explained that the "rule of thumb" in the pellet industry is that you can't turn a profit while shipping any of your supply from more than 120 km away. He said that pellet plants are profitable when they are taking sawdust from a neighbouring sawmill.

"Unless these German investors know something that I don't, it doesn't support ocean freight unless the premier of your province says, 'Look boys, I'll pay for the wood to be cut and shipped to you'," said Mr. Swaan. "If the material is up there (Roddickton), you build the plant up there."

Roddickton Mayor Ray Norman and Holson Forest Products owner Ted Lewis agree with Mr. Swaan.

"Why would I want to ship product to a plant in Stephenville when we have enough resource for a plant in Roddickton, that would keep the manufacturing jobs here in the area?" said Mr. Lewis.

Mayor Norman said that while he's heard the province will order Corner Brook Pulp and Paper to take 10,000 more cubic metres of pulpwood from the Northern Peninsula, to bridge the gap until a pellet plant is built, that won't save Roddickton's forest industry in the long-term.

"As long as we look to outsiders coming in and taking our raw materials elsewhere we'll be in same situation in 50 years as we're in today," said Mayor Norman. "We want something done here in the Roddickton area."

Mr. Taylor was on a trade mission to Iceland last week and unavailable for comment.