Forestry Operators are seeing business case where economists do not not

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REBECCA PENTY
Telegraph-Journal

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J.D. Irving, Limited is looking to make a multi-million-dollar investment in its Saint-Léonard sawmill by adding a biomass thermal plant and pellet plant.

The company applied for an environmental impact assessment with the province last month and the public has until Sept. 30 to submit comments and questions.

The 11,750-square-foot thermal plant would be fuelled by bark removed from wood at the sawmill, producing heat to be used at the pellet plant dryer and ash to make a compost additive or agricultural fertilizer.

Building the thermal and pellet plants next to the sawmill will save the company on transportation costs and offer nearby and guaranteed markets for its sawmill products.

"The siting achieves great efficiencies as the byproduct of one plant becomes the primary input of another," spokeswoman Mary Keith said in a statement, declining to comment on the total value of the projects.

The pellet plant, at 10,500 square feet, would produce 52,000 metric tonnes of wood pellets for residential, commercial and industrial heating fuel markets.

Keith said all of the sawdust used to make the pellets would come from the firm's Saint-Léonard, Veneer and Kedgwick sawmills.

The pellet plant project will create 16 direct, full-time jobs at pellet plant and 50 jobs during construction.

The forestry firm is the latest in New Brunswick to eye a pellet operation, even while an expert report prepared for the province insists the plants do not pull in the most revenue or create the most jobs from the wood resource.

A document on future opportunities for New Brunswick's forest sector written by CIBC Markets' managing director Don Roberts last year puts pellet plants near the bottom of the list for long-term investments by companies.

Roberts writes that even plants using sawmill residues to make pellets - which would compliment operations where other products are being made - are unadvisable. One dry metric tonne of wood used to make pellets fetches $86 as an end product while the same tonne of wood used to make pulp amounts to $280 on the markets, he writes.

But sawmill operators are clearly seeing a business case where the economist does not.

Groupe Savoie CEO Claude Savoie told the Telegraph-Journal last month that he has plans to set up an $8- to $10-million pellet plant at his firm's Saint-Quentin sawmill.

The company currently uses some of its sawing leftovers to make wood brick fire logs, selling the rest of its sawdust to producers of fibre board and its bark to pulp operators.

For the firm, a pellet plant would be a nearby, guaranteed consumer of its sawdust and bark, should other customers stop buying.

Mark Arsenault, the president and CEO of the New Brunswick Forest Products Association, said there are many decisions companies make around whether to invest in a large pellet operation.

"You could easily argue that taking a log and turning it into a pellet is not that best use of that fibre," Arsenault said.

But he said the math could work when using sawmill leftovers to make pellets, especially when pulp producers that would normally consume residue have left the market.

"Sometimes there's no alternative, especially if you've lost your pulp mill that was purchasing the residue from you," Arsenault said.

"That's a sudden loss of a revenue stream."