Superior Laminated Lumber Corp. (SLLCS) is now on its way to building a $70 million laminated veneer lumber (LVL) mill in Atikokan, after the province announced the conditional allocation of 168,000-cubic metres of Crown white birch to the company.
It’s welcome news for the town of 3,200 that has suffered forestry layoffs, and is facing the impending closure of its coal-fired generating station.
The June 25 announcement in Atikokan now makes it possible for the plant to create 180 jobs and synergies that would save the town’s particleboard mill, and FibraTECH’s operation along with approximately 40 per cent of their wood cost. Superior hopes to begin construction of the mill located adjacent to FibraTECH by next spring.
The wood became available when Thunder Bay’s struggling Buchanan Northern Hardwood mill asked the Ministry of Natural Resources for access to softwood lumber. In return, the Crown received the mill’s white birch allocation that was put up for competitive bids in the Thunder Bay-Atikokan region last December.
Thunder Bay-Atikokan MPP Bill Mauro said SLLC’s proposal met the province’s requirements in a number of areas; it would create the greatest number of jobs, it includes First Nations partnerships, and it uses an underutilized tree species.
“The key point has been that they are going to be producing a value-added product,” says Mauro.
“There is a major and serious transition occurring in the forest industry right across North America. Producing value-added products and finding a niche in the market is the way the sector needs to transition to maintain and create new jobs in the industry.”
More and more, traditional lumber mills are amalgamating to stay afloat amidst pressures from global competition, high energy costs, a rising Canadian dollar and the continued softwood lumber issues.
Atikokan’s value-added operation can avoid many of those concerns, say Mauro and SLLC management.
Wood waste from the LVL would supply approximately 40 per cent of the wood materials needed for FibraTECH's 140 person’s operation and provide bio-mass to Delta Energy’s two on-site co generation stations. This will increase market competitiveness with a process that will use the entire birch log.
Delta Energy, an American company, plans to build gasification plants to provide electricity, steam and synthetic natural gas to the new mill. This will save FibraTECH around $1 million per year. In addition, the small amount of wood ash generated from the plants will be used in the LVL laminating process.
Delta is currently undergoing an environmental assessment process, and has a contract with the Ontario Power Authority to sell power to the plant.
Superior formed three years ago when LVL proponent Mike Shusterman and Dan Warren, president of both FibraTECH and SLLC, started up the idled particleboard mill.
It was clear there was potential for FibraTECH and a LVL mill to work together, said Shusterman, a former woodlands consultant and Nipigon mill manager, who had first formulated the idea of a LVL mill in the northwest 10 years ago. Between the two men, plans for an Atikokan value-added operation came together quickly and the synergistic potential for LVL, FibraTECH and Delta snowballed.
“We called it a reverse perfect storm. It was a shocker. We kept coming up with all these benefits,” said Shusterman.
FibraTECH installed new equipment last year reducing gas consumption by 95 per cent, power usage by 37 per cent and emissions by 75 per cent.
“It’s the only way to survive, with the dollar, the market and conditions in northwestern Ontario,” said Warren.
The rising Canadian dollar is a major challenge for many lumber companies. Shusterman says they may be able to circumvent such issues with the introduction of Washington based Pacific Wood Tech handling U.S. sales.
Atikokan would supply the U.S. Midwest with the biggest LVL market because of its close proximity. While Pacific Wood Tech operates two LVL mills on the U.S. West Coast, transportation to the Midwest is costly.
Superior is also partnering with a Canadian West Coast operation that operates two LVL mills, and has applied to the province’s Forest Prosperity Fund for $20 million. The company said it has conditional offers of involvement from several Canadian banking institutions.
“We don’t feel [finding investors] is an issue. It’s more of a formality than anything,” said Warren.
In addition to securing investment, the owners still have to continue to meet MNR conditions, conduct their own due diligence, and order equipment of which most will come from Finland.
Testing of the new birch has yielded good results so far showing that the birch LVL is stronger than Douglas fir, which is traditionally used.
LVL is replacing steel in many modular housing components because of its strength and cost. About 75 per cent of the LVL market is in residential construction. In spite of the slower housing market conditions analysts predict it will increase by next year.
In addition to the Crown birch, the company owns 20,000 cubic metres, and has access to 50-60,000 cubic metres of birch from private landowners.
If it all goes well, Ontario’s first LVL mill could be up and running in the spring of 2009, paving the way for future value-added projects for the town and region, said Shusterman.
“This is a made-in-northwestern-Ontario solution.”
