Conifex Timber Inc. Operational Adjustments and Strategies
Conifex Provides Operational Updates
Conifex Timber Inc. (“Conifex”, “we” or “us”) (TSX: CFF) announced that due to expected transportation challenges affecting Canadian lumber producers and existing unfavorable market conditions, Conifex is reducing its sawmill operating schedule at its Mackenzie site to a one-shift basis for the foreseeable future and temporarily curtailing its power plant commencing shortly. The anticipated end to the curtailment of the power plant is set for the near future.
Recent Notification and Impact on Operations
Canadian National Railway has formally notified that it would begin locking out Union workers, and the Union has issued a strike notice to Canadian Pacific Kansas City Rail. “A reduced operating schedule at the sawmill is necessary due to the impact of our inability to ship production to end markets, reduced demand for lumber products, low lumber prices, and punitive export duties,” stated Andrew McLellan, President and COO of Conifex.
Power Plant and Production Capacity
While it is difficult to quantify the impact of the reduced operating schedule, the power plant curtailment is expected to affect production capacity. If transportation challenges are resolved soon, Conifex may be able to lift the curtailment earlier than projected.
Alignment with Forest Management Policies
Conifex is working with the Ministry of Forests to implement essential policy decisions, including alignment of annual harvest volumes with the Chief Forester of British Columbia's Allowable Annual Cut determination for the Mackenzie Timber Supply Area. This entails a reduction of AACs of Replaceable Forest Licences to match current harvest levels.
Details on AACs Reduction
Effective immediately, the AACs of Conifex’s Forest Licences have been reduced significantly, which will affect the total available sawlog supply annually. The company will need to procure additional timber volume, representing less than 10% of available timber supply, as a result of the changes.
Strategies for Sustainable Operations
To ensure that manufacturing facilities in the Mackenzie TSA have sustained access to sawlog supply, Conifex expects updates in cost allowances and stumpage charges. These changes are anticipated to encourage adherence to cost and pricing benchmarks for timber harvested from public lands.
Community Considerations and Future Outlook
Despite the operational adjustments, Conifex remains optimistic about its timber supply and its economic sustainability strategies for the community and surrounding areas. The company does not foresee challenges in securing sawlogs once conditions permit a return to full operations.
Contact Information
For further information, please contact Trevor Pruden, Chief Financial Officer at (604) 216-2949.
About Conifex Timber Inc.
Conifex and its subsidiaries focus on timber harvesting, forest management, sawmilling, and distributing value-added lumber products in various markets, including the United States and Japan. The company also produces bioenergy at its power generation facility.
Frequently Asked Questions
What led to the operational changes at Conifex?
The changes were prompted by transportation challenges and unfavorable market conditions affecting lumber production.
How will the curtailment of the power plant impact production?
The curtailment is expected to impact power production capacity, but if transportation issues are resolved quickly, curtailment may end sooner than projected.
What is the company's strategy regarding timber supply?
Conifex is aligned with forest management policies and aims to ensure sustainable access to sawlog supply for future operations.
How is Conifex addressing market volatility?
The company is adjusting its operating schedule in response to supply chain and market conditions while mitigating impacts on employees.
Who can provide further information about Conifex?
Trevor Pruden, Chief Financial Officer, can be contacted for further details regarding the company's operations.
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