Conifex Provides Operational Updates
Conifex Timber Inc. (“Conifex”, “we” or “us”) (TSX: CFF) has announced some important operational changes. Due to anticipated transportation challenges facing Canadian lumber producers, along with ongoing unfavorable market conditions, Conifex will be reducing its sawmill operating schedule at the Mackenzie site to a one-shift operation for the foreseeable future. Additionally, the company will temporarily curtail its power plant operations starting soon, with plans to resume normal operations in the near future.
Recent Notification and Impact on Operations
Canadian National Railway has officially notified that it will begin locking out Union workers, and the Union has responded by issuing a strike notice to Canadian Pacific Kansas City Rail. Andrew McLellan, President and COO of Conifex, stated, “A reduced operating schedule at the sawmill is necessary due to our inability to ship production to end markets, decreased demand for lumber products, low lumber prices, and punitive export duties.”
Power Plant and Production Capacity
While it is challenging to determine the exact impact of the reduced operating schedule, the curtailment of the power plant is expected to affect overall production capacity. If transportation issues are resolved promptly, Conifex may be able to lift the curtailment sooner than anticipated.
Alignment with Forest Management Policies
Conifex is collaborating with the Ministry of Forests to implement crucial policy decisions. This includes aligning annual harvest volumes with the Chief Forester of British Columbia's Allowable Annual Cut (AAC) determination for the Mackenzie Timber Supply Area. As part of this process, the AACs of Replaceable Forest Licences will be reduced to match current harvest levels.
Details on AACs Reduction
Effective immediately, the AACs for Conifex’s Forest Licences have been significantly reduced, which will impact the total available sawlog supply on an annual basis. Consequently, the company will need to procure additional timber volume, which represents less than 10% of the available timber supply due to these changes.
Strategies for Sustainable Operations
To ensure that the manufacturing facilities in the Mackenzie TSA maintain consistent access to sawlog supply, Conifex anticipates updates in cost allowances and stumpage charges. These adjustments are expected to promote adherence to cost and pricing benchmarks for timber harvested from public lands.
Community Considerations and Future Outlook
Despite these operational adjustments, Conifex remains hopeful about its timber supply and its strategies for economic sustainability within the community and surrounding areas. The company does not expect to face challenges in securing sawlogs once conditions allow a return to full operations.
Contact Information
For more information, please reach out to Trevor Pruden, Chief Financial Officer, at (604) 216-2949.
About Conifex Timber Inc.
Conifex and its subsidiaries are dedicated to timber harvesting, forest management, sawmilling, and distributing value-added lumber products across various markets, including the United States and Japan. The company also generates bioenergy at its power generation facility.
Frequently Asked Questions
What led to the operational changes at Conifex?
The operational changes were driven by transportation challenges and unfavorable market conditions impacting lumber production.
How will the curtailment of the power plant impact production?
The curtailment is expected to affect power production capacity; however, if transportation issues are resolved quickly, the curtailment may end sooner than expected.
What is the company's strategy regarding timber supply?
Conifex is working in alignment with forest management policies 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 also working to mitigate impacts on its employees.
Who can provide further information about Conifex?
For more details regarding the company's operations, Trevor Pruden, Chief Financial Officer, is available for contact.
