Presiding Mem er of the hecutive Council

Transcription

1 2830. Approved and ordered this 7th day of October, A.D At the Executive Council Chamber, Victoria, Lieutenant-Governor. PRESENT: The Honourable Mr. Bennett Mn Williston Mr. Black Mr. Bonner Mr. Richter Mr. Brothers Mr. Gaglardi Mr. Peterson Mr. Campbell Mr. Martin Mn Mn Mn Mn in the Chair. To His Honour The Lieutenant-Governor in Council: The undersigned has the honour to report : THAT pursuant to Section 36 of the Forest Act, being Chapter 153 of the Revised Statutes of British Columbia, 1960, and amendments, the Minister of Lands, Forests, and Water Resources, received a notice of intent to apply for a tree farm licence from atrocan Pulp and Paper Co. Ltd. in the Coast Land District and situated in the Kitimat, Gardner Canal and hitlope isiver areas, as advertised in the B.C. Gazette, beginning June 17, After holding a public hearing and considerink, the proposal, a counter proposal, and objections presented at the hearing the Minister proposes to approve the application in accordance with the attached summary, observations and recommendations of the hearing. AND TO KECOMMEND THAT the Minister of Lands, Forests, and Water Resources approve the application in accordance with the attached summary, observations, and recommendations of the,aring. DATED this day of 1--.C1-41,/ A.D Minister of nds, Fores, and Water Resources APPROVED this day of tic. A.D File: 01E8856 HNC/jem Presiding Mem er of the hecutive Council

2 TO: HIS HONOUR THE LIEUTENANT-GOVERNOR-IN-COUNCIL May It Please Your Honour' In the matter of: (a) The proposed application of Eurocan Pulp and Paper Co. Ltd. for a Tree Farm Licence in the Coast Land District and situated in the Kitimat, Gardner Canal and Kitlope River areas of the Prince Rupert Forest District. (b) The counter proposal of Crown Zellerbach Canada Limited for a Tree Farm Licence within the same boundary. Under authority invested in me under Section 36 of the Forest Act as Minister of Lands, Forests, and Water Resources, I held a public hearing at Kitimat on August 27, 1965, to consider the proposed application of Eurocan Pulp and Paper Co. Ltd. for a Tree Farm Licence and the counter proposal of Crown Zellerbach Canada Limited. These were not new proposals in the sense that I had previously committed the area for tree farm licence purposes as a result of a public hearing held in Kitimat in The previous applicant was awarded a modified area and a decreased wood volume and declined to proceed. At this hearing Eurocan Pulp and Paper Co. Ltd. presented to me the following proposal:- 1. To manage the Crown lands for the purpose of growing continuously crops of forest products to be harvested in accordance with tha principles of sustained yield. 2. To commence design and construction of the proposed mill immediately after final agreement has been reached for the necessary wood supply. 3. To have in production by the end of 1969 an unbleached sulphate kraft mill of 580 tons per day capacity; 320 tons of this to be manufactured into kraft paper on one machine, and the balance of 260 tons per day to be baled as market pulp; the mill to be located at either Emsley Cove some eight miles from Kitimat or adjacent to the aluminum smelter. 4. To utilize the timber resources of the area to the beet economic advantage through the installation of mechanical wood working equipment, a minimal sawmill and veneer and plywood machinery if feasible. 5. To obtain the main wood supply of 265 million cubic feet from the T.F.L. area and to supplement this at current market prices with chips and pulpwood from the Skeena, Ootsa, Cueen Charlotte and Hecate Public Sustained Yield Units. 6. To expand the project at a later date if additional wood is procurable from adjacent managed units and improved production from the tree farm licence. The expansion will be the addition of a bleaching plant and a newsprint mill or a second kraft paper machine. 7. To install efficient equipment in the proposed mill to keep air pollution at a minimum. 8. To trade sawlogs from the licence for pulpwood and chips on such terms as would be approved by the Forest Service.

3 -2- In counter proposal Crown Zellerbach Canada Limited submitted the following:- 1. To manage the Crown lands and the 41 Timber Licences they hold in the Kitimat Valley for the purpose of growing continuously crops of forest products to be harvested in accordance with the principles of sustained yield. 2. To start construction within approximately two years after a favourable decision, definitely not later than 1970, of a 600 tone per day unbleached kraft mill on a site at Emeley Cove or adjacent to the smelter outside of Kitimat, the pulp mill to be completed within 24 months, subject to the usual force majeure conditions. 3. To incorporate in the mill a complete woodmill capable of being supplied by both water and land borne logs. A market for chips from nearby sawmills and chipping facilities would also be provided. 4. To include facilities to reduce odours to a minimum. 5. To immediately encourage the expansion of salvage pulpwood logging in the Tree Farm Licence and adjoining areas and to conduct investigations into the quantity and quality of sawlog material available on a continuing basis with a view to construction of a sawmill of a size that investigations show is practical and economical. 6. To obtain the main wood supply of 28 million cubic feet from Crown lands plus the sustained yield capacity from the 41 Timber Licencee plus pulp logs, chips, chippable waste and salvage pulpwood from the Kitimat-Terrace area and from north coast public sustained yield units. 7. To employ every economic means of increasing the available wood supply to achieve expansion. The expansion would be further pulp production or newsprint production or both, as market and economic conditions permit. 8. To make available to Terrace operators a volume of sawlogs equivalent to 4.6 million cubic feet for the initial 21 year term of the licence. There were four groups in support of a pulp mill:- 1. Skeena Valley Timberman's Association were in favour of the pulp mill providing they could obtain sawlogs and cedar poles from the original Kitimat S.Y.U. area within the proposed T.F.L. area. 2. Kitimat Chamber of Commerce were in favour of a pulp and paper mill to be built by the company which would provide the type of woods harvesting operation that would be most beneficial to the area and the company which would commence work on the physical plant at the earliest possible date. 3. Terrace and District Chamber of Commerce endorsed the establishment of a pulp mill at Kitimat and supported any proposal that indicated an early construction and production date. They requested that existing industry be assured of an adequate supply of sawlogs, poles, and pulpwood with provision for reasonable expansion. 4. The Aluminum Company of Canada, Limited believed that the establishment of a pulp and paper industry at Kitimat would be of great benefit to the province, the region, the town of Kitimat and their own operations.

4 - 3 There were five objections to the proposal and counter proposal received from associations and companies. These could be summarized ae follows:- 1. The Independent Timber Converters Association objected in general to a tree farm licence being issued. As an alternative they enggested that the establishment of a pulpwood harvesting area would suit the same purpose. If the decision were to grant a tree farm licence then it should be based on the volume of wood required without specifying definite boundaries until an exact survey be made showing the volumes of timber available. 2. MacGillis and Gibbs Company objected to a tree farm licence being issued in the area north of the Kitimat municipality. They requested that this area be added to the Skeena Public Sustained Yield Unit instead for the benefit of all Skeena quota holders. 3. Bay Lumber Co. Ltd. objected to the Douglas Channel and Devastation Channel areas of the Hecate Public Sustained Yield Unit being placed in a tree farm licence as it would eventually decrease the allowable cut in the Hecate. 4. Sande Lumber Mills Ltd. objected to a tree farm licence being granted in the northern portion of the Kitimat area, believing the existing sawmill industry requires an assured additional supply of timber. 5. Mayo Lumber Co. Ltd. objected to the upper Gamaby River area being included in a tree farm licence as this region was adjacent to their existing operations and they had planned on this timber as part of future operations. In addition the Truck Loggers Association submitted that they recognized the need for a pulp mill in the area but objected to alienation of Crown land on a long term basis. If a T.F.L. were granted the Association requested that 50 per cent of all phases of the logging operation be handled on a contract basis by logging operators. The two proposals which were presented at this hearing were both well prepared, and each one would make adequate use of the wood resources which were available. In fact both presentations indicated a present ability to use even clean sawdust in pulp manufacture. The two companies represent world respected producers of pulp and paper products. Any democratic country would welcome their contributions towards industrial expansion. Crown Zellerbach Canada Limited has had a long and successful association with timber development in British Jolumbia. This hearing involved an associated matter of public interest. The city of Kitimat has been dependent upon a single industry for its economic existence. Diversification of the industrial base has been the aim of both the Aluminum Company and the government of the province. Adjudication of the two proposals has taken this fact into consideration. Excess electric power and serviced housing are available now in Kitimat. The general good would be served by using such resources to the maximum extent as soon as possible.

5 - 4 - The award of a licence for timber required for a pulp mill in the Kitimat area directly concerns lumber producers in and about Terrace. A second pulp mill owner is now required to ensure a proper competitive demand for their chips and lumber reject logs. However, the wood used by the pulp mill and associated facilities is also relatively close to Terrace and would normally constitute the means by which the operators from this centre might expand their production. A decision which would benefit and so satisfy the greatest number would be in the public interest. The defective quality of much of the available wood in the Kitimat valley has been the subject of comment ever since intensive inventory studies have been conducted for purposes of establishing the feasibility of a pulp venture. For this reason the present timber crop should be removed as rapidly as approved silvicultural practices will allow. Policy relating to the granting of tree farm licencee has changed in recent years. Consideration to award such types of tenure is only given in the northern parts of the province and only then when the construction of a pulp mill is part of the contract. The new emphasis on total utilization implies that an attempt will be made to gain the highest economic value from each cubic foot of wood. This alters an original concept of many tree farm licences which were designed to provide the actual raw materials for use in the owners' mills. In so far as possible sawlogs should produce lumber or plywood and not pulp. For this reason the offer made by both applicants to trade logs so as to obtain the highest end use of the wood does not imply any violation in the principle of operation of such a licence, providing there is an equal or greater volume of material consumed in the licence owner's mill than is grown annually on the tree farm. The Crown Zellerbach presentation laid great stress on the fact that the market for pulp might be depressed until the period. Respected authority was quoted to support such a contention. For this reason Crown's proposal planned construction so that pulp would reach the market from Kitimat in However, it was emphasized that if conditions were to change that the time schedule would be speeded up. Eurocan'e position with relation to markets for Kitimat pulp can best be presented in this direct quotation from their submission -- "The new company -- has strong market connections. They have established markets. They are new to British Columbia. (In effect) they are bringing their markets to us. It is not a competitive market, in this sense, but it will be a new market in new areas for British Columbia." Four long-established Finnish Companies collectively guarantee a market for the pulp produced despite a prediction of over-supply extending into the early years of British Columbia depends upon sales on world markets for much of its economic stability. It could be argued that the market base for our products should be as widely dispersed as possible. In this connection could it be considered to be in the public interest to enlist the assistance of a new established, world-wide marketing organization to ensure the sale of our pulp during a period when supply might exceed demand?

6 - 5 - It is the policy of the government of British Columbia to encourage the highest possible use of our natural resources within this province. Additional jobs are provided for our workmen and additional values are created to assist in the balance of trade if the manufacturing process is carried beyond the primary stage. The proposal presented by Eurocan provides that more than half the daily production of pulp will be converted into paper whereas Crown Zellerbach proposes to limit present production to pulp. Crown Zellerbach is a publicly financed company whose shares are freely traded on the stock markets. It can be properly argued that opportunity for investment in this company is available to Canadians who may be interested. Eurocan has designated 25% of its initial share offering for specific investment by persons established in British Columbia who wish to become actively associated with the company. Mr. Ben Ginter activated the Finnish interest in the project and has taken a 15% block of the present share offering. A 10% block of shares is being held for local timber operators who might wish to participate financially in the venture. If this latter offer is not accepted such shares will be "available to other local firms or individuals." After consideration of all aspects of the proposals presented it is recommended that Eurocan Pulp and Paper Co. Ltd. be given the opportunity to build a pulp mill at or near Kitimat. In support of this award the following points influenced the decision:- 1. There was no major advantage in wood use associated with the proposals presented by either one of the two applicants. As a consequence whatever priority that might be gained through the initiation of the hearing by Eurocan was not lost. 2. The decadent forest in the Kitimat region will be more quickly utilized to the advantage of future sustained yield management if Crown Zellerbach continues to log from private tenures and Eurocan concentrates production from the over-mature Crown forest. 3. Eurocan proposed to manufacture both pulp and paper thus ensuring a higher level of employment and an increase in value of the product that would be marketed. Crown Zellerbach's proposal was limited to the production of pulp. 4. Eurocan contracted to have a pulp mill in production by Crown Zellerbach undertook to start construction of a mill not later than 1970 and earlier if market conditions would permit. The value of three years possible advance production of pulp is difficult to determine. However, three years of participation in the economic life of Kitimat by a work force employed in a pulp mill would bring advantage to the municipality and to the businesses located therein. Representatives from both the communities of Terrace and Kitimat urged that consideration be given to the proposal which would "be most beneficial to this vast area of North-Central British Columbia -- and that closest consideration be given to that company which will commence work on the physical plant at the earliest possible date." A greater increase in residents in Kitimat will result from the decision taken. Crown Zellerbach can be expected to continue its present logging operation and an additional labour force will be required to harvest timber for Eurocan. Over and beyond this fact, the pulp and paper installation will employ more workmen and will also add a higher appraised value to the assessment roll thus assisting with the cost of services for residents.

7 - 6 - It should be emphasized that if assistance is to be given to Kitimat it should be done as quickly as possible. In another decade world demand for aluminum will likely cause the expansion of the plant and thus increase all phases of industrial activity. If at that time Crown Zellerbach completed the "logging" of its licences the cut back in manpower would not have a detrimental effect on the local economy. 5. Since British Columbia depends upon the sale of its principal products on world markets, it would seem to be in the public interest to expand the contact with established companies who have market connections not now directly served from this country. This award is made on the understanding that within thirty-one (31) days of the date of this report Eurocan Pulp and Paper Co. Ltd. will report their intention to proceed with this project as outlined in the public hearing. At the same time the Company shall deliver to me a performance bond in the eum of six hundred thousand dollars ($600,000) of lawful money of Canada as security for the performance of the undertaking to construct a pulp and paper mill with a capacity of not less than 580 sharttons per day and have it in operation before the end of This deposit shall be released according to the terms set forth in the tree farm licence agreement. Respect submitted, Ray lliston, Min ter of Lands, Forests, and Water Resources. October 7, Victoria, B. C.

8 Mega, '4?... --rpi 4.3r 4, ), I TIA, I: :..4 c DAT :7--,-.10 / --!,, /...z) '.6 Sci$EZ' 0,44.-', (i!hi ' 9,; ):V.-,...e V.?:, 4-,,.f.. 7-V7..-,\/,,N,,,..., / \..., - :.,!'' P-*.".--fl Th,.',.. Ytt'i :,1, t' ".7 :: '-. / , *,,,.,4. /:. :). 7 I. 0o-me, /,, L., \