How to Access Available Crown Forest Resources in Ontario

Transcription

1 Ministry of Natural Resources and Forestry How to Access Available Crown Forest Resources in Ontario January 24, 2017 Mike G. Davis, R.P.F

2 How to Access Available Crown Forest Resources in Ontario Topics: 1. Operating a Facility in Ontario 2. Access to Crown Forest Resources 3. Available Wood Supply 4. Questions 2

3 Facility Licencing Operating a Facility in Ontario: A Forest Resource Processing Facility Licence (a Facility Licence ) is required for the construction and operation of a facility which consumes >1,000 m3/yr (CFSA s. 53). Various licence types depending on product produced and productive capacity (e.g., pulpmill, sawmill, composite, veneer, firewood, or other ). Application requires submission of an acceptable Business Plan demonstrating: 1. ability to Finance, Manage, and Operate the facility 2. ability to fibre the facility (wood supply) Facility Licence requires the completion of an Annual Return summarizing production and utilization of fibre A Facility Licence includes a MROL this does NOT provide for/guarantee wood supply and/or harvest rights. Any mill in Ontario which consumes Crown forest resources must either receive only previously scaled or have a Scaling Agreement which authorizes the measurement of unscaled Crown forest resources. 3

4 Facility Licencing FIAAG map is updated regularly Available from our website 4

5 How are Crown Forest Resources made available? The mechanisms that can be used by a facility owner to access forest resources in Ontario are: 1. Sustainable Forest Licence (CFSA s.26) 2. Forest Resource Licence (CFSA s.27) 3. Supply Agreement (CFSA s.25) 4. Business-to-business arrangements 5

6 Sustainable Forest Licence (SFL): Long-term licence issued for a period of 20 yrs, usually for an entire Management Unit SFL provides the right to harvest and utilize the forest resources available on a management unit. The SFL holder required to carry out certain forest management activities to provide for sustainability of forest (i.e. required to manage the forest) Held by a single company, which can be structured as a: single entity (e.g. pulp mill company) multi-shareholder entity (e.g. shareholder or cooperative) Crown agency (e.g. local forest management corporation) Opportunities to acquire/hold a single entity SFL are rare; a new entrant may be offered an opportunity to participate as a shareholder. 6

7 SFL continued.. Management Responsibilities of a SFL holder: Forest Management Planning: includes preparing FMP every 10 years, Annual Work Schedules (AWS), and Annual Reports. Harvest, renewal and maintenance activities: oversight of all forest operations. Roads: Construction, maintenance and liabilities associated with all forest roads and water crossings. Crown Charges: Responsibility and obligations for stumpage, including maintaining the minimum balance of forest renewal trust fund. Compliance: Planning, monitoring and reporting. Sustainable forest management. 7

8 SFL continued.. What does the right to harvest and utilize the forest resources available on a management unit mean? Harvest means the SFL holder is licensed to harvest consistent with the approved FMP. There may be license conditions where harvest opportunities must be provided to others (Appendix F in the SFL document) Utilize means: Where the SFL holder has a facility, they have right to use forest resources in their facility (i.e., an SFL is a wood supply commitment) There may be a license condition that require the SFL holder to make wood supply available to other users (Appendix E in the SFL document) Otherwise, the SFL holder has the right to market wood from the SFL and are expected to. 8

9 Forest Management Unit #5 Forest Management Unit #2 Forest Management Unit #4 Forest Management Unit #1 Mill Sustainable Forest Licence Forest Management Unit #3 9

10 Sustainable Forest Licences & Crown (MNRF) Managed Units in Ontario May

11 Forest Resource Licence (FRL): Short term (<5yrs) licence issued by local MNRF District Manager for harvest operations; usually no direct forest management responsibilities Can be issued on a management unit under the responsibility of the Crown or overlapping an SFL Where a licence (e.g., SFL) is in place, the parties must endeavour to enter into an overlapping agreement with the SFL holder which describes how operations will be undertaken (see O.Reg 167/95). In many/most instances: the FRL holder does not own a facility, and they market the wood they harvest to local facilities the FRL may require the holder to make Forest Resources harvested available to a facility (e.g. the SFL holders obligations are transferred to the FRL holder via the overlapping agreement, or the FRL can have conditions). In some cases, an FRL is made available to a facility owner so that they can cut their own wood. Since the FRL holder does not necessarily get to use the wood, an FRL is not usually considered a commitment of wood supply. 11

12 FMU #5 FMU #2 FMU #1 (SFL) Mill #1 Mill #2 FMU #4 FMU #3 Mill #3 Forest Resource Licence overlapping an SFL 12

13 Supply Agreement: An agreement between the Minister and a facility (CFSA s. 25) Generally no direct forest management responsibilities Does not give the right to harvest forest resources A condition is placed on applicable licenses (SFL or FRL) which requires the licensee to negotiate a Memorandum of Agreement (MOA) with the Supply Agreement holder to make the Forest Resources available In an SFL this requirement is included in Appendix E The MOA would address price, scheduling, wood specification, logistics etc. Execution of a Supply Agreement can be a lengthy process Prior to entering into a Supply Agreement, the Minister must consider: the competitive process requirement of the CFSA the requirements/results of Aboriginal consultation any representation from licensees wrt the amendment 13

14 FMU #5 FMU #2 FMU #1 Mill FMU #4 Make wood supply FMU #3 available Supply Agreement held by Mill 14

15 Competitive Process requirements: The CFSA s. 24 (2) states: The Minister shall not enter into an agreement under section 25 or grant a licence under this Part except in accordance with a competitive process. However, s. 24 (3)(b) of the CFSA states: Subsection 24 (2) does not apply if another process is authorized by the Lieutenant Governor in Council. OIC 993/95 is the other process 15

16 Business to Business Arrangement: Opportunities to access fibre supplies from existing SFL and/or FRL holders or other facilities No Ministry involvement in the negotiation of business to business arrangements Ministry may recognize known, long term business to business arrangements Highly variable; one-time open market purchases, short/long term renewable arrangements, wood exchanges, wood quality merchandizing logistics. Opportunities may exist to include items that are outside of the Ministry s scope (e.g. industrial efficiencies such as trucking, roundwood for chip exchanges, etc.) 16

17 FMU #1 FMU #2 Business Arrangement FMU #5 Mill FMU #4 FMU #3 17

18 FMU #5 SFL - Open Market opportunities FMU #2: Multi-year B2B with SFL holder FMU #4 Mill #1 granted harvest opportunity (FRL) through multi-year B2B with SFL holder FMU #1: SFL held by mill Mill FMU #3: Supply Agreement held by mill 18

19 Summary SFL Mechanism Supply Agreement FRL Business Arrangements Considerations New entrant unlikely to hold a single-entity SFL Competitive process may be required May be an opportunity to access wood through participation in a shareholder SFL company (through a business arrangement) MNRF has obligations (e.g. competitive process) it must consider before executing, which can be a lengthy process Subject to the conditions of a negotiated MOA Provides authority to harvest, but is not a guarantee of supply to a facility. May be the mechanism under a Supply Agreement/MOA No MNRF involvement Potentially a relatively quick process Efficiencies can also be included 19

20 Available Wood Supply Determining Availability of Crown Forest Resources Available Wood Report (AWR) Identifies the annual wood supply estimated to be potentially available over the medium term (~10 years) for each Management Unit in Ontario. Provincial AWR updated monthly at: Management Unit AWR available upon request Describes in detail the FMP Supply and projected wood use by facility for MU Both reports include contact information for applicable MU contact 20

21 Available Wood Supply 21

22 Available Wood Supply 22

23 How to Access Available Crown Forest Resources in Ontario Questions? 23