New forestry plan boosts investment, sustainability

NEWS RELEASE

DAVID ORAZIETTI, MPP

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Province sets new direction for provincial forestry sector to attract investment and ensure sustainability

SAULT STE. MARIE - The Ontario government is introducing enabling legislation to modernize its forest tenure and Crown timber pricing system to create new jobs and attract investment, while ensuring Crown forests continue to be managed sustainably, David Orazietti, MPP announced today.

“Our government understands the importance of the forestry sector in Ontario and so we undertook extensive stakeholder consultations that have resulted in the creation of a more responsive system that is designed to increase competitiveness and attract new investment,” said Orazietti. “These changes will also improve the governance of Crown forests in a way that ensures they continue to be renewed and enhanced, while also creating more opportunities for jobs and economic growth in the North.”

The new tenure system will establish two governance models for sustainable forest licences (SFLs):

- Local forest management corporations (LFMCs), which would be established as Crown agencies; and

- Enhanced shareholder SFLs, which would be developed working with the Ministry of Natural Resources, forest industry, Aboriginal peoples and local stakeholders.

The goal is to initially establish two LFMCs. 

In addition, over the next five to seven years, there will be a substantive shift from single company SFLs to enhanced shareholder SFLs and improvements to the existing shareholder SFL models across Ontario.

Plans to introduce legislation during the next session follow several months of industry, community, Aboriginal and stakeholder consultation on a proposed framework, released last April. 

That framework featured three main elements: establishing new LFMCs that separate consuming mills from forest management; moving toward more competitive markets to allocate and price Crown timber; and establishing a new revenue model for LFMCs.

“We want to thank Minister Gravelle for carefully considering our concerns regarding tenure and pricing reform. The proposed path forward is a positive development and provides much needed certainty for operating mills, while creating opportunities for new investment in the sector,” said Jamie Lim, president and CEO, Ontario Forest Industries Association. “We look forward to working constructively with the Ontario government to implement and evaluate the various tenure systems that will evolve across the province over the next several years.”

The province has made historic investments in Ontario’s forestry sector and it is the only level of government to support St. Mary’s Paper with investments that include:

- In response to challenges in the forestry industry, such as escalating costs and a high Canadian dollar, the provincial government, beginning in 2005, made $1.08 billion available in grants and loans to the forestry sector in Ontario to update equipment and improve energy efficiencies, which is the largest-ever provincial investment in the forest sector in Canada.

- In order to support local forestry jobs the province provided St. Mary’s Paper with an $8.8 million loan in October, 2010 that allowed the mill to re-open and resume printing production. In 2007, the Ontario government provided St. Mary's with a loan of over $17 million for working capital to restructure and re-open, which brings total provincial support for the paper mill to $25.8 million. In addition, the province has provided St. Mary’s Paper with a 30 megawatt Power Purchase Agreement (PPA) that will enable the company to build a $175 million biomass fuelled co-generation plant, creating 555 jobs.

Quick facts

- Crown timber is currently harvested from nearly 40 Sustainable Forest Licences spread across northern and eastern Ontario. Most of these licences are held by mill owners. Ontario plans to reform this licensing system by requiring mill owners to form cooperative bodies that, among other things, allow opportunities for new businesses to access Crown timber. Proposed legislative reforms will also allow local forest management corporations, operating as Crown agencies, to hold a Sustainable Forest Licence.

- Shareholder SFLs consist of a group of mills and/or harvesters that collectively form a new company to manage Crown forests under the SFL that is issued to them.

- Moving forward in a measured way would allow everyone to see how each model performs in relation to the objectives of creating opportunities for new entrants, encouraging full utilization of available Crown timber, bringing greater market forces to bear on allocation and pricing of Crown timber and fostering greater local and Aboriginal community involvement.

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