Skeena Sawmills is seeking government funding to carry it through the COVID-19 pandemic.
The company, which has operated a sawmill in the Terrace area since 2013 and opened a pellet plant last year, has invested approximately $70 million to establish operations so far and is on the cusp of turning a profit, according to CEO Roger Keery.
The company typically relies on financing from owner Teddy Cui, a Chinese property developer, but Cui’s businesses in China have slowed significantly because of the pandemic. Also, moving funds from China to Canada has grown increasingly difficult in recent years due to frosty relations between the two countries.
Now, the company is looking to the B.C. government and the federal government for approximately $15 million to cover operating costs and to upgrade its aging sawmill.
“It’s not a bailout for us, it’s simply operating capital,” Keery said, noting the company is currently debt-free.
The sawmill had been shuttered by former owner West Fraser Timber but was purchased by Cui in 2011 and re-opened in 2013 following some improvements.
Although $50 million has already been invested in the sawmill, Keery said it badly needs rejuvenation including new dry kilns, an upgraded planer, and upgraded head saw, and a conveyor belt to move sawdust from the mill to the adjacent pellet plant.
“We have a very dated sawmill, to put it politely,” he said.
The parent company to Skeena Sawmills invested an additional $20 million into an adjacent pellet plant that opened in 2019, which was essential to the success of the sawmill, Keery said.
“Prior to that we were trying to run our sawmill with no home for all the bark and sawdust and so on,” he said.
The company has difficulty securing private financing in North America because that lumber market is facing a downturn, Keery said, but much of Skeena Sawmills’ business goes to Asian markets, which are currently in much better shape.
Keery said demand in Asia is much higher than Skeena Sawmills can currently produce, and newer equipment at the sawmill could boost production to meet demand.
“We could sell double our volume right now,” he said.
Skeena Sawmills sent a letter to the City of Terrace requesting its support in obtaining financing from higher levels of government.
City council discussed the request at its April 14 council meeting and voted unanimously to provide that support.
Speaking at the meeting, Mayor Carol Leclerc said Skeena Sawmills is faring much better than other sawmills in the province and has been an integral part of the community.
“They’re in a great position to come out of all of this,” she said. “They’re sliding into home plate and they just need to touch it.”
Skeena Sawmills employs approximately 150 people, directly and indirectly, between the mill and pellet plant.
Keery said the sawmill was in the process of hiring for a second shift at the mill when the COVID-19 pandemic hit. This was fortunate, he said, because they had extra hands on deck to cover for employees on the first shift who stayed home due to the virus.
Keery said he was pleased with the support Skeena Sawmills has received from its employees and the community in response to the pandemic.
“Going into this [COVID-19] thing, I thought, ‘We’re not going to be able to run. Everybody’s going to head for the hills.'”
