Mill closures and new investment necessary to renew forest products sector: report
New mines needed for Canada to shine in metals boom, Conference Board says
Canada’s forest products sector needs to close uncompetitive mills and invest in research and development, new products, and more modern facilities to compete globally, according to report released today by the Conference Board of Canada.
In the same report, the private sector think thank said Canada needs to develop more new mines to
fully capitalize on the global demand for minerals.
Today’s reports are the final ones in a three-year research program to reimagine the Canadian economy.
“Canada’s forest products sector needs renewal. This is especially the case in pulp and paper, where older, smaller mills are losing ground to newer, larger global rivals,” said Gilles Rhéaume, vp, public policy. “Scale matters in this industry, and to compete, Canadian companies must be able to build larger mills. Governments should change timber allocation processes and eliminate interprovincial trade barriers to make ‘super-mills’ possible.
“This will mean that older, smaller mills may have to close, and provincial governments should not step in to save them. But governments need to work with industry to anticipate mill closures and help affected communities make transitions to new economic opportunities.”
The report recommends a number of actions to support industry renewal, including:
- Provincial governments need to reform the timber tenure system and eliminate interprovincial barriers to trade in logs;
- Governments must modify taxation and competition policy to support investment in much larger mills than currently exist in Canada;
- Governments and industry must increase investments in R&D to develop new products, including biofuels and biochemicals;
- Governments should provide incentives to expand biomass energy, similar to that already provided for wind power, and reform energy policies to allow excess electricity generation from biomass to be sold to power grids; and
- Governments and industry must continue the work they have initiated to improve air quality in mill towns.
As for the mining industry, “Canada’s reserves of major metals are declining because of inadequate exploration activity in the last decade,” said Rhéaume. “Greater exploration efforts than ever before will be required to boost our reserves and open new mines.”
According to the Conference Board, governments should support exploration activity through tax credits and by developing a permitting process and set of rules that are consistent across provinces and territories.
Governments must also provide adequate funding to develop the geological data that are critical to mineral discoveries.
Most exploration activity will take place in remote, environmentally-sensitive regions. The Canadian industry and governments will need to ensure that all mining companies, regardless of size, are motivated and equipped to provide excellent environmental stewardship. As many new mines will be close to Aboriginal communities, engaging Aboriginal people in the mining sector must be a priority.