Tembec to update Ontario sawmills, Quebec spending put on hold

Feb. 2, 2015 – Quebec-based Tembec plans to invest about $50 million over the next five years to upgrade it Ontario sawmills, but will put off any spending in Quebec until the province lowers wood costs, which are the highest in North America.

The pulp, paper and lumber producer told The Canadian Press it can’t justify investing in the province where log costs are 20 per cent higher than Ontario.

The company is prepared to spend as much as $35 million to upgrade its three Quebec mills if the provincial government makes changes to charge market prices for wood instead of using an auction system that establishes higher minimum prices. The investments would be used to modernize equipment and bring sawmills up to the same standards as the British Columbia industry. Lopez said some jobs would be lost with automation, but the shifts would be added at some mills to maintain overall employment.

CEO James Lopez said Quebec could lose hundreds of millions of dollars in investments if Tembec’s rivals also put off spending until the government changes its policies.

“The longer they wait, the longer we have to wait. I just hope they don’t wait so long that some of these mills become uncompetitive and we have to shut then down because they are losing money,” he told reporters.

As well, its cellulose pulp business will continue to face pressure because of increased capacity in the United States and Brazil that is reducing prices, noted the company.

Last November, the Temiscaming, Que., lumber mill temporarily ceased production after 650 unionized workers went on strike.

— With files from Ross Marowits, The Canadian Press