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Land ruling could impact lumber market as much as pine beetle

Land ruling could impact lumber market as much as pine beetle | Timberland Investment | Scoop.it

A Supreme Court of Canada ruling on aboriginal land could eventually have as severe an impact on North American lumber supply as the mountain pine beetle, RBC Capital Markets warned on Monday.


The court’s unanimous decision on June 26 relates to a 30-year-plus land dispute between the Tsilhqot’in Nation and the British Columbia and Canadian governments. It entitles the B.C. First Nation to dictate what logging and other activities take place on its newly recognized 1,700 square kilometres of land.


Now with an established precedent to title, the provincial/federal governments in Canada will have to consult, and gain the consent of the respective First Nation(s) when development projects/timber harvesting concern unceded land, RBC analyst Paul Quinn told clients.

He noted that B.C. has accounted for roughly 24% of North American lumber production during the past 10 years.


If the Supreme Court ruling leads to delays and limitations in harvesting sawlogs in B.C., Mr. Quinn expects a tighter lumber market and higher prices.

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Tembec to sell nearly 50,000 hectares of B.C. land for at least $37 million

Tembec to sell nearly 50,000 hectares of B.C. land for at least $37 million | Timberland Investment | Scoop.it

Forestry company Tembec Inc. says it has reached an agreement to sell about 49,500 hectares of land in the East Kootenay region of British Columbia to Jemi Fibre Corp. in a deal worth at least $37.1 million.


Jemi will pay the Montreal-based company $35 million plus at least $2.1 million in deferred payments over seven years in connection with the resale of a portion of the land.


Tembec (TSX:TMB) will sell the land to Jemi in two phases —17,700 hectares in June for $15 million, and 31,800 hectares for $20 million in September — subject to the buyer obtaining financing.


The company hopes to sell up to $70 million worth of land in British Columbia by December, $5 million less than previously forecast.

It has realized $23.2 million of sales to date, which could rise to $60.3 million including the $2.1 million deferred payments once the Jemi deal is completed.


The company still has 7,433 hectares of land in B.C. it is seeking to sell.

Sam Radcliffe's insight:

Arithmetic: $750 per hectare or $303 per acre

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Noble Updates Shareholders on Sale of Surface and Timber Rights of Block A of Project 81

Noble Updates Shareholders on Sale of Surface and Timber Rights of Block A of Project 81 | Timberland Investment | Scoop.it

Noble Mineral Exploration Inc. today provided an update regarding recent developments relating to its proposed sale of the surface rights (including the timber rights) to Block A of its Project 81 property...
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At the April 17, 2014 adjourned meeting, shareholders will be asked to consider and, if deemed advisable, pass a special resolution approving the sale of the Property.
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The Property has an area of approximately 145,000 acres, or 58,000 hectares, and is located in the Timmins area of northern Ontario. Pursuant to a restated agreement of purchase and sale dated as of January 28, 2014 entered into by the Company and Resource Land Holdings, LLC (the "Purchaser")... the Purchaser has agreed to buy the surface rights and timber rights to the Property, including any sand, gravel (including hard rock aggregate), peat, gas or oil located on or under the Property, as well as a 5% net profits interest in the mineral rights on the Property which can be repurchased by the Company at a cost of $800,000 per 1% interest.


The purchase price to be paid by the Purchaser in this transaction is $6,800,000, and the Company will also be granted a 50% net royalty on revenue generated from any carbon credit business relating to the Property.
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Resolute FP Canada Inc. has signed an agreement (as extended) with the Company pursuant to which the timber-related right of first refusal that is registered against Block A and Block B of Project 81 would be terminated for a payment of $1,000,000. That agreement expires on May 15, 2014.

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Canada: Peak Lumber by 2016?

Canada: Peak Lumber by 2016? | Timberland Investment | Scoop.it

A persistent mountain pine beetle epidemic plus the housing crisis equals desperate times for Canadian forestry companies; many survivors are investing what's left into timberland located in the U.S. South.


In or around 2016, lumber supplies coming from Canada are expected to peak. Unless the situation deteriorates further, Canada's overall supply is expected to decrease by 9%, or 400,000 homes worth of wood products. 

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It's happening for three key reasons
1) Governmental lands are not professionally managed

2) Old growth, mature trees (+80 years) are more susceptible to disease and harmful insects

3) Less than harsh winters have not slowed the pine beetles progress

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Jack D Bridges's comment, October 11, 2013 7:48 AM
Does P&C offer any seminars for financial advisors? The author of the piece (and his clients) could benefit from more ways to invest in timber than owning Plum Creek equity. Also, he's a bit confused about Weyerhaeuser--WY has been a REIT since 2011. Thanks, Sam.
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Foreign investor buys into Kaingaroa Forest

Foreign investor buys into Kaingaroa Forest | Timberland Investment | Scoop.it

The Public Sector Pension Investment Board, one of Canada's largest pension investment managers, has bought 30 per cent of the shares in Kaingaroa Forest from Harvard Management Company, the endowment fund of Harvard University.

Harvard had a 60 per cent stake in Kaingaroa Forest and will retain a 28.75 per cent stake in the Forest.

As part of the transaction, the New Zealand Superannuation Fund had bought an additional 1.25 per cent stake, taking its total to 41.25 per cent.

The change in shareholding which was settled last week followed approval by the Overseas Investment Office in April.

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Brookfield wants to sell its stake in Island Timberlands

Brookfield wants to sell its stake in Island Timberlands | Timberland Investment | Scoop.it

Brookfield Infrastructure Partners has reported that it is negotiating the sale of its 25-per-cent stake in Vancouver Island forest company Island Timberlands for $170 million.


The sale involves a change in the positions held by the timber company’s existing shareholders and is expected to close in the second half of 2013.
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“Since the release of our quarterly results on May 2, 2013, we have executed definitive agreements to sell the remainder of our Canadian timber operations for $170 million,” the prospectus stated. “Consistent with our financing strategy, we will seek to re-invest these proceeds at our targeted, after-tax annual return on equity of 12 per cent to 15 per cent.”


Island Timberlands is a private forest company that owns 258,000 hectares of timber land, most of it on Vancouver Island. It is the second-largest private landowner in the province.

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The Wall Street Journal reported last November that the China Investment Corp. was close to making a deal to purchase a stake in Island Timberlands. That deal did not happen.

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Beyond pulp and paper - there is new hope in Thunder Bay

Beyond pulp and paper - there is new hope in Thunder Bay | Timberland Investment | Scoop.it

In a land of such seemingly endless forest resources, it's hard to imagine that the forest industry of Northwestern Ontario, Canada would be a shadow of its former self in just a decade. Since the start of the millennium the majority of pulp and paper mills and sawmills strung out along the Trans-Canada Highway from Sault St. Marie to Kenora have been shuttered by economic forces. These include unfavorable currency exchange rates, low cost competition, the sharp decline of newsprint demand and the fall of the US housing market. Fifty percent of Ontario's major forest industry capacity was lost during this period.


But there is some hope of recovery germinating in Thunder Bay, the once mighty pulp and paper town, and the entire Northwest Ontario region. The Centre for Research and Innovation in the Bio-Economy (CRIBE) has been selectively investing seed money from the Government of Ontario to revitalize the industry.


Established in 2009, CRIBE has a five-year mandate to invest up to $25 million Canadian to assist pulp and paper companies to find new and innovative valued-added revenue streams from forest resources. This is being done by collaborating with research and development organizations, Northern Ontario universities and technology companies outside the pulp and paper industry involved in such diverse fields as automotive parts manufacture, bio-plastics, bio-fuels, food additives, pharmaceuticals and industrial ethanol. As a result, forest products research and development work previously done in laboratories is now being applied in demonstration projects using wood fiber, formerly underutilized woody materials and pulp process by-products from real-world processes.

Sam Radcliffe's insight:

Thanks for the link @FORSightResourc

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U.S. Lumber Coalition concerned by log export policy changes in British Columbia

U.S. Lumber Coalition concerned by log export policy changes in British Columbia | Timberland Investment | Scoop.it

The U.S. Lumber Coalition is seriously concerned by the recent announcement of log export policy changes in British Columbia (BC), particularly an increase in the “fee in lieu of domestic manufacturing” applied to many log exports that will take effect on March 1.ent of log export policy changes in British Columbia (BC).


Log export restrictions have the effect of insulating BC lumber mills from world market prices for logs, which have increased significantly in recent years as China and other countries have increased their demand for North American logs. The recent announcement of measures to tighten log export restrictions on the BC Coast will allow BC lumber producers to pay even further below-market prices for their log inputs.


Logs harvested from public or private lands in BC must be advertised to local mills before they can be exported. If a local mill offers to pay the prevailing domestic log price – which can be much lower than the export price – for a particular log sort, export of that sort is prohibited. Further, even when permission to export is granted, a “fee in lieu of domestic manufacture” is assessed on logs harvested from public and some private land. This fee is often much greater than the price that BC charges to harvest standing timber on public land. Effective March 1, the “fee in lieu” on the BC Coast will be increased by 20 percent.

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Province buys Bowater lands

Province buys Bowater lands | Timberland Investment | Scoop.it

Provincial taxpayers are the new owners of more than 220,000 hectares of forest land worth more than $100 million, part of a deal that will fund the pensions of former Bowater Mersey Paper Co. employees and eventually see Emera own Brooklyn Power Corp.


Premier Darrell Dexter announced the deal with Resolute Forest Products Inc. of Montreal and the Washington Post early Monday evening in a news release.

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It is not as simple as a straight purchase of the land, valued at $117.7 million. Resolute wanted a clean break from the Queens County paper mill, which it closed in June, and wanted to dispose of the assets in one sale. After close to six months of negotiations, the province has bought Bowater Mersey Paper Co. for $1, excluding the Oak Hill, Lunenburg County, sawmill.


The company comes with assets and liabilities. The only money that changes hands other than the $1 is an $18-million debt repayment, which Bowater owed to Resolute.


The liabilities also include $100 million to cover pension costs of union and non-union employees, plus another $18.4million in other employee costs and liabilities.

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Resolute had been the largest private landowner in the province, with the 220,000 hectares representing an area a bit bigger than Yarmouth County. The biggest portions of the land are in Annapolis County (89,200 hectares) and Queens County (63,100 hectares).


A portion of the land will be protected.


Under provincial accounting rules, the $117.7-million land value is added to the provincial debt. The land value works out to $535 a hectare, well below the $2,350 per hectare average for 10,100 hectares it bought in January as part of a deal to keep the mill running.

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The province expects to earn about $4 million annually in stumpage fees from the land within a couple of years, which would be enough to cover the increased debt-servicing costs.


The province has also purchased Brooklyn Power Corp., a 24-megawatt biomass facility valued at $25 million. It plans to sell it to Emera Inc., the parent of Nova Scotia Power, for that price. That purchase will have to be reviewed by the provincial Utility and Review Board, Dexter said.


The mill site itself is valued at $5 million. The province plans to turn that into a bioenergy and clean energy centre and will make an announcement with new tenants Wednesday.

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West Fraser Timber Co., Western Forest Products Inc Leading Canadian Lumber Producers To Big Profits

West Fraser Timber Co., Western Forest Products Inc Leading Canadian Lumber Producers To Big Profits | Timberland Investment | Scoop.it

West Fraser Timber Co. (WFT.TO) and Western Forest Products Inc. (WEF.TO) are leading Canadian lumber producers to the biggest combined profit since 2006 as mills run at five-year highs to feed a U.S. housing rebound and near-record Chinese demand, Bloomberg reported.


It said lumber mills in British Columbia, Canada's leading forestry region, ran at 86%t of production capacity in the five months through May, compared with 82% for all of 2011, according to the Western Wood Products Association. Lumber futures rose to a 15-month high on Aug. 15 on the Chicago Mercantile Exchange.


The industry is recovering from losses and mill closures during the four-year U.S. housing bust amid resurgent new-home sales and building activity south of the border. Some producers are also capitalizing on orders from China for imported Canadian lumber even as the Asian country's economy slows.

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Raw log exports have Canadians at loggerheads [opinion]

Raw log exports have Canadians at loggerheads [opinion] | Timberland Investment | Scoop.it

Does the export of raw logs to China hurt or help British Columbia’s economy?


NDP leader Adrian Dix is rallying for export tariffs on logs, which would put a hard stop on the export of raw logs from B.C. that are being shipped and processed in China instead of here. The concern is that log exports result in a loss of jobs for B.C. residents and dampen overall efforts for sustainable forest management. Last year, about one-third of B.C.’s softwood lumber, worth nearly $1.1 billion, was exported to China.


Such protectionist strategies only result in inefficient markets. By trying to force the creation of a few jobs in value-added forestry products, thousands of existing efficient and sustainable jobs in the log exporting sector will be sacrificed.


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Canada teen discovers tree pulp has anti-aging benefits

Canada teen discovers tree pulp has anti-aging benefits | Timberland Investment | Scoop.it

A Singapore-born teenager who recently moved to Canada won a national science award Tuesday for her groundbreaking work on the anti-aging properties of tree pulp, officials said.


Janelle Tam, 16, won the $5,000 award in the 2012 Sanofi BioGENEius Challenge Canada for showing that cellulose, the woody material found in trees that enables them to stand, also acts as a potent anti-oxidant.


Tam's work involved tiny particles in the tree pulp known as nano-crystalline cellulose (NCC), which is flexible, durable, and also stronger than steel.


A pulp and paper mill that opened in January in Quebec now serves as the world's first large-scale NCC production plant.


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Timber supply review launched by B.C. government

Timber supply review launched by B.C. government | Timberland Investment | Scoop.it

A special government committee will examine British Columbia's timber supply after a leaked report warned about thousands of job losses due to a declining amount of wood caused by the ravages of the pine beetle epidemic.

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Jemi Fibre Corp. Completes Tembec Timberlands Acquisition

Jemi Fibre Corp. Completes Tembec Timberlands Acquisition | Timberland Investment | Scoop.it

Jemi Fibre Corp. (TSXV: JFI) ("Jemi Fibre" or the "Company") is pleased to announce that it has completed the first of two timberlands acquisitions from Tembec Inc. ("Tembec"), previously announced on April 25, 2014.


The Company has closed on the acquisition of approximately 17,700 hectares, and timber rights for an additional approximately 1,900 hectares, for a purchase price of $15 million. The timberlands are located in the Regional District of East Kootenay, British Columbia and are the first phase of a two phase purchase of timberlands from Tembec. The second phase is for approximately 31,800 hectares, which the Company anticipates closing in September 2014 for a purchase price of $20 million. The closing of the second phase is subject to the Company obtaining adequate financing and other customary conditions. There can be no assurance that the second phase will be consummated in whole or in part.


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Former Abitibi timber rights sold to California company

Former Abitibi timber rights sold to California company | Timberland Investment | Scoop.it

A company from California has won the harvesting rights to a large wood supply in central Newfoundland that once belonged to Abitibi-Bowater.


CBC News has learned that Rentech now has ownership of the 280,000 cubic metres of wood that once belonged to the former newsprint producer, which shut down its Grand Falls-Windsor mill in early 2009

Rentech, mainly a fertilizer company in the U.S., is looking into producing wood pellets in Canada.


The company has access to a large wood resource in Ontario, and also owns two wood pellet plants in that province.


In November, the company purchased in idled mill in Wawa, Ont. to convert it into a pellet production facility. It has yet to produce any pellets, but the company said it does have customers.

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New Brunswick: New forestry plan provides more Crown wood to industry

New Brunswick: New forestry plan provides more Crown wood to industry | Timberland Investment | Scoop.it

The New Brunswick government is increasing the amount of softwood the forestry sector can take from Crown land by 20 per cent under the province's new forestry strategy.


It's expected to result in the harvesting of an additional 660,000 cubic metres, said Premier David Alward and Natural Resources Minister PaulRobichaud, who unveiled the long-awaited strategy at a news conference in Fredericton on Wednesday.

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The industry is also expected to invest about $600 million, the government said.


J.D. Irving Ltd. plans to announce three "major capital investments" at its forest product operations later this week, according to a news release issued shortly after the forestry plan was unveiled.

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Private wood lot owners will also be positively impacted by the plan, said Robichaud.


The anticipated investment by industry will result in an increased need for wood from private wood lot — about 250,000 cubic metres, he said.


The overall timber objective is now about 3.9 million cubic metres of spruce and fir from Crown lands.


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TimberWest and EDP Renewables Canada Partner on Large-Scale Wind Power Projects on Vancouver Island

TimberWest and EDP Renewables Canada Partner on Large-Scale Wind Power Projects on Vancouver Island | Timberland Investment | Scoop.it

TimberWest Forest Corp. ("TimberWest") and EDP Renewables Canada Ltd. ("EDPR Canada") have entered into a partnership and propose to develop, build, and operate large-scale wind projects on southern Vancouver Island.

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The proposed projects present a unique opportunity to build power generation capacity on Vancouver Island, which generates only a third of its energy demand locally. At up to 300 megawatts of capacity, the projects would provide approximately $600 to $750 million of potential investment and support hundreds of jobs on Vancouver Island, including training for new skills and services. To date, TimberWest and EDPR Canada have invested several million dollars in developing these projects.

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Gordon Planes, Chief of the T'Sou-ke First Nation whose traditional territory lies within the proposed wind projects, said "We look forward to working with TimberWest, EDPR Canada, and other First Nations to see that the wind projects can be developed in a way that is respectful of First Nations people, and their culture, aspirations and interests."

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CP Rail sues for mineral, timber rights on B.C. lands

CP Rail sues for mineral, timber rights on B.C. lands | Timberland Investment | Scoop.it

CP Rail has launched an unprecedented lawsuit to reclaim timber and mineral rights on hundreds of thousands of acres of land in B.C.

The railway filed the claim in B.C. Supreme Court Thursday against the province and hundreds of unnamed landowners and contractors.

CP claims it never gave up resource rights on more than 800,000 acres of land it transferred to private owners and the province.


The land — mostly in the Kootenays and Okanagan — was originally granted to the railway companies in the late 1800s.

Now the company wants compensation for the harvesting of the resources on and under that land.


CP's director of public affairs Breanne Feigel says the company wants title and damages past and present — a claim that could reach back more than a century and amounts to millions of dollars in damages if their lawsuit is successful.

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Ontario experiencing delays in shipping forest products to United States

Ontario experiencing delays in shipping forest products to United States | Timberland Investment | Scoop.it

Current delays in shipping forest products to the United States are being experienced by Ontario forestry companies and The Ontario Forest Industries Association (OFIA) is expressing significant concern on the matter.


The delays are a direct result of a major lack of rail cars being provided by key railway carriers. The inability of Ontario companies to ship their products across the United States border is causing substantial losses in market share, something that OFIA believes could have long lasting impacts for Ontario’s forest sector.


“With the return of markets in the United States, we are seeing a corresponding increase in the demand for Ontario forest products. Unfortunately, we believe that Canadian Class 1 railroads have clearly underestimated both the magnitude of the recovery and the number of rail cars needed to ensure that Ontario products make it to market” says Jamie Lim, President and CEO of OFIA.

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Canadian timber groups are investing in enlarging capacity again

Canadian timber groups are investing in enlarging capacity again | Timberland Investment | Scoop.it

The unexpectedly brisk recovery in the US building industry and increasing exports of softwood lumber to China and Japan are currently putting many Canadian and US timber groups in an optimistic frame of mind. Producers are working from the assumption that the upward trend already observed in softwood lumber sales, production, and prices for a number of months now is going to continue this year. A variety of Canadian companies in particular have responded to the last few months of growing demand for softwood lumber assortments and the marked recovery in the level of prices, especially in the USA, by drawing up plans for capacity enlargement in the softwood lumber sector. The decisions range from reopening temporarily idled works and investment in expansion to setting up new production lines. The measures announced to date in Canada alone indicate that the output of softwood lumber could rise by several million cubic metres in 2013 and 2014.

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Retirees on the Rampage

Retirees on the Rampage | Timberland Investment | Scoop.it

John Woolley, a retired public school teacher, recently blockaded a logging road with family and fellow islanders on Cortes Island to protect the 2,700-acre forest from an unlikely adversary—his own pension funds. Woolley is the latest kind of Vancouver Island activist: a pensioner appalled at the way his pension is being invested in the liquidation of private forest lands on Vancouver Island by companies in the portfolio of BC Investment Management Corporation (bcIMC).

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Woolley is outraged that the company managing his pension—and those of half a million other British Columbians—has moved aggressively over the last ten years into “destruction of habitat and the devastation of our forests, which is not responsible investing.” bcIMC owns 25 percent of Island Timberlands, 50 percent of TimberWest (the other half is owned by the federal Public Sector Pension Investment Board), and is a major shareholder of a Brookfield Asset Management (BAM) company that owns another 51 percent of Island Timberlands and 49 percent of Western Forest Products.

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Woolley, in correspondence with bcIMC’s Pearce, questions bcIMC’s claims as an ethical investor. Pearce claims that at 25 percent ownership, bcIMC is only a minority investor, and therefore has no say in day-to-day operations. Woolley argues that “does not excuse blindness to corporate responsibility.” But Pearce says Island Timberlands operations meet ethical investment standards under Sustainable Forestry Initiative (SFI) certification, a certification that leading market campaigner and Cortes Islander Tzeporah Berman has plenty to say about.

Sam Radcliffe's insight:

Timber has only been lightly promoted as a "social investment". The Cortes Island conflict is a relatively minor skirmish... or is it the tip of the iceberg?

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Despite High Prices, Canadian Housing Unlikely to Bubble, Burst

Despite High Prices, Canadian Housing Unlikely to Bubble, Burst | Timberland Investment | Scoop.it

Despite high housing prices in Canada, the market there is unlikely to experience a bubble and bust like that in the U.S., according to the Royal Bank of Canada, MarketWatch reported Aug. 22. Instead, the Canadian government has implemented mortgage finance reforms since 2008 to cool the housing market.


The reforms have included requiring a minimum down payment of 5 percent on government-backed mortgages and a reduction in the amount of time borrowers have to pay down mortgages. Payoff terms were reduced from 35 years in 2008 to 25 years as of June.


While MarketWatch reported that Canadian housing prices have doubled in the past 10 years, the government’s tightened underwriting standards have prevented a major housing crisis, MarketWatch reported.


RBC noted that the nation’s market continues to cool; the number of newly listed homes for sale dropped 3.3 percent from June to July. The Canadian Real Estate Association reported that the average sales prices for homes also have fallen for the fourth time in the past five months, dropping 0.8 percent from June to July on a seasonally adjusted basis.


Both Vancouver and Toronto — hot markets for condos—have seen declines in resales for the past several months.


But MarketWatch reported that Canadian borrowers take on much greater mortgage interest-rate risk than U.S. borrowers. A third of Canadian homeowners have adjustable-rate mortgages. However, Robert Hogue, senior economist at RBC, told MarketWatch that he’s seeing more borrowers move into fixed-rate loans.

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U.S. Coalition Disappointed by Decision on British Columbia Softwood Lumber Agreement

U.S. Coalition Disappointed by Decision on British Columbia Softwood Lumber Agreement | Timberland Investment | Scoop.it

The U.S. Lumber Coalition is disappointed by today's London Court of International Arbitration (LCIA) ruling that British Columbia's (BC) timber pricing practices do not circumvent the U.S.-Canada Softwood Lumber Agreement (SLA).


By selling large volumes of timber for a lower price than should have been charged under the BC Interior timber pricing system grandfathered in the SLA, BC moved Crown timber prices even further from market value - giving back to lumber producers with one hand the export taxes it had collected with the other.


In the arbitration, the United States provided a compelling demonstration that the effects of the mountain pine beetle on the suitability of logs for producing lumber could not begin to justify the increase of timber graded and priced as mostly unsuitable for producing lumber in BC. The LCIA did not take issue with this conclusion as a factual matter, but concluded it could not rule against Canada on this basis alone. Rather, the LCIA tribunal found that the United States also had to demonstrate that a particular amount of misgrading could be attributed to each specific BC government action.

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Mill CEO blames closure on market conditions - Nova Scotia

Mill CEO blames closure on market conditions - Nova Scotia | Timberland Investment | Scoop.it

The Bowater Mersey mill's closure can be blamed on market conditions, according to Richard Garneau, president and CEO of Resolute Forest Products.


"We've worked with the employees and government to try and save the mill. The economic slowdown around the world has made the situation untenable," Garneau said.


"We really tried hard to find a way forward for this mill to operate, but we never expected overseas demand would go down by 25 per cent."


Garneau said Resolute has already put its assets up for sale. He said the company has had some interest in its sawmill in Lunenburg, its electrical company generation plant, as well as a half a million acres of land.

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Unsold wood chips blamed on pulp mill closures in Maine, Nova Scotia and Quebec

Unsold wood chips blamed on pulp mill closures in Maine, Nova Scotia and Quebec | Timberland Investment | Scoop.it

A Fredericton sawmill owner says his company is facing tough times because of a lack of buyers for his wood chips, which he is blaming on the regional slowdown in the forestry sector.

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