The Huu-ay-aht First Nation is getting into lumber production.
The First Nation’s Huumiis Ventures has agreed to buy into Western Forest Products’ Alberni Pacific sawmill and take a controlling stake in Tree Farm Licence 44 in a $36-million deal.
The deal will see the First Nation spend $35.2 million for 44% of TFL 44 LP, giving the Huu-ay-aht a total 51% of the limited partnership. They bought a minority share of that partnership in 2019.
They will also spend $1 million for a 7% interest in Alberni Pacific Division, a new limited partnership set up by Western to control the sawmill. Huumiis will have an option to purchase an incremental ownership interest in the limited partnership.
Western chief executive Don Demens said the deal means increased participation by the Huu-ay-aht.
“The APD sawmill is a natural evolution of their investment in the forest industry, going into production,” he said. “I have genuine belief this is good for our business and the Huu-ay-aht First Nation, our employees and customers.”
Demens said it means certainty around fibre supply and makes the industry stronger.
As part of the deal, Western and TFL 44 LP will enter into a long-term fibre agreement to continue to supply Western’s coastal manufacturing operations.
“Having them invested in that area, in their traditional territory, is a real positive for us,” Demens said. “It could be a demonstrated template for the way business can contribute to reconciliation, but it’s a way we can move forward as Western in other [forest] tenures with other First Nations.”
Huu-ay-aht Chief Derek Peters said it was an important deal to give the First Nation more control over their traditional territory.
He said the First Nation will be guided by its principles, which translate as “utmost respect,” “taking care of” and “everything is one,” as it creates more opportunities and wealth for the nation in a way that protects its resources for present and future generations.
Western could sell ownership stakes of TFL 44 LP to other area First Nations, including Huumiis.
“This is an historic announcement that is fundamentally about reconciliation and forestry revitalization,” said Chief Councillor Robert J. Dennis Sr.
“This agreement will enable Huu-ay-aht to have more jurisdiction over our [traditional territory], strengthen the long-term sustainability of the forest sector in the Alberni region, provide strong environmental stewardship that aligns with Huu-ay-aht’s forestry guiding principles, and create more opportunities for First Nations, including our citizens.”
The transaction is expected to close in the second quarter.
This week’s deal builds on the Reconciliation Protocol Agreement signed between Western and the Huu-ay-aht in the spring of 2018 and a deal for a minority stake in TFL 44 signed last year.
Demens said it’s a bit of good news during a dark time for the economy. Western, which is just getting back into gear after an eight-month strike that sidelined its logging and manufacturing operations, had been feeling bullish on the industry until the COVID-19 outbreak.
Demens said early building signs in the U.S. looked good, while there was good response from both Japan and China, but the last couple of weeks have created uncertainty — though he has been encouraged by online sales from big-box lumber stores.
“There are some rays of light, but we are monitoring developments as they occur and we are focused on matching production and market demand.
“This is not the time to get out of sync here and build inventory.”
He said the company is working to keep people safe with new cleaning and work protocols in the face of the outbreak, and where possible, employees are working from home.