Thank you, Mr. Chair.
That was a great pronunciation of our name. Sometimes it can tongue-tie people.
I would like to thank the committee for inviting Dakwakada to present before you on the issue of the renewal of Canada's forest industry.
By way of a quick background and to give context to my submission, I will give a quick overview of DDC and some of our experiences over the past 15 years within the context of the forest industry.
DDC is the business arm of an investment trust established by the Champagne and Aishihik First Nations. Our mandate is to seek business opportunities to invest in for the purposes of generating financial returns to the investment trust and ultimately to the first nations. The investment capital is compensation funds that were the result of the settlement of a comprehensive land claim. We currently have ownership in four operating companies as well as our four commercial properties. Our companies employ upwards of 200 people and do approximately $60 million in revenue annually.
DDC has had experience in a number of investment opportunities in the forestry sector over the past 15 years, as I've said. This is largely the result of a significant spruce beetle infestation that created a sense of urgency to utilize forest resources in the traditional territory of the Champagne and Aishihik First Nations that had been affected by the infestation.
In approximately 1999, Dakwakada Development Corporation invested in the development of a small sawmill enterprise in our local community. The intention was to create a sawmill that would produce lumber to supply the local and regional market. Unfortunately, due to numerous factors, which included trade issues at the time with the United States, federal policy related to the management of and access to timber harvesting permits, and market conditions, this venture was ultimately unsuccessful.
This was prior to the devolution transfer agreement that was negotiated between the federal government, the Yukon government, and Yukon first nations that saw the management of forest resources devolved to the territorial government. As it has been determined since then, the forest management practices at that time did play a critical role in limiting the development of the forest industry in the Yukon. For our part we are optimistic that local management of the resources now will provide a more successful outcome.
In 2009, Dakwakada engaged in a feasibility study to assess the opportunity to establish a new pellet industry in the Yukon. We determined at that time that a small regional pellet industry was feasible to service the local market. To achieve this required numerous policy changes at the territorial level that would assist in advancing the promotion of pellets as a viable fuel source for the territory. To date, unfortunately, those policy changes that we identified have not come to fruition. In our opinion, until this is done, the development of this opportunity would be very difficult to advance.
In 2010, Dakwakada Development Corporation, in partnership with the Village of Haines Junction and the Champagne and Aishihik First Nations, undertook the feasibility assessment of developing a power generation and district heating system for their community. A critical part of the feasibility study was the financial support we received from CanNor. The feasibility study determined that a scalable approach could work. However, from Dakwakada's perspective, the socio-economic opportunity outweighed the financial investment opportunity, and as a result was too far outside our investment mandate for DDC to participate in. A critical part of that discussion was reconciling the investment values in a public-private partnership.
Going forward, for DDC to participate in resource development, including the forest industry in the Yukon, it is our position that there must be a resolution to the question of land use planning. In all three of our experiences it became apparent that there was not a consensus on how forest resources should be utilized. While there is now a forest management plan for the Champagne and Aishihik First Nations' traditional territory, the land use plan still required under the terms of the Champagne and Aishihik First Nations land claim agreement has not been completed. As a result, the ambiguity and lack of certainty around the utilization of resources in the traditional territory is a significant inhibitor to investment in that region by our company.
Our experience in the Yukon economy has resulted in our realization that traditional forest industries are less viable than opportunities that focus on innovation and value-added approaches that recognize our small-market reality.
Further, it has been our experience that in a small market, attempts to advance a broad spectrum of opportunities will not result in an economically feasible business model. Small markets require focused efforts that have significant public sector support. This means reducing the plethora of opportunities and studies, and focusing on real opportunities or more probable opportunities. It also requires policy support from all layers of government, as they are generally key partners in small-market economies.
In closing, from my perspective the forest industry as an exploitable resource and as an economic driver of aboriginal communities has an advantage over other resource sectors in that aboriginal communities are often able to more easily reconcile the cultural and economic values with the exploitation of a renewable resource. As such, as the investment arm of an aboriginal community we will continue to support and consider opportunities related to the forest industry within our traditional territory, provided those opportunities provide meaningful economic value back to our shareholders.
Thank you.