Thank you very much. Good afternoon and thanks to the committee for the invitation to come forward today as a witness.
Forest renewal and the future of one of Canada's oldest industries is of great interest to the group I'm here representing today, MLTC Resource Development. MLTC stands for the Meadow Lake Tribal Council, as the chair mentioned, which is owned by nine first nations communities in northwest Saskatchewan. MLTC Resource Development is a private equity investment partnership that owns several businesses in Saskatchewan and Alberta. Our largest investments are in forestry, and we also own real estate, hotels, fertilizer distribution, trucking companies, and telecommunications services.
The chiefs and councils of the nine first nations have developed a very positive reputation for having strong governance and clear separation of business and politics. I'm proud to say that as a non-first nations person, it's very humbling to work for an organization that is helping Canada's indigenous peoples make a contribution and earn a stake in the economy and work towards prosperity. There is a key reason why MLTC has been so successful in forestry, and it's because we're owners. We own the mill. We own the forest management company. We own the harvesting, the trucking, and the value-added processing. As owners, we control the natural resource development, the planning, the infrastructure, and we control how the benefits are retained in the region.
At the heart of our business is NorSask Forest Products, a state-of-the art high throughput and technologically advanced studmill facility. We produce 135 million board feet annually and are on track to increase that with ongoing investments in technology and innovation. Our high quality two by four and two by six studs are sold across North America and sought after by our customers due to our exceptional quality, customer service, and reputation.
NorSask was one of the few sawmills to remain open in the downturn and has remained a viable and successful sawmill under some of the most difficult conditions. NorSask directly employs nearly 200 people and 75% are aboriginal, almost half of whom are first nations people and most quite young.
The regional jobs that are maintained in the planning, harvesting, transportation and maintenance, and use of the timber are well in excess of 1,000 people and many of these are also first nations members. All of these jobs are linked to NorSask and MLTC's role in forest management.
Despite our success and resilience, we face unprecedented pressures due to limited market access, infrastructure deficits, no rail service, low quota levels, high labour cost, shortages of skilled trades, and competition for government resources from foreign-owned multinational companies.
ln 2007 we could see that forestry had to change. Lumber markets were collapsing. The traditional model where a sawmill and pulp mill operate hand in hand was just not sustainable. The pulp mills depend on low-cost pulp chips, produced as a byproduct of sawmills, as well as large government subsidies for capital and electricity rates, to stay viable. Pulp markets were shrinking. Pulp mills were closing and the future was uncertain. Pulp mills are also supposed to use hardwood species to allow access to the softwood for a sawmill.
Good lumber depends on good fibre and Saskatchewan has some of the best in the world. We are not yet impacted by the mountain pine beetle and the market knows that. Yet, we are still dependent on pulp mills, typically foreign owned, to utilize hardwood and to buy pulp chips, unless we change our model.
Since 2013, we have invested more than $20 million into modernization, expansion, and recapitalization of our sawmill. As a result, we have put our money where our mouth is towards innovation and the confidence that lumber will always be a product in high demand, despite market cycles.
ln our view, the future depends on finding better value from our timber resources instead of just lumber and pulp. We need to ensure total fibre utilization, including the value-added use of our wastes. Our focus turned to bioenergy and in particular electricity generation and wood pellets. Wood pellets are simple enough as long as you can find markets. Electricity, on the other hand, is very hard to get into without cooperation from local utilities. ln our case, SaskPower is the provincial-owned crown corporation and holds a monopoly in the regulated market. ln 2013, we successfully signed a power purchase agreement to construct a 36 megawatt biomass fired power plant, the first in Saskatchewan.
ln 2014, we started construction on Saskatchewan's first wood pellet manufacturing facility with a design output of 10,000 tonnes per year of premium wood pellets for use in residential heating and environmental spill cleanup. We are very optimistic that this plant can be expanded as we continue to develop more markets across North America.
A key issue worth mentioning is that first nations-owned sawmills do not qualify for many federal or provincial funding programs. So all of this is done with private investment. We can't use the accelerated capital cost allowance, SR and ED, IRAP, or any other innovation funding programs, and the softwood lumber agreement usually prevents direct government funding to sawmills. So our investments in innovation have been internally and privately financed, which is a huge disadvantage compared to the rest of the forest sector and hampers innovation investing.
I can't leave here today without mentioning the softwood lumber agreement. Saskatchewan is often overlooked in the Canadian negotiations. We haven't got enough quota. Today we have three saw mills operating and enough quota for one. Other provinces, such as B.C.... I won't go through the list, but several of them have excess quotas. Negotiators seem unwilling to try to help Saskatchewan because of the fear that changing the agreement would jeopardize the fragile consensus and that we're better just to renew the status quo.
We are strongly recommending that the SLA be structured to give Saskatchewan it's fair share. Moving quota does not cost the other provinces any jobs, but if Saskatchewan doesn't increase it's quota, it could cost a thousand jobs.
In summary my recommendations to the committee are as follows: develop financial support programs and investment incentives for diversified forest products that first nations-owned companies are eligible to received; focus on continued skills trade program funding such as Northern Career Quest, which we feel is very successful; develop a new domestic focus on ensuring that community ownership models are supported, including loan guarantees or other financing programs; rebalance the SLA quotas to support the Saskatchewan saw mill industry without harming other provinces who have surplus quotas; and expand and enhance federal funding programs for innovative new technology investments to encourage domestic investment and newer leading edge technologies.
I want to thank you for your time today, and I'll do my best to answer any questions you may have.
I hope that our story has been a benefit to your committee's work and we can offer some proof that forestry innovation is alive and well in Canada.
Thanks.