Natural Resources Committee on Nov. 17th, 2025

[Corey Hogan, Liberal, Calgary Confederation, AB]

That is a perfect lead-in to my next question.

I agree. Our forests are very high quality because of our approach to forest management. We end up with a really great product, as long as we get it at that right point. To your point, it can sometimes go too far. The economics of sawmills are such that they are only economical when the entire tree is being used.

If paper demand is declining and if pulp and paper markets are evolving, what are our alternatives for the use of residuals, and how can governments help the market get there faster?

[Terry Skiffington]

We are advancing very quickly away from traditional pulp and paper markets and into advanced building material markets. It's not just Canada; many markets around the world are pivoting themselves to wood-based building manufacturing.

There's technology that has evolved over the last 10 years or so, with products like MDF, CLT and OSB. I'm sorry for the acronyms. MDF is the highly compressed board that you'll see for high- quality kitchen cabinets. It's very much part of building furniture. It's very big in the flooring business. Due to the natural quality of the northern boreal softwood, it's turning out to be a very good quality to make a superior engineered wood material for building, for a bunch of reasons.

It's primarily because we grow a tree in the northern boreal that's a diameter of about 30 cm in 75 years. The density of that tree is extremely high, whereas in the U.S. south, they'll grow a tree of similar diameter in 23 years.

To your point that we manage the forest very well, this is exactly correct. However, Mother Nature also gave us the tremendous advantage of our summer-to-winter temperature cycle and the fact that most of our forest grows in what I'll call a swamp. The trees grow very slowly and are very high quality.

There are advanced building materials that we in Ontario are moving toward. There are several already. There's a large plant in Sault Ste. Marie. Georgia-Pacific just announced an expansion of their plant in Englehart, Ontario.

[Corey Hogan, Liberal, Calgary Confederation, AB]

Thank you.

[The Chair, Liberal, Terry Duguid]

Mr. Simard, you may go ahead for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Mr. Skiffington, first I'd like to make sure you can hear the interpreter's lovely voice instead of mine.

[Terry Skiffington]

My French is not great, so I'll try and do....

[Mario Simard, Bloc, Jonquière, QC]

I just want to know whether you are getting the interpretation.

[Terry Skiffington]

Yes, I can.

[Mario Simard, Bloc, Jonquière, QC]

Excellent.

You did a good job of explaining how integrated the forestry sector is. Value is captured at every link in the chain. If you take away a link, it puts everything else at risk. That is why the dispute around the anti-dumping and countervailing duties is hurting the sector as a whole. I'd like to hear your thoughts on a proposal that's going around right now. I'll have the clerk send it you.

There are two proposals. The first is to compensate the industry commensurate with a portion of the countervailing duties. We know that $11 billion in countervailing duties is currently sitting in U.S. coffers. The government could buy back a portion of those countervailing duties. Although it is a lot of money, members of the industry, together with unions, recently came out with a new idea. They have suggested that the government purchase 50% of countervailing duties at the end of each month. That way, businesses could continue exporting to the U.S. market, keep people employed, and ensure manufacturing facilities for wood chips and pellets.

I'm not sure whether you heard about the proposal in Ontario, but it's gotten a lot of attention in Quebec.

Do you think the proposal has merit?

We'll send it to you in writing, and I'd like you to get back to us with a written answer.

[Terry Skiffington]

Mr. Chair and Mr. Simard, I apologize, but it's really not my area of expertise. My experience and my whole focus is on the downstream side of the secondary residual processing. Although I'm victimized, let's say, through the downstream on the tariff, I'm not an expert by any means on the mechanisms around recovering tariffs in different ways. I apologize.

[Mario Simard, Bloc, Jonquière, QC]

We'll send you the question in writing. It may be easier that way. I was talking mainly about the countervailing and anti-dumping duties, which are at 35% right now.

In your opening statement, you spoke at length about what we now call bioproducts. For example, cellulose fibre can be used to replace petroleum-based products and clean fuels can be used to produce energy. The committee has talked about that. A number of witnesses told us that, in order to move in that direction, the government would need to keep carbon pricing in place and provide tax credits for these new clean technologies.

Do you support such a policy, which would make it easier to deploy bioproducts, be they biofuels or cellulose fibre?

[Terry Skiffington]

Absolutely I do. There's a national agenda on decarbonization. We provide a number of means towards that objective. What I mentioned earlier—minimizing forest fires and converting that carbon into a solid wood product—is one of the most powerful ways we can do it. Forest fires, as we know, are one of the largest sources of emissions in our country every year. The more we can take that material and convert it into carbon storage through products, and the more help that we can get on any form of incentive, whether it's a tax credit, whether it's recognition of the carbon reduction, or whether it's through a green-energy power purchase agreement.... We completely agree with and support any mechanisms that can accelerate our being able to both do that ourselves and attract private sector investors.

[Mario Simard, Bloc, Jonquière, QC]

You talked about the significant decline in the pulp and paper sector. That is a fact.

When it comes to converting wood waste into chips, what is the best path forward for the forestry sector?

From a technology standpoint, where should we step up our efforts to help ensure that the sector is healthy?

[Terry Skiffington]

As I mentioned, it's the emerging technologies on advanced building materials, moving away from traditional pulp and paper products and putting in MDF medium-density and high-density production lines.

The beauty of that technology is that it's in place around the world. It's proven. It's quick. A two-year project almost could replace two Kap Papers in terms of softwood chip consumption. It's a very, very quick way to make a step change in bringing our balance back.

You mentioned the other—

[The Chair, Liberal, Terry Duguid]

Could you wrap up your answer?

[Terry Skiffington]

Okay.

Also, then, there's a suite of opportunities in the bio space. As I mentioned, and if we look at the facility in Temiskaming, which is already well down that path, deploying those sorts of technologies in northern Ontario is the next....

[The Chair, Liberal, Terry Duguid]

Thank you.

We're going to our second round now, colleagues.

Mr. Martel will be followed by Mr. Guay and then Mr. Simard for six minutes each.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chair.

Mr. Skiffington, thank you for being with us today. It's a pleasure to have you.

Describe, if you would, the condition of your facility and the major challenges you face in order to stay operational?

[Terry Skiffington]

Thank you.

To describe our facility, we would be considered a medium-scale pulp and paper complex. We employ 300 people directly at our plant. It's a large facility. It has a blend of newer technology and historical technology. Our energy assets are quite historical. Our effluent treatment assets are world-class.

Although we produce a very good product, as I mentioned in my earlier comments, in spite of producing a good product we are unable to cover our operating costs because of the havoc that has been created in the marketplace, particularly through the trade war. What we do have in terms of infrastructure, though, is enviable.

We sit on the Trans-Canada Highway. We sit on the main east-west gas pipeline, which runs across our property. We have the Ontario high voltage network on our property, and we have the main rail line between northern Ontario and Toronto on our property. Also, of course, we have a well-trained and readily available workforce that wants to stay and live in the north. From an infrastructure point of view, as I mentioned earlier, for the fibre that we have related to our three regional sawmills, we're absolutely poised to pivot the facility, and we must. We just have to.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Would you need to upgrade your processing facility in order to increase production?

[Terry Skiffington]

Yes, we would. It really wouldn't be considered an upgrade. It would be a replacement. We would be replacing our existing manufacturing lines with completely new manufacturing lines that would take advantage of the infrastructure I just described. We would do that in a fashion that would allow us to continue our current operations over a period of several years and then switch to the new lines.

As I mentioned, we're concentrating on the engineered wood products. We are discussing...well, more than discussing; we're very active with the federal government's strategic response fund on supporting that exact transformation. It's hundreds of millions of dollars. It's not billions, but it's hundreds of millions of dollars. We are looking to support that from the provincial level, from the federal level and from the private sector.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

You said you received provincial assistance from Mr. Ford. You also received federal support from Ms. Joly.

What kind of help did you receive from the federal government?

[Terry Skiffington]

At the federal level, we've received through FedNor, for the period of October to the end of this year, an opex loan of $10 million. We have another tranche coming through FedNor, but I'm not sure I can say that publicly yet. I don't know what my constraints are or the rules, but I don't think I can.

[The Chair, Liberal, Terry Duguid]

You just said it.

[Voices]

Oh, oh!