By Tony Kryzanowski
British Columbia-based Conifex Timber Inc has doubled its production capacity and tripled its potential output of southern yellow pine (SYP) with the completion of its $70.8 million refurbishment of its El Dorado, Arkansas sawmill and recent purchase of two additional sawmills in Arkansas and Florida.
The company has purchased the former Suwannee sawmill in Cross City, Florida and the former Caddo River sawmill in Glenwood, Arkansas for $200 million (U.S.) from the Blue Wolf (BW) Group, bringing its total sawmill footprint in the American South to three.
Both new purchases produce SYP lumber and specialty products like decking. The decking is described as a high margin product that will be sold to customers throughout the American Southeast and Southwest, which will help Conifex diversify its revenue streams.
“This is a highly strategic and transformative transaction for Conifex,” says Ken Shields, President and CEO of Conifex Timber Inc. “It brings together two successful growth-oriented companies to create a leading SYP lumber producer.”
All told, Conifex now has the ability to produce 1.09 billion board feet of lumber annually. Their SYP production capacity is over half of that, at 550 million board feet.
In establishing a significant presence south of the border, Conifex has joined several other Canadian forest industry leaders like Canfor, Interfor and West Fraser who have also diversified their businesses by expanding in the U.S.
“We had been looking at getting a foothold in the high margin U.S. South for a number of years,” says Shields.
He noted a number of solid business reasons for making purchases in that area of the United States. Among them are higher lumber mill net prices after duties in the U.S. South compared to the Interior region of BC; access to the largest and fastest growing U.S. residential housing market: and, availability of a plentiful and cost-effective log supply with close proximity to mills.
Another motivation was the mitigation of foreign exchange risk, as costs and selling prices are, or course, in U.S. currency. Perennial softwood lumber disputes between Canada and the U.S. also factored into the decision, as Shields noted that the U.S. sawmill purchases mitigate adverse impact from risks and uncertainties to cross-border trade disputes.
“We also expect higher profit margins reflecting the competitive cost structure and higher mill net realizations,” he says.
Overall, the goal of the El Dorado sawmill refurbishment and new sawmill purchases is to increase shareholder value.
Headquartered in Vancouver, Conifex Timber is celebrating a decade in business, having been established in 2008 when it acquired its first then-idled sawmill in B.C. A second mill followed two years later as well as a biomass power plant that has been operating since 2015.
The company has invested about $80 million in its two Canadian sawmill complexes, in Fort. St. James and Mackenzie, B.C., and related businesses, as well as $100 million in its green power generation businesses, creating over 500 jobs.
The El Dorado sawmill was the company’s first facility purchase in Arkansas and the Southern U.S.
The El Dorado sawmill was previously owned by Georgia-Pacific and was a producer of SYP dimension lumber and specialty 1” products. It closed in 2006 when its timber supply was allocated elsewhere and it remained closed throughout the severe housing downturn in the U.S., starting in 2008. The U.S. housing market has since rebounded dramatically, reflected in current high lumber prices.
The shuttered sawmill was purchased by Conifex and the company has completed its sawmill refurbishment project. It is currently ramping up with the goal of achieving full production of 180 million board feet on a two-shift basis by 2019. The re-opening and upgrading of the sawmill has brought 138 jobs back to this south Arkansas community of 18,000 residents.
“I have been driving by that site twice a day for the past 10 years, and I’m glad to see the property back in use,” says Union County Judge Mike Loftin. “The jobs that have been created for Union County will be a great boost to our local economy.”
El Dorado Mayor Frank Hash adds that, “from timber owners, timber harvesters, timber processors, plant maintainers and suppliers, and product transporters, the economic gains to all will be significant.” Conifex is expected to purchase about 700,000 tons of pine annually within a 100 kilometre radius of the sawmill, spending about $30 million with suppliers.
Shields says that there is an excellent supply of pine timber available for the sawmill, and that they acquire their logs from multiple sources. The single line El Dorado sawmill will process logs down to an 8” top and up to 22” in diameter, producing products from 2 X 4 to 2 X 10, over a wide grade range. Their highest volume product is 2 X 6, with the highest value product being MSR lumber. Products manufactured at this sawmill will serve the new home construction market, treaters and the renovation and repair market.
As part of the refurbishment project, Conifex was able to use portions of the existing building and some machine centres. For example, the existing bucking line, edger, trimmer and sorter were reactivated. However, the planer mill is all new except for the refurbished sorter.
Hans Thurs, executive vice-president of Conifex responsible for the U.S. South expansion and rebuild, says that the robust fibre supply and potential for superior mill returns was a driving force behind capital investment decisions. Conifex’s primary engineering partner on the project was Mid-South Engineering, which is now owned by USNR, having been acquired by the latter company earlier this year.
Starting at the front end, a new overhead crane log handling system was supplied by LogPro, LLC. Conifex describes it as a state-of-the-art system. It is capable of unloading trucks in just seven minutes. Logs enter the sawmill infeed through the reactivated and existing bucking line. Conifex installed a new Nicholson A8 debarker, followed by log feeders also supplied by LogPro.
USNR supplied almost an entirely new primary breakdown line.
“Most of the primary breakdown is state-of-the-art USNR, including the Sharp chain and HSS gang,” says Thur, adding that USNR also supplied two, natural-gas fired, continuous dry kilns, planer and optimized lumber grading equipment in the planer mill as part of the entire project.
The primary line consists of a new USNR breakdown unit that includes auto-rotation, scanning and positioning, repurposed twin bandmills, and a new USNR Horizontal Shape Saw (HSS) gang. The goal is to achieve the highest lumber grade recovery from each log. Lumber proceeds through the reactivated edger, trimmer and sorter portion of the line. At the back end of the sawmill, Conifex purchased a new MoCo Engineering & Fabrication stacker.
After kiln drying, the planer mill begins with a new Piche infeed tilt hoist, leading to processing through the new USNR planer and lineal high grader. The sorter is repurposed. The new stacker was also supplied by Piche, and a new strapper was supplied by Signode.
Other new equipment installed as part of this project includes a new Acrowood chip screen, a new baghouse system installed by local El Dorado business, Long’s Blow Pipe Inc, with controls by Raptor, and a new rail siding by Dustin Grace in nearby Pine Bluff.
Thur says that Conifex is investigating integration opportunities among its three U.S. sawmills.
“Conifex Glenwood is two hours northwest of El Dorado, so there are some obvious opportunities for harmonization of shipping and log procurement,” he says. “We will be looking at best practices sharing across all the South, and with our Canadian operations.”
Conifex estimates that integrating the acquired mills with its existing operations will generate over $5 million (U.S.) in synergies through procurement opportunities, cost benefits, customer service rationalization, and providing business support services to an expanded number of mill locations.
One particularly positive element of the recent purchase of the two additional sawmills is that the Conifex Glenwood and Cross City operations will likely not need much capital investment. Both have been upgraded with significant capital investment in recent years. A $12 million (U.S.) modernization and optimization project was completed at the Cross City mill in 2017 and approximately $14 million (U.S.) of capital expenditures were completed at the Glenwood mill in connection with its restart in May 2017.
The Cross City sawmill upgrade project included installation of Comact GradExpert automated lumber scanning and grading technology, a Comact upgrade of the log handling and processing functions including profiler and new gang, and installation of a USNR Biovision optimizer at the trimmer. There were also controls upgrades on the edger, log merchandizer and log handling system provided by Comact and ACS.
Phase one of the Conifex Glenwood sawmill upgrade included reconstruction of the existing dry kiln by AFS Technology, mill equipment including gang, trimmer upgrades and edger optimizer by Baxley, quad and bandsaw controls optimization by Comact, planer upgrades by the BID Group with independent contractor Dennis Miller and Columbia Construction, and a new strapper supplied by Samuels.
Phase two included installation of a second dry kiln by American Wood Dryer, and lumber sheds.
On the Cover:
A new Sennebogen 830 M-T at the Cameron River Logistics operation in northern B.C. moves 16-foot CTL logs from truck to rail for the Dunkley sawmill. Watch for the next issue of Logging and Sawmilling Journal, and a feature story on how a Sennebogen 830 M-T log handler’s stacking ability has boosted yard capacity for Saskatchewan’s Edgewood Forest Products (Photo courtesy of Sennebogen).
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