The Provincial Government is moving forward with initiatives for the forest sector to diversify their industry with funding of $14 million in Budget 2008. These initiatives will assist the industry compete in the global economy and to identify and develop specific new products and market opportunities.

"The forest industry in our province is beginning an important journey back to an industry that will be strong and sustainable and one that is able to compete in today�s new global market," said the Honourable Kathy Dunderdale, Minister of Natural Resources and the Minister Responsible for the Forestry and Agrifoods Agency. "We have been listening to the entire forest industry as we determined how best to proceed in helping the industry get back on a solid footing. We believe the initiatives being announced today will enable the industry to become more competitive, produce a more diverse line of forest products and secure important new markets."

The funding was announced during Minister Dunderdale�s address to the Annual General Meeting of the Newfoundland and Labrador Lumber Producers� Association in Corner Brook. The Provincial Government will put $4 million from its share of the Community Development Trust towards these initiatives. The Community Development Trust was announced by the Federal Government in March. Newfoundland and Labrador will receive $23.4 million under the program, which is designed to assist vulnerable communities dependent on a single employer or sector under pressure due to exchange rate fluctuations, declining demand or other factors.

"Our government is working with the forest industry on investments that will provide for a sustainable future," Minister Dunderdale said. "The decline in demand for North American lumber market has resulted in surplus supply and low prices. This situation is compounded by the strong Canadian dollar, high energy prices and the challenges of retaining a skilled workforce. It is apparent that the status quo is not an option for us."

The Provincial Government and industry together are exploring a potential new market relating to local wood pellets as a source of fuel. This would result in major savings in energy costs and a greener heating source. The department is now doing the additional analysis to determine the feasibility of developing a provincial wood pellet industry.

The initiatives being undertaken this year are designed to position the sawmill sector to secure markets and are consistent with several initiatives brought forward by sawmillers and the ongoing review of the forest sector. The initiatives so far include:

• $11 million to establish a diversification program that will provide for infrastructure required by industry to produce new forest products and gain access to new markets.
• $1 million provincial contribution to a cost-shared economic study with Corner Brook Pulp and Paper to convert wood to an alternate green fuel source to reduce the mill�s requirement for bunker C oil. It�s estimated that 32,800 barrels of bunker C oil will be replaced through this initiative.
• $500,000 for the department to conduct mill diagnostics, a detailed technical and financial analysis of the major sawmills in the province and the development of sustainable business plans.
• $500,000 for a pellet market development program that will provide for a 25 per cent rebate for the purchase and installation of wood pellet stoves.
• $1 million to develop a marketing program that supports all integrated sawmills in the province access new global markets.

"The intention of the initiatives is to reduce the industry�s reliance on the United States market and develop a more diverse marketing strategy and economy," Minister Dunderdale said. "Our government will work with industry on developing new value-added forest products and on accessing new markets to ensure we have a sustainable forest industry into the future."

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Media contact:

Tracy Barron
Director of Communications
Department of Natural Resources
709-729-5282, 690-8241
tracybarron@gov.nl.ca

2008 04 25                                                   2:00 p.m.