North American lumber industry threatened by aboriginal land ruling

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IHB/RBC/VS
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A ruling by the Supreme Court of Canada on aboriginal land could have a severe impact on North American lumber supply almost as the one caused by the mountain pine beetle, warns RBC Capital Markets quoted by Vancouver Sun.

The Canadian Court's unanimous decision back on June 26 related to a 30-year-plus land dispute between the Tsilhqot’in Nation and the British Columbia and Canadian governments, entitles the B.C. First Nation to dictate what logging and other activities take place on its newly recognized 1,700 square kilometres of land, according to RBC. 

Now with an established precedent to title, the provincial/federal governments in Canada will have to consult, and gain the consent of the respective First Nation(s) when development projects/timber harvesting concern unceded land, RBC analyst Paul Quinn was quoted saying. 

Quinn added that British Columbia has accounted for almost a quarter of all North American lumber production in the past 10 years, and if the Supreme Court ruling leads to delays and limitations in harvesting sawlogs in B.C., Quinn expects a tighter lumber market and higher prices.

Paul Quinn, quoted by Vancouver Sun, thinks that the consequence of this ruling could eventually have an impact equal to that of the mountain beetle epidemic which destroyed between 2000 and 2012 around 710 million cubic metres of commercially valuable pine timber, or 53 per cent of all such pine in the province.

The analyst noted that while 94 per cent of land in B.C. is currently classified as provincial Crown land, aboriginal title will eventually likely make up the majority.

Vancouver Sun says that with about 200 Indian Act Bands in British Columbia, many with overlapping claims, negotiations between industry/government and First Nations may prove lengthy. It will likely take more than a decade to understand the full impact of this SCC ruling on North American lumber production.

Quinn believes larger B.C. companies are most at risk since they have long-established tenure rights and, therefore, have required fewer First Nation partnerships to secure timber supply. He highlighted Conifex Timber Inc. (100 per cent of capacity in B.C.), Western Forest Products Inc. (100 per cent), Canfor Corp. (73 per cent), West Fraser Timber Co. Ltd. (40 per cent) and Interfor Corp. (40 per cent) as companies with significant lumber capacity mix in the province.

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