Deep cuts in New Brunswick timber royalties were 'a bit surprising,' top logging executive says
'It doesn't appear to align with the markets,' says Acadian Timber president
"It was a bit surprising to us," said Adam Sheparski. "It doesn't appear to align with the markets we are experiencing."
Sheparski is president of Edmundston-based Acadian Timber, New Brunswick's second-largest private landowner and a major supplier of wood to New Brunswick lumber and pulp mills.
During a conference call with stock analysts last week to discuss Acadian's first quarter results, he was asked whether plans New Brunswick has to lower what it charges mill owners to supply themselves with publicly owned trees would undermine prices Acadian will be able to charge for its trees.
Adam
Sheparski is president of Acadian Timber. It's the third-largest
landowner in New Brunswick after the province and J.D. Irving Ltd. He
told stock analysts last week he was surprised by New Brunswick cutting
royalty rates. (Adam Sheparski/LinkedIn)
Sheparski said he doesn't understand what the province is doing, but felt the effect on his company would be minimal in the short term.
"I know that's hard to believe, given the rates," Sheparski told analysts.
He cited access to out-of-province markets and some contractual price protections on in-province sales as two reasons Acadian might be able to weather price cutting by the province, at least temporarily.
"In the long run we'll keep an eye on it." he said.
Earlier this month, New Brunswick posted a list of royalties it is proposing to charge forest companies for wood they cut on Crown land in 2023. The prices are retroactive to April 1 and include major reductions on some of the province's most prized timber.
The royalty on spruce, pine and fir studwood, which is cut by mills into two-by-four lumber, is to be lowered from its current rate of $33.58 per cubic metre to $18.40. That's a $30-million royalty reduction on the 2 million cubic metres of studwood that companies take from Crown land annually.
Softwood sawlogs, which are larger and more valuable, are facing a proposed royalty reduction of $18.77 per cubic metre, a discount of up to $19 million this year from current rates, depending on annual harvested volumes.
The
J.D Irving Ltd. sawmill in Grande-Rivière outside Saint-Léonard, is New
Brunswick's largest. Mills use a mixture of wood from private and
public forests. Private sellers complain that low government royalty
rates undercut prices mills will pay them. (Nicolas Steinbach/Radio-Canada)
There were offsetting royalty increases on some hardwoods, but not nearly as significant as the reductions representatives of New Brunswick's private wood suppliers openly worried could trigger pricing troubles for them.
"I really couldn't believe that it dropped that much," Linda Bell, the general manager of the Carleton Victoria Wood Producers Association in Florenceville, said last week.
"The more cheap wood that the mills have from Crown, the less incentive they have to buy our wood."
The Department of Natural Resources and Energy Development did not respond to questions from CBC News last week about the changes, but has publicly said the posted royalty rates are incomplete and will be added to later.
According to the department, there are plans to supplement royalties with special charges to fund a new "private woodlot sustainability fund."
Extra royalty rates connected to the fund have not been disclosed, but last November, Natural Resources Minister Mike Holland told MLAs the "goal" is to raise $10 million a year from industry through the new charges.
New
Brunswick has been promising to add a surcharge on Crown royalty rates
to finance a new private woodlot sustainability fund. It was supposed to
have been set up for April 1, but wasn't. (Nicolas Steinbach, Radio-Canada)
It's well below the $40 million to $50 million in timber royalty discounts the same industry players are also set to receive this year.
The fund, and special royalty rates to finance it, were both meant to be in place by April 1, but the department missed that deadline. Currently, neither has yet been established.
In an email Thursday, the department said it is still working on the details.
"The regulation for the Private Woodlot Sustainability Act is being drafted by government drafters, and will be posted for comment upon their completion," wrote spokesperson Nick Brown.
In the Legislature Thursday, Green Party Leader David Coon criticized the reductions in timber royalties as a give away to "billionaires." In an interview later, he said the delay in setting up the sustainability fund makes him question whether it is coming at all.
"I'm guessing we may never see those private wood-sustainability funds show up," said Coon.
Green
Party Leader David Coon criticized reductions in timber royalty rates
in the Legislature Thursday. He said he's worried that delays in
implementing offsetting increases to finance a new program for
independent woodlot owners means the plan is in trouble. (Jacques Poitras/CBC)
In New Brunswick, royalties are meant to reflect the "fair market value of standing timber" and are determined by an annual survey of what private land owners were paid for their standing trees by mills or independent logging contractors in the prior year.
In his conference call, Sheparski suggested Acadian Timber has detected no major decline in those values that would have triggered a major reduction in government royalty charges.
"We are in the process of understanding the methodology and the result of the survey," said Sheparski.
There's sort of a disconnect in what we're seeing in the markets and what came out of their survey."
ABOUT THE AUTHOR
Anyone really surprised by this with this government we have?
Whining about the debt when negotiating contracts with civil servants, giving themselves big raises, increase subsidize to industry that doesn't need it.
Simple as that folks. He may no longer be on the Irving payroll (that we know of) but sure as rain he still works for them.
Email: asheparski@acadiantimber.com
From: Linda Bell <Linda.Bell@cvwpa.ca>
Date: Mon, 1 May 2023 16:15:25 +0000
Subject: RE: RE New Brunswick to cut timber royalties charged to
forestry companies up to $50M
To: David Amos <david.raymond.amos333@gmail.
Sorry you could not hear me – my cell phone does not work in the
office and our phone lines are out of service here now. We have had
no power and just got it back but still no phone service.
Thanks for sending me the email – I will read through it.
Sent from Mail<https://go.microsoft.com/
From: David Amos<mailto:david.raymond.
Sent: Monday, May 1, 2023 1:01 PM
To: chris.spencer@snbfpmb.ca<
pfolkins@snbwc.ca<mailto:pfolk
kim.jensen.cvfpmb@outlook.com<
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Subject: RE New Brunswick to cut timber royalties charged to forestry
companies up to $50M
https://davidraymondamos3.
Monday, 1 May 2023
New Brunswick to cut timber royalties charged to forestry companies up to $50M
https://www.cbc.ca/news/
New Brunswick to cut timber royalties charged to forestry companies up to $50M
Fees to cut lumber-quality softwood dropping 46%
Robert Jones · CBC News · Posted: May 01, 2023 7:00 AM ADT
The outside of a green-cladded industrial building with a large Irving
corporate logo sign on the front, with "grand lake timber" in green
letters below it. Several vehicles are parked in the yard around the
building. Multiple forestry companies cut wood on publicly owned land
in New Brunswick. J.D. Irving Ltd. is the largest and takes just under
half of the public wood that is turned into lumber. (CBC)
Seven months after raising royalty rates on trees cut by industry in
provincially owned forests, the New Brunswick government is proposing
up to $50 million in reductions, with some rates falling all the way
back to where they were a decade ago.
It's a move Linda Bell wasn't expecting and doesn't like.
"I really couldn't believe that it dropped that much," she said.
Bell, general manager of the Carleton Victoria Wood Producers
Association in Florenceville, says lower royalty rates reduce revenues
to the province, but they also make it difficult for private sellers
of wood to get decent prices for what they cut.
A woman smiling in front of piles of logs Linda Bell represents
independent woodlot owners in western New Brunswick and says the
province reducing the royalties it charges for wood cut on public land
undercuts smaller private sellers. (Submitted by Linda Bell)
"The more cheap wood that the mills have from Crown, the less
incentive they have to buy our wood," said Bell.
In a posting on the province's Public Review of Draft Regulations
website last week, the Department of Natural Resources and Energy
Development listed several proposed changes to timber royalties that
are charged to New Brunswick forestry companies.
The most significant is a 46 per cent reduction in charges for
softwood sawlogs and studwood used by New Brunswick sawmills to
manufacture both high and low grades of lumber.
Based on current royalties and historical volumes cut on public land,
the price drop will likely cost the province and save forest companies
$50 million in fees this year.
The department is asking for public comment on the changes but did not
respond to a series of questions about them last week.
New Brunswick raised the royalty rates on publicly owned timber for
the first time in seven years last September in a belated, but heavily
promoted effort to profit from two years of record lumber prices.
A sign with a tree symbol and the Irving logo next to a pile of wood
New Brunswick forestry companies saw their revenues from wood
manufacturing increase by more than $1 billion when lumber prices
surged. New Brunswick raised its timber royalties only as prices fell
and is now retracting most of the increases. (CBC)
"We've instigated an increase for this year, a fairly significant
increase," Natural Resources Minister Mike Holland told CBC News last
summer in one of a number of interviews announcing the higher fees.
In 2021, New Brunswick wood manufacturers, mostly sawmills, reported a
record $2.6 billion in sales, $1.2 billion more than two years earlier
on similar amounts of production.
That helped convince the province it should charge more for trees the
mills were using, but the financial bonanza around lumber had largely
fizzled by the time royalties were finally raised in the second half
of 2022.
Delays in boosting timber royalties saved N.B. forest companies millions
N.B. companies with forest properties on both sides of U.S. border
paying higher taxes in Maine
With lumber prices now into more normal ranges, the province has
decided to roll back royalties as well.
But unlike the increases, which took effect last September after
months of deliberation and the 60-day waiting period observed before
changes in fees are normally implemented, reductions will be faster
than immediate. They are to take effect retroactive to April 1st.
That irks Bell, who said the speed at which royalty rates are being
cut is in stark contrast to the indecision and delays that preceded
raising them.
"They certainly didn't put the rates up very fast when the prices
went up, but they sure put it down fast when the markets aren't as
good," said Bell.
"It's typical of what the government does. I am just astonished at the
rates that the government uses for this taxpayer asset."
A man wearing a suit standing in front of a brown building Natural
Resources and Energy Development Minister Mike Holland publicly
announced when timber royalties were increasing last summer, but his
department did not respond to questions last week about plans to cut
them. (Jacques Poitras/CBC)
New Brunswick forestry companies cut a variety of trees of differing
values from publicly owned land every year.
The most lucrative are spruce, pine and fir trees large and straight
enough to be cut into lumber. In a typical year, companies cut three
million cubic metres of softwood for sawmill use from public land.
About 850,000 cubic metres of those amounts are softwood sawlogs,
which carry a current royalty of $40.60 per cubic metre. That was
raised from $31.09 last year, but is now proposed to fall to $21.83.
Royalties on softwood sawlogs in New Brunswick have not been that low
since 2012.
That is causing some confusion in the forestry sector, since higher
royalties were meant to help finance a new private woodlot
sustainability fund, announced by the province six months ago, that is
supposed to help smaller private owners of forests manage their lots
more efficiently.
A softwood forest New Brunswick companies cut millions of trees
annually from publicly owned forests and in exchange pay the province
royalties. (Radio-Canada)
Kim Jensen, general manager of the Carleton-Victoria forest products
marketing board, said she doesn't know if the fund is still to be paid
for by royalty rates or some other surcharge or mechanism the province
hasn't explained yet.
"We've heard nothing. It's been dead silence," said Jensen.
Not all rates are declining, however.
There is a proposed 34 per cent increase in poplar and hardwood
pulpwood royalties. Based on traditional volumes, that could add $2.2
million in revenue to offset some of the reductions.
The public has until May 24 to comment on the proposed changes.
ABOUT THE AUTHOR
Robert Jones
Reporter
Robert Jones has been a reporter and producer with CBC New Brunswick
since 1990. His investigative reports on petroleum pricing in New
Brunswick won several regional and national awards and led to the
adoption of price regulation in 2006.
CBC's Journalistic Standards and Practices
61 Comments
David Amos
We get the governments we deserve when apathy rules the day eh?
David Amos
Reply to David Amos
"The public has until May 24 to comment on the proposed changes"
I say no way
What say you?
claude bourgeois
I guess Higgs is still working for Irving.
David Amos
Reply to claude bourgeois
Thats been blatantly obvious for years
Gary MacKay
I find this kind of action by government counter intuitive. The US
will probably see this as a subsidy and they will most likely impose a
tariff to counter the reduction and we will spend more tax dollars
fighting that as they (US) collect from the mills. Even if we win the
US refuses to comply. This has been the routine for decades for some
reason we have not learned from this bit of history IMO.
David Amos
Reply to Gary MacKay
Well put
Vladamir Smirnoff
It’s not just Higgs to blame. It appears the conservative caucus is in
support of the reduction.
David Amos
Content Deactivated
Reply to Vladamir Smirnoff
They follow Higgy's orders
https://www.acadiantimber.com/
ACADIAN TIMBER CORP. ANNOUNCES ELECTION OF DIRECTORS
Edmundston, NEW BRUNSWICK, May 5, 2023 – Acadian Timber Corp. (TSX:ADN) (the “Company”) announced that the nominees listed in the management proxy circular for the 2023 Annual Meeting of Shareholders were elected as directors of the Company. Detailed results of the votes for the election of directors held at the virtual Annual Meeting of Shareholders on May 4, 2023 are set out below.
Nominee Votes For % For Votes Withheld % Withheld
Malcolm Cockwell 10,958,022 97.74% 252,821 2.26%
Heather Fitzpatrick 11,168,192 99.62% 42,651 0.38%
Karen Oldfield 11,165,839 99.60% 45,004 0.40%
Erika Reilly 11,187,204 99.79% 23,639 0.21%
Bruce Robertson 11,171,553 99.65% 39,290 0.35%
Adam Sheparski 11,187,109 99.79% 23,734 0.21%
About Acadian Timber
Acadian Timber Corp. (“Acadian”) is one of the largest timberland owners in Eastern Canada and the
Northeastern U.S. and has a total of approximately 2.4 million acres of land under management. Acadian owns and manages approximately 761,000 acres of freehold timberlands in New Brunswick,
approximately 300,000 acres of freehold timberlands in Maine and provides timber services relating to
approximately 1.3 million acres of Crown licensed timberlands in New Brunswick. Acadian’s products
include softwood and hardwood sawlogs, pulpwood, and biomass by‐products, sold to approximately 90 regional customers.
Acadian’s business strategy is to maximize cash flows from its existing timberland assets through
sustainable forest management and other land use activities while growing its business by acquiring assets and actively managing these assets to drive improved performance.
Acadian’s shares are listed for trading on the Toronto Stock Exchange under the symbol ADN.
For further information, please visit our website at www.acadiantimber.com or contact:
Susan Wood
Chief Financial Officer
Tel: 506‐737‐2345
Email: ir@acadiantimber.com
The current Board of Directors comprises six
members. The names and biographies of each of the Directors are set
forth below.
Malcolm Cockwell
Mr. Cockwell is the Managing Director of
Haliburton Forest & Wildlife Reserve, a private land stewardship
company that operates a mid-sized hardwood sawmill as well as a diverse
ecotourism business, and owns approximately 100,000 acres of hardwood
timberland in central Ontario. Having previously served as General
Manager of Haliburton Forest since January 2014, he was appointed
Managing Director in 2016. In addition to his work with Haliburton
Forest, Mr. Cockwell is a PhD Candidate at the Faculty of Forestry at
the University of Toronto with research interests focused on hardwood
silviculture and processing. He holds a B.Sc. in Forestry from the
University of Toronto and is a Registered Professional Forester in
Ontario. Mr. Cockwell also serves on the board of directors of Forests
Ontario and represents Haliburton Forest at the Ontario Forest
Industries Association. Mr. Cockwell is a resident of Haliburton,
Ontario, Canada.
Mr. Cockwell has been a Director since May 8, 2018. Mr. Cockwell assumed the role of Chairman on August 20, 2019.
Heather Fitzpatrick
Ms. Fitzpatrick is the President and CEO of
Halmont Properties Corporation (TSX Venture: HMT-X). Ms. Fitzpatrick
holds a bachelor’s degree in commerce from Memorial University of
Newfoundland and has served in a variety of senior accounting roles with
the Bank of Montreal and other firms over the last ten years. Halmont
invests directly and indirectly in commercial real estate, forest
properties, and in securities of companies holding property, energy, and
infrastructure assets. Ms. Fitzpatrick is a Chartered Professional
Accountant.
Ms. Fitzpatrick has been a Director since August 20, 2019.
Karen Oldfield
Ms. Oldfield was the President and CEO of the
Halifax Port Authority, a position which she held for more than 17
years. Ms. Oldfield has global experience in trade development,
particularly new markets combined with expertise in supply chain
management and logistics. Additionally, Ms. Oldfield currently serves as
Chair of the Board of Governors for Saint Mary’s University and is a
Director of the Conference Board of Canada.
Ms. Oldfield is the Chair of the Compensation
Nominating and Corporate Governance Committee and is the Lead
independent Director. Ms. Oldfield has been a Director since May 9,
2019.
Erika Reilly
Ms. Reilly has over 15 years of capital markets
experience and has been an investment professional with Brookfield since
2006. She has led growth and divestiture initiatives, public and
private financings, and has played a key role in restructurings and
asset management of timberland and infrastructure businesses. Erika has
worked with Acadian since its inception and has served as President and
Chief Executive Officer of the company from September 2019 to July 2021
and served as Chief Financial Officer of the company from 2013 to 2016.
Erika holds a Bachelor of Commerce in finance from the University of
British Columbia.
Ms. Reilly has been a Director since May 6, 2021.
Bruce Robertson
Mr. Robertson is the Vice President, Investments
of The Woodbridge Company Limited and has held this position since
September 2013. Prior to joining Woodbridge, Mr. Robertson held various
executive positions at private equity firms focused largely on markets
in Canada and the United States. Mr. Robertson received his Bachelor of
Commerce (Honours) degree from Queen’s University in 1988 and has served
on the board of directors of both private and publicly-listed
companies, including his current positions as director of Morguard
Corporation and as trustee of Morguard North American Residential REIT.
Mr. Robertson is a resident of Toronto, Ontario, Canada.
Mr. Robertson is the Chair of Audit Committee. Mr. Robertson has been a Director since February 2018.
Adam Sheparski
Mr. Sheparski was appointed President and Chief
Executive Officer of Acadian on July 30, 2021, having held the office of
Chief Financial Officer since February 2020. Prior to joining Acadian,
Mr. Sheparski held multiple senior executive roles within Empire Company
Limited and Sobeys Inc. During this time, he managed multiple M&A
transactions, streamlined operations to achieve millions in annual
savings, and created structural changes to support long term
sustainability for the organization. Mr. Sheparski began his career in
1999 with PricewaterhouseCoopers where he was a CPA CA and led the
audits for public clients in the aviation, aerospace, and manufacturing
industries. Mr. Sheparski holds a Bachelor of Business Administration
from St. Francis Xavier University and is a member of CPA Nova Scotia.
Mr. Sheparski has been a Director since July 30, 2021.
Adam Sheparski President
Tel: 1-506-737-2345 ext. 2356
Susan Wood
Chief Financial Officer
E-mail: ir@acadiantimber.com
Malcolm Cockwell
Managing Director
Originally from Toronto, Malcolm holds a B.Sc. in Forestry from the University of Toronto and is a PhD Candidate at the same institution’s Faculty of Forestry.
After working closely with Peter Schleifenbaum for several years, Malcolm took responsibility for Haliburton Forest as the Managing Director in December 2016.
In addition to his work at Haliburton Forest, Malcolm is a Registered Professional Forester, serves on the Board of Directors of Forests Ontario, and represents Haliburton Forest at the Ontario Forest Industries Association.
When Malcolm isn’t working, he can usually be found stomping around in the forest.
Brookfield Asset Management Inc; Macer Forest Holdings Inc.: Early Warning Release
TORONTO, Aug. 20, 2019 (GLOBE NEWSWIRE) -- Brookfield Asset Management Inc. (“Brookfield”) and Macer Forest Holdings Inc. (“Macer”) report that Macer has acquired and Brookfield has disposed of an aggregate of 7,513,262 common shares (the “Shares”) in the capital of Acadian Timber Corp. (“Acadian”), pursuant to a private transaction at a price of $17.00 per Share totaling aggregate consideration of approximately $128 million in cash. The Shares represent approximately 45% of the issued and outstanding common shares of Acadian. Macer acquired the Shares for investment purposes. Prior to the transaction, Macer did not hold any securities of Acadian; however, Malcolm Cockwell, the President and principal shareholder of Macer and an associate own 214,400 common shares of Acadian. Macer may acquire or dispose of additional securities of Acadian in the future on the open market, through private transactions or otherwise, as the circumstances or market conditions warrant. Brookfield disposed of the Shares as part of its investment strategy. Brookfield no longer owns or controls any shares of Acadian and, at this time, Brookfield has no intention to acquire additional securities of Acadian. The Shares were acquired pursuant to the private agreement exemption in accordance with section 4.2 of National Instrument 62-104 – Take-Over Bids and Issuer Bids. As a result of this transaction, Benjamin Vaughan has resigned from his position as Chairman of Acadian’s Board of Directors, effective immediately. Malcolm Cockwell, current director of Acadian and a principal of Macer, has assumed the role of Chairman of Acadian’s Board. Brookfield Timberlands Management LP (“Brookfield LP”), a subsidiary of Brookfield, is continuing to act as external manager to Acadian in accordance with the terms of the asset management agreement between Brookfield LP and Acadian. In accordance with National Instrument 62-103, an Early Warning Report with additional information in respect of the foregoing matters will be filed in respect of the transaction for Brookfield and Macer. A copy of such report may be obtained from the SEDAR profile of Acadian at www.sedar.com. Acadian’s head office is located at Suite 1800 – 1055 West Georgia Street, PO Box 11179, Royal Centre, Vancouver, B.C. V6E 2R5. Brookfield Asset Management Inc. is a leading global alternative asset manager with over $385 billion in assets under management. The company has more than a 120-year history of owning and operating assets with a focus on real estate, renewable power, infrastructure and private equity. Brookfield offers a range of public and private investment products and services, and is co-listed on the New York, Toronto and Euronext stock exchanges under the symbol BAM, BAM.A and BAMA, respectively. Brookfield’s head office is located at Brookfield Place, 181 Bay Street, Suite 300, Toronto, ON M5J 2T3. Macer Forest Holdings Inc. is incorporated pursuant to the laws of Ontario. Its principal business is to acquire and hold for the long-term shares of companies owning and operating forest and recreational properties. Macer’s head office is located at 400 – 51 Yonge Street, Toronto, ON M5E 1J1. For more information on Brookfield, please visit Brookfield’s website at www.brookfield.com or contact: Claire Holland Linda Northwood Communications & Media Investor Relations Tel: (416) 369-8236 Tel: (416) 359-8647 Email: claire.holland@brookfield.com Email: linda.northwood@brookfield.com For more information on Macer, please contact: Malcolm Cockwell, RPF President Tel: (705) 754-2198 Email: mcockwell@haliburtonforest.com
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