Sun Wave puts some money in the bank, but still no plans to start a mill

The purchase of 390,000 cubic metres of annual harvesting rights in the Kispiox Timber Supply area has been completed as Sun Wave Forest Products received their final payment of $750,000 of the 1 million dollar total purchase price for the woodlands that once fed the Skeena Cellulose mill.

With the deal complete, the Gitxsan are now free to make their own arrangements with whichever pulp or lumber producer may wish to make use of their Timber supply. One player to watch in this will be Nanaimo based Harmac, which has been scouring the northwest looking for a fibre supply for their mill on Vancouver Island.

The final payment once again also reminds one and all of the lack of progress in moving the pulp mill on Watson Island forward and into an operational phase. Once slated to be operational in 2007, Sun Wave has done very little in the way of preparing the site for operations and indeed the prospect of a working pulp mill in Prince Rupert in 2007 seems like a lost cause at the moment.

The front page of the Daily News featured the details of the agreement between Sun Wave and the Gitxsan in the Friday edition as well as a review of where things stand between Sun Wave, the city of Prince Rupert and those who are still waiting for a return to the pulp lines on Watson Island.

Sun Wave completes sale of forest licence to Gitxsan
By Leanne Ritchie
The Daily News
Friday, March 8, 2007
Page one

The Gitxsan have completed the purchase of the Carnaby Forest Licence from Sun Wave Forest Products, but are not tied in to selling any fibre to the current owners of the Watson Island Pulp mill.

According to Gordon Sebastian, Gitxsan Treaty Office executive director, Gitxsan Forest Enterprises (GFE) has finally completed the purchase of 390,000 cubic metres of annual harvesting rights in the Kispiox Timber Supply area.

A $750,000 cheque was issued March 6, the final payment in a $1 million deal between Sun Wave Forest Products and GFE, a corporation controlled by the Gitxsan hereditary chiefs.
“There were a lot of hassles left over from the previous licensees (New Skeena Forest Products and Skeena Cellulose) so GFE couldn’t do winter logging until those were cleared up,” said Sebastian. “Forest stewartship plans are now being developed and we’ll be fully operating by the summer logging season.”

According to assessments of the licence done during the sale of New Skeena Forest Products’ assets, there were $2.8 million in silviculture liabilities that needed to be completed on that tenure. Sebastian noted the deal with Sun Wave does not limit GFE’s fibre-selling options.
“The agreement does not tie us in to anything as far as an exclusive deal with Sun Wave for providing them fibre. If we can get a better deal selling to someone else then they don’t want to restrict us,” he said.

In addition to the annual cut provided in the forest licence, the Gitxsan also have tenure under a Short Term Forestry Agreement signed with the province for the rights to harvest 1.2 million cubic metres of timber during the next five years.

“The Gitxsan economic strategy for the forest sector on the traditional territories is now five years ahead of schedule,” said Sebastian. “Our next focus is to make as much progress in our mining and fishing sector strategies.”

The sale of the tenure by Sun Wave appears to be the only recent activity of the company, which at one point said it planned to have the pulp mill up and running by April 2007.

Given the lack of any apparent start up at the mill site — even an aggressive plan would require six months of work before start up — it seems unlikely the mill will be starting any time soon.
Prince Rupert city council had earlier agreed to give the company a five-year tax break, provided it started the mill before the end of December 2007.

Council has been sending letters to the company, owned primarily by the Chinese Central Government, with no avail and no response as to what is happening with the property. In addition to the tax deal, the city also agreed to sell the land to Sun Wave for less than a third of its estimated value — $1.6 million. The assessment on the waterfront, rail-linked property put it closer to $6 million.

This was all done on the basis the company was looking at starting the mill.