British Columbia’s biggest forestry companies will be the most affected by a recent Supreme Court of Canada ruling on aboriginal land title, according to equity research firm Salman Partners.
On June 26, the Supreme Court ruled that the Tsilquot’in First Nation had title over 1,750 square kilometers of land west of Williams Lake. The decision was the conclusion of a decades-long court case and is unprecedented in Canada.
The ruling requires potential land users to get the consent of the Tsilquot’in before proceeding, and gives the First Nation “a right to proactively use and manage the land.”
In a note to investors, Salman analyst Rajiv Mukhi wrote that there the effect of the ruling will be “minimal” on forestry in the short term, but over the long term, it could result in less timber being available.
“B.C.‘s long term timber supply is likely to be further constrained over time, as individual bands make the case for officially designating Aboriginal title to unceded lands, and the Crown timber harvesting regime adjusts accordingly,” Mukhi wrote.
West Fraser Timber (TSX:WFT), Canfor Corporation (TSX:CFP), Conifex Timber (TSX:CFF) and Western Forest Products (TSX:WEF) would be most affected by this possibility because of their “large operating presence in B.C.”
A reduction in wood supply could increase the price of B.C. lumber, Mukhi wrote. One quarter of North America’s lumber supply currently comes from B.C.
Tsilquot’in Chief Joe Alphonse recently told Business in Vancouver that most forestry companies have changed the way they do business in B.C. and for the most part have a good working relationship with First Nations.
Mukhi noted that in Conifex’s most recent public filings, the company described its positive relations with First Nations. The Nak’azdli, Tl’azt’en and Takla First Nations are shareholders of Conifex.
