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Northern B.C. facing economic headwinds, says report

Mega-projects wind down as forestry sector shrinks
Concrete finishing on the outside wall of the powerhouse at Site C dam.

Communities in Northern B.C. are bracing for a “considerable downshift” in economic activity, as several energy mega-projects wind down and sawmill and pulp mill closures result in massive job losses.

The Northern Development Investment Trust's annual State of the North report notes some positive economic developments in some regions, such as new gold mines, but warns of economic headwinds ahead for other regions, especially those that are forestry dependent.

Unemployment in Northern B.C. rose to 5.3 per cent in the fourth quarter of 2023, the State of the North report notes, compared to 3.9 per cent in Q4 2022. The report attributes the rise in the unemployment rate largely to the “ongoing forestry sector consolidation.”

In 2023, Canfor Corp. (TSX:CFP) announced the closure of a sawmill and pellet plant in Chetwynd, a sawmill in Houston, B.C. and a pulp and paper mill in Prince George. The closures resulted in a loss of 650 jobs, the report estimates.

And early in 2024, West Fraser announced the closure of its Fraser Lake sawmill, resulting in 175 job losses in a community of 1,000.

“While there are a multitude of reasons for that consolidation, there remains considerable uncertainty in Northern B.C. about the future of the sector with more closures likely to occur,” the report says.

“With these closures, we will see service and supply sector job losses and an erosion of the tax base in municipalities, which is beginning to affect local government’s ability to respond to community based issues, particularly where forestry was the sole industry.”

Some Northern B.C. communities have been buoyed in recent years by the thousands of jobs and contracts associated with mega-projects, like the $40 billion LNG Canada project in Kitimat, Site C dam in the Fort St. John area, and the Coastal GasLink pipeline, which runs from Dawson Creek to Kitimat.

But the Coastal GasLink pipeline is complete, LNG Canada is 90 per cent complete and Site C dam 86 per cent complete.

“As we look forward, consideration must be given to what we call the end of the ‘generational major projects era’ in Northern B.C.” the report states.

The report points to new gold mines – notably the Blackwater mine near Prince George – and port expansions in Prince Rupert as positive new developments for some northern communities. But it also warns of numbers economic headwinds.

“Although continued investment at the Port of Prince Rupert and the development of the Blackwater Gold project and possibly the Cariboo gold project, not to mention several hospital projects, will bolster activity in the region, rising costs, high interest rates, investor uncertainty and a shrinking private sector labour pool have the potential to exacerbate existing changes in the regional economy.”

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