Domtar and Tembec are to merge their lumber operations to save money, creating Canada’s second largest solid wood producer in the process.
The companies will combine operations in Quebec and Ontario and market timber manufactured by Tembec at sawmills in British Columbia and by Domtar at its Lebel-sur-Quevillon mill in Quebec. The companies expect to save C$30m-C$40m a year through lower production costs.
Both firms have suffered from US duties on Canadian softwood lumber imports.
Domtar recorded a loss of C$21m during the first quarter of 2003, while Tembec’s forest products group had a loss of C$10.8m in its second quarter, which ended on March 29.
The new company, expected to be created by September, will have assets of about C$850m; a manufacturing capacity of 2.1 billion board feet; and sales capacity of 2.6 billion board feet. This would put it second in size to Canfor.
