Canfor Corporation has signed an agreement to acquire Tembec Industries Ltd’s southern British Columbia (BC) interior wood products assets for C$60m.

Canfor will acquire Tembec’s Elko and Canal Flats sawmills and approximately 1.1 million m3 of combined crown, private land and contract annual allowable cut.

The transaction will include a long-term agreement to provide residual fibre supply for Tembec’s Skookumchuck mill.

Over the next few years, Canfor intends to make capital investments in excess of C$50m to improve productivity and cost performance in its BC southern interior mill facilities.

The Elko and Canal Flats mills will provide an additional 420 million board feet to Canfor’s annual capacity, bringing its total capacity in North America to more than five billion board feet.

The acquisition is subject to regulatory approval and is expected to be completed late in the first quarter of 2012.