Pinnacle reacts to British Columbia sawmill curtailments

By Erin Voegele | October 03, 2019

Pinnacle Renewable Energy released a statement Sept. 30 indicating ongoing sawmill curtailments in British Columbia are causing higher fiber, maintenance and repair costs at some of its facilities due to a decrease and intermittent supply of sawmill residuals and a higher supply of more expensive harvest residuals being processed at its British Columbia pellet plants. As a result, the company has lowered its guidance for adjusted EBITDA for fiscal year 2019. Pinnacle did discuss the impacts of the sawmill curtailment during its second quarter earnings call

In its Sept. 30 statement, Pinnacle said it has made progress in actively managing the availability and impact of replacement fiber for sawmill residuals in response to the sawmill curtailments and expects to make further progress in the fourth quarter of this year. However, higher cost and harvest residuals and related operating costs have continued to impact operating results into the third quarter. Pinnacle said same facility production for the third fiscal quarter was down 14 percent when compared to the same period of last year.

Pinnacle said it is continuing to make operational changes to mitigate the current impacts of the sawmill curtailments. This includes upgrades at the Williams Lake and Meadowbank facilities to increase dryer capacity to enable the processing of a broader range of fiber sources. The company has also increased chipping and grinding units from two in 2018 to eight in 2019, allowing increased processing of harvest residuals. Pinnacle also said it is increasing fiber delivers to its British Columbia plants by 20 percent during the fourth quarter to build inventory in an effort to mitigate the impact of seasonal or maintenance-related sawmill shutdowns going forward. The company is also increasing fiber suppliers by 25 percent in the fourth quarter to improve supplier diversification.