Cycling to Success

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C A N F O R C O R P O R A T I O N

Sustainable Products for the WorldBuilding New Markets and Sustainable Success for Forest Communities Across BC

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ABOUT CANFOR

15 sawmills in Canada4 sawmills in US50.2% interest in Canfor Pulp

Canfor Employs:4,690 Employees2,200 Contractors

Plateau Sawmill Employs:49 Salary Employees290 Hourly Employees

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Sustainable Operation in a Global Context

World population– 6 billion in 2000– 7 billion in 2010– 8 billion in 2020– Over 20 years, an additional 2 billion people

Countries around the world are focused on how to supply housing, energy and sustenance with the least impact on the planet– Tremendous opportunity for wood products– Forest-rich communities poised for sustained prosperity

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Cycling to Success

Forward looking strategy and planning for success can reduce cyclical impacts on operations, communities

For Canfor Plateau, this has meant:– Maintaining top safety performance. Sustainable jobs

and communities starts with keeping people safe. – Maintaining Plateau’s top quartile performance. Top

quartile mills can operate even when market demand low.

– Sustainable forest management; involves Canfor and key contractors; maintains preferential access to key markets.

– Developing diversified markets, so that we remain committed to but not entirely reliant on the US.

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CANFOR’S MAJOR MARKETS

Then: 80% US 10% Domestic 7% Asia 3% Europe and other

Now 45% US 40% Asia 10% Domestic 5% Europe and other

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US MARKET

The United States has traditionally been our largest market, and will remain central to Canfor in the future– World’s largest and most dynamic economy– Many key Canfor customers– Our closest neighbour

But, many reasons to diversify markets– Good business practice– In most cases, balances out regional economic cycles– Long term US softwood lumber trade dispute and

associated costs

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ASIAN MARKETS

Japan has been an important market for Canfor for more than 40 years and will remain important going forward– Premium market with a strong preference for higher-grade

lumber– Mature in terms of single family housing demand and

population growth– Significant growth opportunities in

– Green building– Non-residential applications– Elderly care facilities for Japan’s aging population

– Canfor is working with long term customers on how to assist reconstruction efforts from earthquake, tsunami disasters

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Sendai Japan

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Sendai Japan

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CHINA MARKET DEVELOPMENT

Canfor was the first BC company into China, beginning in 2000

Within a few years, Canfor joined by other BC companies and the BC Government

Canfor’s pursuit of China acted as a catalyst for government market development initiatives, which brought about $6 million / year to building the Chinese market for forest products

When we began, China did not build with wood nor have the – regulatory framework– architectural capacity or– building trades knowledge to build with wood

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CHINA MARKET DEVELOPMENT

Collective efforts have involved– Promotion– Regulatory work– Technology transfer– Government relations– Demonstration

Early on, established the “Canfor College” – Wood design, building training

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NAME_2010 C A N F O R C O R P O R A T I O N

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Tremendous Success for Canfor and BC

May and June exports to China surpassed exports to the United States

30% of Canfor’s total sales Widespread use of wood in

– Concrete forming– Remanufacturing– Roofing– Early uptake in wood

construction

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What Comes Next in China

The knowledge base for wood use has been established Now BC’s market development efforts can focus on the

highest-growth opportunities:– Supporting major developers / builders to implement

wood frame construction– Affordable housing low-rise apartment projects

envisioned in China’s 12th 5-Year Plan As China adopts the use of wood in construction, the

potential for lumber demand is immense.– Over the last 10 years, 218 million Chinese moved from

rural to urban areas – almost 7 times the entire population of Canada. All of them need somewhere to live.

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Into the Future

INDIA– 10 or more years away from significant demand

– But so was China in 2000– Canfor will be joining BC reps on Premier Clark’s

mission in November KOREA

– Small but growing market– Well-developed understanding of green merits of wood

MIDDLE EAST / NORTHERN AFRICA– Preliminary investigations into market opportunities

here

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WHAT THIS MEANS FOR BULKLEY-NECHAKO

Diversified markets and a nimble marketing infrastructure positions Canfor and our communities for stability

Chinese demand– Kept mills operating that would have faced curtailment

due to the US housing market collapse– Kept upward pressure on price– Kept people working, at the mill and across our supplier

network

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THE FUTURE IS BRIGHT

Demand for wood products world-wide is growing– Wider recognition of the environmental merits of

wood use– Growing world population needs sustainable

resources, products– Forest-rich communities with proven

environmental credentials are well positioned for sustained prosperity

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THE PATH AHEAD

Economic sustainability involves working together Business has a role to play Governments at all levels have a role to play

– Sound business hosting conditions– Support for market development– Support for labour force attraction and retention– Maintenance of strong communities and a great place

to live for employees, contractors and suppliers To date, the collaboration between industry and

government at all levels has created tremendous opportunities and flow-through benefits to communities like Vanderhoof

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THANK YOU

Questions?