Tembec cited the high dollar and weak markets for lumber in announcing the temporary closure of sawmills in Ontario and B.C. (CBC)Forest-products company Tembec on Friday announced the shutdown of some of its sawmills, the company's third shutdown announcement this month.

It will temporarily close all four sawmills in northern Ontario, affecting 500 employees for varying lengths of time.

It also confirmed that two B.C. sawmills will be idled.

"These shutdowns are a consequence to the rapid and significant appreciation in the value of [the] Canadian dollar, continued weak markets for lumber, and the related need to manage inventories and working capital," Dennis Rounsville, president of the forest products group, said in a news release.

In B.C., the affected operations are the Elko and Canal Flats mills, which will close for a minimum of three weeks starting June 15.

In Ontario, the idled mills are in:

• Kapuskasing, shut for a week beginning July 6.
• Chapleau, shut for three weeks beginning June 29.
• Cochrane and Hearst, both shut for six weeks beginning June 22 and July 6 respectively.

The six mills have a total annual capacity of a billion board feet a year, 550 million in Ontario and 450 million in B.C.

The 500 employees affected in Ontario include mill and forestry workers.

'Black liquor' hits pulp operation

On Thursday, Tembec said it was closing its pulp mill in Skookumchuck, B.C., for at least two weeks, beginning the week of June 29.

The majority of the 285 employees at the mill will be affected. The company will consider whether to extend the shutdown week by week.

It blamed the high dollar, the poor pulp market, the lack of economically priced fibre and a massive U.S. subsidy to U.S. pulp mills for the shutdown.

"The black liquor tax credit available to U.S. producers was absolutely a factor in this decision. It has allowed chemical pulp capacity that would otherwise be uneconomic to either remain in operation or be brought back into production, resulting in a material distortion in the pulp market in terms of both the supply/demand balance and pricing," James Lopez, Tembec president and CEO, said.

"In the absence of an offsetting measure to allow Canadian producers to level the playing field, our industry and its employees will continue to pay the price through mill idlings and closures."

The Tembec mill in Pine Falls, Man., makes newsprint. (CBC)The federal government, forestry industry and unions and other countries with big forestry operations have been pushing the U.S. to end the subsidy.

In early June, Tembec said it would close its Pine Falls, Man., newsprint plant for at least three weeks, starting June 16, affecting about 300 employees.

"Market and operating conditions remain challenging for North American newsprint producers, driven by the significant decline in demand for newsprint," said Chris Black, president of the paper group.

The company expects to lose production of at least 11,000 tonnes of newsprint.