The most important number in Domtar’s planned indefinite idling of the Howe Sound pulp mill may not be 400.

It may not even be the approximately 380,000 metric tonnes of annual northern bleached softwood kraft pulp capacity expected to leave the market.

The number worth watching is how much low-value wood fibre suddenly loses a buyer if the mill stops consuming it.

That is what turns the Howe Sound situation from a pulp-market story into a much larger test of British Columbia’s coastal forest economy.

Domtar announced on August 20 that it would indefinitely idle both the Howe Sound mill and its associated Bayview Fibre chipping facility in Port Mellon. The company cited weaker Asian demand, sustained poor global pulp pricing and declining access to affordable domestic fibre. Domtar says it has invested nearly C$500 million in the operation since acquiring the mill in 2010.

Negotiations are now underway in an attempt to prevent that indefinite curtailment from becoming something more permanent. Former senior B.C. civil servant Don Wright and former Canfor president and CEO Don Kayne have been brought into discussions with Domtar.

But even if a temporary solution can be found for Howe Sound, the underlying problem will remain.

A pulp mill does not operate separately from the sawmills, logging contractors and fibre suppliers around it.

And on the B.C. coast, that relationship is becoming increasingly difficult to balance.

The apparent contradiction in B.C.’s fibre crisis

At first glance, something about the Howe Sound story appears contradictory.

Domtar says the mill cannot obtain enough affordable fibre.

Yet industry consultant David Elstone warns that if the mill closes, demand for pulp logs could collapse and put additional pressure on sawmills.

How can a region simultaneously have too little economic fibre for a pulp mill and risk having too little demand for pulp-quality wood?

Because “fibre” is not one uniform commodity.

The economics change according to wood quality, species, location, processing route, transportation distance and which facilities remain available to consume different portions of the harvested tree.

A sawmill primarily wants logs that can economically become lumber.

But a harvested log does not become only lumber.

Sawmilling also produces chips and other residual material. Lower-quality logs that are unsuitable or uneconomic for lumber can also have value when pulp mills, chip plants, pellet producers or other secondary manufacturers are available to consume them.

Pulp mills therefore perform a second economic function beyond making pulp.

They provide a market for material that may have considerably less value elsewhere.

That relationship is visible in B.C. government data.

The latest detailed provincial mill report publicly available shows that in 2022, 45% of coastal chip supply came from residual chips generated by sawmills. Another 32% came from whole-log chipping and 23% from imported chips.

More importantly, the province found that coastal chip supply was already failing to keep pace with regional demand between 2020 and 2022. It warned that further lumber-mill closures and reductions in allowable harvest could tighten supply further and increase dependence on whole-log chips and imports.

Those figures predate the latest round of mill closures, so they should not be treated as a measurement of the 2026 market.

But they reveal the structure of the problem.

Sawmills help feed pulp mills with residual chips. Pulp mills, in return, help create economic value from those residuals.

Weakness on either side can therefore feed weakness on the other.

Closing a pulp mill does not create more economic fibre

This is where the Howe Sound case becomes especially important.

Removing a large pulp consumer might appear to ease competition for fibre.

In volume terms, it can.

In economic terms, the result is more complicated.

If a pulp mill disappears, sawmills and logging operations may lose an outlet for chips, pulp logs and lower-grade material. Material that previously had a customer may need to travel farther, find another processor or become less valuable.

Transportation matters particularly on the coast, where geography, water transport and long distances between industrial sites can materially affect delivered fibre costs.

The B.C. government itself describes integrated relationships between primary harvesters and secondary fibre users as the most cost-effective way of recovering residual fibre.

That means eliminating demand at one point in the system does not necessarily solve fibre economics elsewhere.

It can simply move the problem.

This is why the phrase “domino effect” deserves attention—but also caution.

Elstone’s warning that additional sawmills could become uneconomic is a scenario, not a confirmed forecast of specific mill closures.

No evidence presented so far establishes that a named coastal sawmill will close because Howe Sound stops operating.

But the mechanism behind the concern is real: removing a major residual-fibre customer changes the value equation for businesses that sell material into that mill.

Howe Sound was already more than a pulp producer

The scale of Howe Sound makes that relationship harder to dismiss.

Domtar says the mill has capacity to produce approximately 380,000 air-dried metric tonnes of NBSK pulp annually, serving applications including tissue, paper towels and fine writing paper.

Before the curtailment announcement, a Domtar fact sheet also estimated that the operation supported 910 indirect jobs and generated a C$953.8 million economic impact. Those are company estimates rather than an independent economic-impact assessment, but they demonstrate how Domtar itself viewed the mill’s role beyond its direct workforce.

The mill is also an energy producer.

Its operations use biomass-based cogeneration, and electricity economics have now entered the negotiations. Domtar has argued that a more favourable arrangement for electricity sold into the provincial system would improve the mill’s position.

That matters because modern pulp-mill economics increasingly extend beyond the selling price of pulp.

A mill can simultaneously be a fibre consumer, chemical recovery operation, steam system and power generator.

Profitability is therefore determined by a combination of pulp prices, wood costs, logistics, energy revenue, maintenance requirements, labour, chemicals, environmental compliance and capital intensity.

Solving only one of those variables may not restore competitiveness.

Nearly C$500 million of investment did not eliminate the structural problem

One of the more revealing details in Domtar’s announcement is the amount already invested.

The company says nearly C$500 million has gone into Howe Sound since 2010, alongside construction of the Bayview Fibre facility.

That makes this difficult to describe simply as an old mill failing because its equipment was neglected.

Capital investment can improve reliability, efficiency, environmental performance and operating costs.

It cannot guarantee competitive wood supply.

It cannot set global NBSK prices.

And it cannot force end-market demand to recover.

This distinction matters because industrial policy discussions often focus heavily on mill modernization.

Modernization remains important, but the Howe Sound case suggests that capital alone cannot compensate indefinitely for poor fibre economics and weak commodity markets.

A technically capable mill still needs a viable operating environment around it.

B.C. is losing pulp capacity from more than one region

Howe Sound also cannot be viewed in isolation.

Domtar permanently closed the Crofton mill in British Columbia after announcing the decision in December 2025, removing approximately 380,000 air-dried tonnes of annual NBSK capacity. The company again cited poor pulp pricing and lack of access to affordable fibre.

Then in July 2026, Canfor announced the permanent closure of its Northwood pulp mill in Prince George.

Northwood’s closure removes approximately another 300,000 tonnes of annual NBSK production and directly affects about 300 employees.

Different mills face different regional fibre systems and operating conditions, so these closures should not be treated as identical cases.

But the repeated appearance of two problems—weak pulp markets and uneconomic fibre—should concern the sector.

The B.C. government has gone further, saying inflation-adjusted pulp prices are approaching their lowest levels in a century and arguing that low-cost hardwood eucalyptus pulp is increasing competitive pressure on B.C. softwood kraft pulp. That is the provincial government’s characterization of current market conditions rather than an independently verified historical price calculation.

The distinction matters.

NBSK and hardwood kraft pulp are not interchangeable in every furnish or end use. Softwood fibre retains important strength characteristics and technical roles in many tissue, paper and packaging applications.

But customers can alter furnish ratios when economics justify it.

A softwood producer therefore does not need to be completely replaced by eucalyptus pulp to feel competitive pressure. Even partial substitution can influence demand and pricing.

The industry now faces a circular problem

British Columbia’s forest sector appears to be moving deeper into a difficult feedback loop.

When sawmills close or reduce production, fewer residual chips become available to pulp mills.

Pulp mills then rely more heavily on whole-log fibre, alternative fibre sources or longer transportation routes.

That can raise delivered fibre costs.

If pulp mills subsequently close because their economics no longer work, sawmills and logging companies lose buyers for residual chips and lower-quality material.

That can reduce the value recovered from each harvested tree.

The Council of Forest Industries made essentially this point after the Howe Sound announcement, describing pulp mills as an integral part of the forest value chain because they consume residual chips and other fibre generated elsewhere in the sector. COFI says at least 21 B.C. lumber mills have closed permanently or indefinitely since 2023.

The industry problem is therefore not simply:

How do we save a pulp mill?

It is:

How many pieces of the fibre system can disappear before the remaining pieces become materially harder to operate?

That is a much more difficult question.

The negotiations will have to solve more than pulp prices

The provincial government cannot control the international pulp cycle.

Neither can Domtar.

That means any workable Howe Sound solution is likely to depend on variables that can actually be influenced domestically.

The discussions described publicly so far include fibre availability and cost, the regulatory environment, electricity economics, continued investment in the facility and employment commitments.

Those issues reveal what is really being negotiated.

This is not simply a request to keep one production line running until pulp prices improve.

It is a negotiation over the operating conditions required for a coastal kraft pulp mill to remain economically relevant in British Columbia.

And there is an important risk here.

A short-term arrangement can postpone a closure without correcting the structural economics that caused it.

If additional fibre becomes available but remains expensive to harvest and transport, the problem remains.

If power revenue improves but pulp markets stay deeply depressed, the problem remains.

If pulp prices recover but surrounding sawmill capacity continues shrinking, the fibre problem can return.

The strongest outcome would therefore be one that improves the mill’s position across several variables rather than relying on a single temporary concession.

Whether such an agreement is achievable is not yet known.

“Indefinite” matters

There is also a difference between a temporary maintenance outage and an indefinite curtailment.

Machinery can be preserved.

But industrial ecosystems are harder to put on standby.

Experienced operators may find other jobs.

Contractors redeploy equipment.

Suppliers adjust routes.

Customers qualify alternative pulp sources.

Families relocate.

Fibre suppliers find other markets where they can.

The longer an integrated industrial operation remains idle, the more difficult the economic network around it can be to reconstruct.

That does not mean Howe Sound cannot restart.

Domtar explicitly left open the possibility of evaluating future opportunities if market conditions, fibre availability and the broader business environment improve.

But a restart requires more than turning equipment back on.

It requires the commercial relationships around the equipment to remain viable.

Howe Sound may be a test of what B.C. still wants its forest economy to be

The immediate objective is obvious: determine whether the Howe Sound mill can remain open and preserve the jobs directly tied to it.

The larger question is harder.

British Columbia has spent decades building a forest economy in which different manufacturers extract value from different portions of the same fibre stream.

High-quality logs can become lumber.

Residual chips can become pulp.

Lower-grade material can feed pulp, pellets, energy or other fibre applications.

That model works best when there are enough complementary users to create value from material that another processor does not need.

As those users disappear, the remaining fibre may not disappear physically.

Its economic value can disappear instead.

That is what makes Howe Sound worth watching beyond Port Mellon.

If the mill survives, the agreement that keeps it operating could provide clues about what B.C. believes a viable coastal pulp business now requires.

If it does not, the next important numbers may not come from the pulp mill at all.

They may come from the sawmills, logging contractors and fibre suppliers that previously depended on having a pulp buyer in the system.

For industry professionals, that is the discussion worth having now: when a regional forest economy begins losing its residual-fibre buyers, where does the pressure show up next—and what operating model can prevent the cycle from feeding on itself?

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Last Updated on 14/09/2026 by Jota Machinery