Potlatch won’t build sawmill at tree farm

Potlatch Corp. has scrapped plans to build an $8 million sawmill at its tree farm in Boardman, Ore., and will instead recruit an outside firm to construct and run the mill.

The project “is best suited for a company with deeper hardwood manufacturing and marketing experience,” said Michael Covey, Potlatch’s president and chief executive officer.

Acting as the merchandiser for the logs is also a better fit for Potlatch’s recent conversion to a real estate investment trust, or REIT, Covey said.

If Potlatch processed the logs through a non-REIT manufacturing subsidiary, the company would end up paying higher taxes.

The fast-growing poplars produce a clear-grained wood that could be used for lumber, veneer or engineered wood products, according to the company. Spokane-based Potlatch started planting the 17,000 acres of irrigated poplars in the early 1990s, with the intent of using the wood chips to feed its pulp and paper mills.

At the time, prices for wood chips were expected to rise. When the price-hike failed to materialize, Potlatch began searching for other uses for the higher-valued poplars.

The poplars reach harvestable size in 11 years. The farm will produce about 350,000 tons of logs each year, and should contribute about $8 million to $10 million annually in cash-flow to the company, Covey said.

In related remarks, Covey said Potlatch will increase logging on its Idaho lands by about 25 percent over the next five years. Most of the additional logs harvested will be sold to outside customers.