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Parent company of Lavington plant has a monopoly on B.C. pellet industry, organizations say

A letter has been sent to the Competition Bureau of Canada calling for an investigation into Drax Group
Lavington and Coldstream firefighters respond to a fire at the Pinnacle pellet plant on School Road in March 2016. (File photo)

The parent company of a Lavington pellet plant is the subject of a proposed monopoly investigation.

Drax Group is a British firm that has owned Pinnacle Renewable Energy since February 2021. On Feb. 16, the Canadian Centre for Policy Alternatives and Conservation North sent a letter to the Competition Bureau of Canada calling on them to investigate what they call a monopoly Drax holds over the B.C. wood pellet industry.

Drax directly controls or is a partner in seven of the province’s 13 pellet mills, controlling two thirds of the nearly 2.5 million tonnes of pellets produced in B.C. each year, which the organizations say justifies an investigation.

The letter was issued after Drax acquired $675 million in sales contracts from Pacific Bioenergy, B.C.’s second-largest pellet producer, late last year. Days later, Pacific Bioenergy announced it will close the facility in March, costing 55 jobs.

“We are obviously extremely concerned at the impact the closure will have on our members and their families. But we are equally concerned about Drax’s stranglehold on B.C.’s wood pellet industry and what it may mean for our forests and forest industry workers in the months and years ahead,” said Gary Fiege, president of the Public and Private Workers of Canada, which represents workers at the Pacific Bioenergy plant.

Drax operates the world’s largest biomass thermal electricity plant in the U.K. that burns 10 million tonnes of wood pellets annually. The company claims the pellets it burns are from waste or “residual” wood chips and sawdust from lumber mills, but the organizations calling for an investigation say the pellet industry in B.C. is in fact cutting “hundreds if not thousands” of trees in the province and turning them into pellets each year.

“We are deeply troubled by evidence of massive numbers of whole logs being chewed up at Drax operations. Drax’s monopoly should be reviewed immediately by Canada’s Competition Bureau,” said Conservation North director Michelle Connolly, adding a call for the B.C. government to appoint an independent expert to assess how many logs per year are being consumed by Drax operations.

Drax’s manufacturing capacity in B.C. is nearly 1.6 million tonnes per year, about 64 per cent of the nearly 2.5 million tonnes of capacity in the province’s pellet industry. Canada-wide, Drax now controls 44 per cent of all pellet production.

“We think that level of control is unhealthy. Not only does it stifle competition, but it further entrenches a company that generates among the fewest number of jobs per unit of wood processed of any sector in Canada’s forest industry,” said Ben Parfitt, CCPA resource policy analyst.

READ MORE: British firm Drax bids to buy B.C.-based pellet maker Pinnacle

READ MORE: Parent company of Lavington pellet plant donates $50K for B.C. flood relief

Brendan Shykora
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Brendan Shykora

About the Author: Brendan Shykora

I started as a carrier at the age of 8. In 2019 graduated from the Master of Journalism program at Carleton University.
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