Two heads may be better than one. But one plant made more sense than two.

That was the strategy that prompted Louisiana-Pacific Corporation (www.l-pcorp.com) and Slocan Forest Products Ltd. (www.slocan.com) to recently form a 50/50 joint venture, Slocan-LP OSB Corp. The new joint venture company will build and operate a new 700 million-sq.-ft. (65.1 million-sq.-m.) oriented strand board (OSB) mill in British Columbia. The Slocan-LP OSB facility will create more than 500 direct jobs, company officials said.

Initially, Slocan and Louisiana-Pacific planned to each build a separate OSB facility in British Columbia. Instead, the two firms are combining their industry-know-how and resources. The JV's single plant will satisfy both firms' long-term supply needs, while making the most efficient use of sustainable resources in the region, company officials say.

Size and Scale of JV Mill Will
Lower Per-Unit Production Costs

"This joint venture mill will be of a size and scale to achieve very low per unit costs of production, which is a critical ingredient for successful operations in the years ahead," said I.K. Barber, chairman of Slocan Forest Products.

Slocan owns, or holds substantial interest in, wood products and pulp and paper operations in 11 British Columbia communities, which stretch from the U.S. border in the south to the Yukon border in the north. Barber will serve as president of the new Slocan-LP OSB joint venture company.

The new mill will be located in the Fort St. John area of British Columbia, and it will supply market distribution channels already in place in North America and Asia.

"Slocan is a leading Canadian forest products company and skilled operator of wood processing facilities," said Mark A. Suwyn, Louisiana-Pacific's chairman and CEO. "We are excited about our new partnership with them and look forward to breaking ground in the future."

Headquartered in Portland, Ore., Louisiana-Pacific owns almost 1 million acres (400 ha.) of timberland and operates facilities in 29 U.S. states, as well as in Canada and Ireland.

JV Facility Will Allow LP
To Redeploy Capital

Suwyn noted that the joint venture gives Louisiana-Pacific additional financial flexibility by reducing the company's investment in OSB plant expansions, facilitating the redeployment of capital into other investment opportunities.

"This joint venture presents great economic opportunities to both Slocan and its shareholders as well as the local community and surrounding area," said Barber. "Demand for OSB in residential and commercial construction is strong, and it will likely continue to outpace more traditional building materials."

Barber and Suwyn both noted that the cooperation and continued support of the provincial and community governments has been "vitally important" for the successful development of the Slocan-LP OSB joint venture.

Construction Will Take 12-18 Months

The joint venture company plans to immediately begin the environmental assessment process, company officials said. Groundbreaking and start-up dates will depend on environmental and other regulatory requirements, they added.

Once the environmental assessment process is completed, construction of the new mill should take between 12 and 18 months. The company anticipates the creation of more than 500 direct jobs in manufacturing and forestry related activities.

In addition, company officials say that facility construction will create more than 750 indirect jobs.

The Slocan-LP OSB project will annually contribute more than US$74 million to the local economy, company officials say.