Sustainable Products for the World

1. Sustainable Products for the World Building New Markets and Sustainable Success for Forest Communities Across BC

2. ABOUT CANFOR • 15 sawmills in Canada • 4 sawmills in US • 50.2% interest in Canfor Pulp • Canfor Employs: • 4,690 Employees • 2,200 Contractors • Plateau Sawmill Employs: • 49 Salary Employees • 290 Hourly Employees

3. Sustainable Operation in a Global Context • World population • 6 billion in 2000 • 7 billion in 2010 • 8 billion in 2020 • Over 20 years, an additional 2 billion people • Countries around the world are focused on how to supply housing, energy and sustenance with the least impact on the planet • Tremendous opportunity for wood products • Forest-rich communities poised for sustained prosperity

4. Cycling to Success • Forward looking strategy and planning for success can reduce cyclical impacts on operations, communities • For Canfor Plateau, this has meant: • Maintaining top safety performance. Sustainable jobs and communities starts with keeping people safe. • Maintaining Plateau’s top quartile performance. Top quartile mills can operate even when market demand low. • Sustainable forest management; involves Canfor and key contractors; maintains preferential access to key markets. • Developing diversified markets, so that we remain committed to but not entirely reliant on the US.

5. CANFOR’S MAJOR MARKETS Then: • 80% US • 10% Domestic • 7% Asia • 3% Europe and other Now • 45% US • 40% Asia • 10% Domestic • 5% Europe and other

6. US MARKET • The United States has traditionally been our largest market, and will remain central to Canfor in the future • World’s largest and most dynamic economy • Many key Canfor customers • Our closest neighbour • But, many reasons to diversify markets • Good business practice • In most cases, balances out regional economic cycles • Long term US softwood lumber trade dispute and associated costs

7. ASIAN MARKETS • Japan has been an important market for Canfor for more than 40 years and will remain important going forward • Premium market with a strong preference for higher-grade lumber • Mature in terms of single family housing demand and population growth • Significant growth opportunities in • Green building • Non-residential applications • Elderly care facilities for Japan’s aging population • Canfor is working with long term customers on how to assist reconstruction efforts from earthquake, tsunami disasters

8. Sendai Japan

9. Sendai Japan

10. CHINA MARKET DEVELOPMENT • Canfor was the first BC company into China, beginning in 2000 • Within a few years, Canfor joined by other BC companies and the BC Government • Canfor’s pursuit of China acted as a catalyst for government market development initiatives, which brought about $6 million / year to building the Chinese market for forest products • When we began, China did not build with wood nor have the • regulatory framework • architectural capacity or • building trades knowledge to build with wood

11. CHINA MARKET DEVELOPMENT • Collective efforts have involved • Promotion • Regulatory work • Technology transfer • Government relations • Demonstration • Early on, established the “Canfor College” • Wood design, building training

13. Tremendous Success for Canfor and BC • May and June exports to China surpassed exports to the United States • 30% of Canfor’s total sales • Widespread use of wood in • Concrete forming • Remanufacturing • Roofing • Early uptake in wood construction

14. What Comes Next in China • The knowledge base for wood use has been established • Now BC’s market development efforts can focus on the highest-growth opportunities: • Supporting major developers / builders to implement wood frame construction • Affordable housing low-rise apartment projects envisioned in China’s 12th 5-Year Plan • As China adopts the use of wood in construction, the potential for lumber demand is immense. • Over the last 10 years, 218 million Chinese moved from rural to urban areas – almost 7 times the entire population of Canada. All of them need somewhere to live.

15. Into the Future • INDIA • 10 or more years away from significant demand • But so was China in 2000 • Canfor will be joining BC reps on Premier Clark’s mission in November • KOREA • Small but growing market • Well-developed understanding of green merits of wood • MIDDLE EAST / NORTHERN AFRICA • Preliminary investigations into market opportunities here

16. WHAT THIS MEANS FOR BULKLEY-NECHAKO • Diversified markets and a nimble marketing infrastructure positions Canfor and our communities for stability • Chinese demand • Kept mills operating that would have faced curtailment due to the US housing market collapse • Kept upward pressure on price • Kept people working, at the mill and across our supplier network

17. THE FUTURE IS BRIGHT • Demand for wood products world-wide is growing • Wider recognition of the environmental merits of wood use • Growing world population needs sustainable resources, products • Forest-rich communities with proven environmental credentials are well positioned for sustained prosperity

18. THE PATH AHEAD • Economic sustainability involves working together • Business has a role to play • Governments at all levels have a role to play • Sound business hosting conditions • Support for market development • Support for labour force attraction and retention • Maintenance of strong communities and a great place to live for employees, contractors and suppliers • To date, the collaboration between industry and government at all levels has created tremendous opportunities and flow-through benefits to communities like Vanderhoof

19. THANK YOU • Questions?