Canada's Foresters See Green in China

IN the past year, Hank Ketcham, president of West Fraser Timber Ltd. in British Columbia, has given up rights to cut trees on about 750,000 acres of government-owned land in British Columbia. Much of that land is now earmarked for wilderness use. It is one of the reasons that brought Mr. Ketcham and two of his colleagues on a recent tour of the forests of southern China.

''We believe finding a lot more wood in Canada is not going to be possible,'' Mr. Ketcham says. ''If you want to have a growing forest-products company, you better go find some wood someplace, and [that's] why we're looking outside of Canada.''

As provincial governments in Canada, especially British Columbia, reduce the forests available for cutting, forest-product firms in B.C. are so desperate for wood to run their pulp, newsprint, and lumber mills that they are importing from Alaska and the province of Alberta. Some have been forced to close. Others, like Ketcham, look to China.

''The B.C. government is turning all of Vancouver Island into a park,'' says John Duncanson, exaggerating. He is a professional forester who runs his own consulting firm, Duncanson Investment Research Inc. in Toronto. His clients include forest-product companies in British Columbia and one in China.

One-third of Canada's forest-product industry (based on sales) is located in British Columbia, he says.

''Over the past 10 years the annual allowable cut has been reduced from 85 million cubic meters to 70 million,'' he says. ''And that could be cut back further to 65 million.''

The wood shortage and a high demand for paper are driving up the price of wood pulp, which is set to rise from $825 a metric ton to a record $925 in June.

What's drawing these companies to China is that the forests here (which are plantations) grow much faster because of the tropical climate than in North America.

''The major attraction to us here [in China] is that these are fast-growing plantation forests, whereas in Canada we have slow-growing natural forests,'' Ketcham says. ''Long term, we believe the future of forestry is to get into plantations in fast-growing areas.'' Ketchum is trying to determine if it's more economical to ship chips from China to his pulp and paper mills in Canada.

The two types of trees Ketchum and his crew are looking at are aspen, grown in Jiangxi province, and eucalyptus, grown in the provinces of Guangdong and Guangxi -- both of which are south of the Tropic of Cancer, about the same latitude as Cuba. Trees in these provinces grow more than five times the rate of those in the southern United States and 15 times faster than trees grown in the Pacific coast of Canada.

''This aspen is just five years old and 10 inches in diameter, and it's ready to be harvested,'' says Mr. Duncanson, adding that this wood is the cheapest in the world.

Pulling a piece of Canadian aspen from his pocket, he says, ''Compare it to this tree grown in Canada, which is five years old. It would be no more than 2 inches in diameter.''

Duncanson calculates that the cost of pulp chips delivered to a mill is $15 in China compared with $45 in Sweden and $26 in the southern US. The Chinese trees, reduced to chips to make pulp, are marketed in China, Korea, Taiwan, and Japan.

THE executives on this trip were concerned about ownership rights to trees in China, which, in spite of its economic miracles, is still a Communist country.

''We have leased these plantations from the government for 50 years, and we contract with local people to harvest and reforest for us,'' says Allen Chan, a Hong Kong-based entrepreneur who is chairman of Sino-Forest, which sponsored the tour. ''We then sell the final product, either here in China or on world markets.''

There is growing world demand for trees at a time when there are fewer trees to cut. Environmental pressures in southeast Asia have reduced clear-cutting.

''Countries such as Indonesia and Malaysia have banned the export of logs from their rain forests. It's created a wood crunch, and it's one of the reasons the Japanese, Taiwanese, and Koreans are importing chips from China in ever increasing amounts,'' Duncanson says.

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