About the Category 2 Licence Programme
Under the Category 2 licence programme in British Columbia (BC), companies approved by the Government are eligible to bid for timber sales on plots of land that are issued by the Government’s British Columbia Timber Sales Programme (BCTS). The Category Two Licence program is based on a well-established and legislated process.
Existing Category 2 Licence
Drax has one remaining Category 2 Licence (A0670) which will end in May 2025. Pinnacle Renewable Energy Inc. bid on the licence in March 2021, prior to Drax taking full control of the business.
In the case of Drax’s one remaining Category 2 Licence, Drax as the licence holder retains overall responsibility, however Drax has a power of attorney (POA) in place where all harvesting obligations become the responsibility of the lumber supply/sawmilling company that holds the POA. This transfer of liabilities and obligations is permitted by BCTS.
It is the lumber supply/sawmilling company which oversees the harvesting and sorting processes of the forest material.
We have arrangements with the lumber supply/sawmill company we work with to supply us with sawmill residuals – sawdust, chips and bark, harvesting residues and low grade roundwood, which is used to produce wood pellets in exchange for the rights to the timber. The economics of the wood pellet industry do not facilitate the use of sawmill quality logs for biomass and that is not the material that we source.
Drax’s name stays on the licence’s paperwork because the company is the bid winner. As such Drax retains overall responsibility for meeting the conditions of the licence agreement and monitors compliance of the lumber supply/sawmill company to the POA. However, Drax does not directly undertake any harvesting activity.
Part of the A0670 licence area was designated as OGDA by the BC Government in November 2021, six months after Drax acquired the Category 2 licence in May 2021. Drax made the decision in October 2023 to stop sourcing wood fibre directly from OGDAs and has not and will not take any material directly from this licence area, or any others which are designated as OGDA.
This final remaining Category 2 licence held by Drax (A0670) was due to expire in May 2024; it was extended to May 2025 in order to fulfil the terms of the licence to the BC Government and Drax’s sawmill/lumber supply partner. Upon completion of licence A0670, Drax will not hold any current Category 2 licences and will not be bidding on anymore in the future.
Why is Drax’s name on the remaining Category 2 licence?
The licence is in Pinnacle Renewable Energy Inc.’s name, which is a Drax company in Canada. The Drax company name stays on the licence’s paperwork because the company is the bid winner and as the licence-holder Drax retains overall responsibility for meeting the conditions of the licence agreement. This does not mean Drax directly undertakes any harvesting activity. Drax is not directly involved in the harvesting or sorting process. Drax has a power of attorney (POA) in place where all day-to-day harvesting obligations become the responsibility of the lumber supply/sawmilling company that holds the POA. This transfer of liabilities and obligations is permitted by BCTS.
Will Drax take material from the remaining Category 2 Licence?
Drax has not and will not take material directly from this licence area. We receive sawmill residuals – sawdust, chips and bark, from the lumber supply/sawmilling partner that sourced sawlogs from the area.
We also have an arrangement with the lumber supply/sawmilling company which involves us taking material from them, including forest and secondary residues and low grade roundwood, however this material will not be sourced from this specific site.