BC Business
It’s 35 degrees Celsius in Accra on a February afternoon and former Conservative Prime Minister Joe Clark looks comfortable, despite wearing a business suit and tie in the sweltering West African heat. A frequent ¬visitor to the capital of Ghana, Clark isn’t breaking a sweat. His B.C.-based company, Clark Sustainable Resource Developments (CSRD), is on the verge of signing a deal with the government here to log hardwood trees submerged at the bottom of Lake Volta. With a small Canadian and Ghanaian convoy in tow, Clark is driven from his hotel through the congested streets of Accra to attend a signing ceremony. The deal could see Clark’s company mop up hundreds of millions in revenues for test-driving underwater tree-harvesting technology in tropical waters. He hasn’t yet found a partner who can bring the necessary technology to the table, but Clark is confident that Canadian-made and operated machinery will eventually tackle this project in a joint venture with CSRD.
The Republic of Ghana’s main water body, Lake Volta, is 25 kilometres wide and extends 450 kilometres upstream behind Akosombo Dam, which produces electricity for Ghana and its neighbouring countries. The lake is also used for fishing and transportation, and provides water for domestic and industrial use.
But this lake’s bounty runs deeper. Southern Ghana contains forests of tall and valuable West African hardwoods such as mahogany, odum and ebony. Ghana’s savannah is also home to shea trees, acacias and baobabs. They can all be found in the drowned forest beneath the surface of Lake Volta. Deprived of oxygen, which fuels the normal decay process, and protected from insects and bacteria that cannot exist underwater, the hardwoods have retained their saleability.
Surprisingly, neither the Ghanaian officials nor Clark’s team are willing to speculate how many trees are at the bottom of the lake or what their market value might be. However, a study conducted in 2001 by an American company vying for the same contract estimated that each tree represented a wholesale value of US$60,000. The same study claimed that because of the size of the lake, it would take more than 120 years to exhaust the underwater forest of hardwoods.
Clark and his team say they have never seen that study. They have seen the Ghanaian government’s own geographical assessments of the lake, although the public has not been made privy to those. As Vancouver Island resident and the president and CEO of CSRD, Wayne Dunn, points out, “the areas were flooded in ’63 to ’65 before there were detailed forestry maps. We know that some of the lake has commercially valuable timber and that some of it stretches into the savannah where commercial logging, even on land, isn’t feasible.”
Clark and Dunn plan to undertake a new inventory now that their company has signed a contract, which consists of a multi-year, two-phase project slated to begin after a year of mobilization and planning. According to the agreement, once the harvesting, processing and marketing of Lake Volta timber is ¬underway, Ghana will receive 20 per cent of the wood, while 80 per cent will go to CSRD. Ghanaian concessions to mining companies are similar, according to one government official.
So what is Clark’s estimate of the timber’s value? It’s worth tens of millions of dollars, he says, but he won’t name an exact figure. “The reality is that there is now the likelihood of a way to get at the very substantial value that is in the lake,” he offers during an interview at a press conference in Accra. This is his first private business venture in Africa, and while he’d like to do more work like this all over the world, he’s got a lot to do first in Ghana. One of the real advantages for Clark is that he has big-name recognition; that is what convinced the government to do this deal. Dunn says Clark’s “leadership role on the anti-apartheid campaign, including as chair of the Commonwealth Committee of Foreign Ministers on Southern Africa, is well-known and remembered.”
The challenge for Clark (a resident of Brennans Hill, Quebec, an hour’s drive from Ottawa) will be to find someone who has the technology to make his tropical log salvage plan a reality – and he’s trolling around B.C. to find just that. In addition, he must deal with all sorts of other complications, including the fact that Ghana has instated strict timber export limits.
For now, Clark’s plan is steadily moving forward. He tells a captive audience of Ghanaian politicians, bureaucrats and reporters gathered at the Ministry of Energy offices that his company has found a way to get at the trees under the lake with environmentally sound methods. “Part of our job is going to be to determine the applicability of Canadian technology to the Ghanaian situation,” he proclaims as the heads of the Volta River Authority (VRA), the Ministry of Energy and the Ministry of Harbours and Railways listen attentively.
The VRA held an open tender in 2003 to select contractors to remove the trees, but it rejected all the bidders because of inappropriate financing and technology. CSRD put in a bid that same year, and was chosen ¬because the company is expected to have access to cutting-edge technology in Canada, and because it is seeking financing from the private sector.
CSRD probably knows a lot more about the quality and nature of trees than it’s letting on. Former British colonial rulers and the VRA kept pretty good records. However, the Ghanaian government is keeping the document of the agreement with CSRD confidential until it passes before its parliament sometime this year. [pagebreak]CSRD anticipates the first phase of its joint venture will extend from November this year to February 2009, and will cost $10 to $20 million. It will cover adapting and testing technology, acquiring operating equipment, sampling and inventory and some initial ¬harvesting. CSRD has not yet raised the ¬capital for this phase, which is considered high risk because it involves developing and testing new technology. Clark and Dunn ¬expect international development banks and private investors to come on board now that CSRD has signed an agreement with the ¬government of Ghana.
Clark met his company’s president, Wayne Dunn of Mill Bay, Vancouver Island, five years ago in Calgary, at a conference on South Africa sponsored by the Canadian Council on Africa. The conference addressed the application of corporate social responsibility in developing countries. Dunn, who is married to a Ghanaian, brought the Lake Volta logging proposal to Clark.
Widely respected for his engagement with the Third World, the Saskatchewan-born Dunn has received international awards for his work in extractive industries in ¬developing countries. His accolades include being the first private-sector winner of a World Bank Development Innovation Award, receiving the Nexen Award for Excellence in Corporate Social and Ethical Responsibility, and the People’s Choice Award from the World Bank Development Marketplace.
Although Dunn is a Stanford Sloan Fellow with a Master of Science in Management from the graduate school of business at Stanford University, he never graduated from high school. He logged as a teenager in Saskatchewan, and later worked in the early ’90s as a consultant for BC Hydro in HR restructuring. While there, Dunn learned about harvesting timber in flooded reservoirs.
In 1996, he started his own consulting company, Wayne Dunn & Associates. He first heard of the underwater trees in Lake Volta in late 2004, after reading Ghanaian press coverage of boating accidents attributed to the stumps. A few months later he presented the idea to Joe Clark, who was just the guy he needed on board to sell his plans to the locals. In 2005, CSRD was registered as a private company in B.C.
Fast-forward to February of this year. Confronted by a former Canadian prime minister, the Ghanaians in the room are spellbound. Clark, who is a director of the Canadian Council of Africa, might as well be Canada’s sitting prime minister.
“There are elements that are relevant in Ghana,” continues Clark. “One of them is safety.” Boating accidents on the lake regularly occur when overcrowded vessels collide with the underwater trees.
“It is relieving to know that someone has eventually come to our aid to help us procure financing and technology for the extraction of the tree stumps from the lake. This will improve the safety of boats on the Volta Lake,” says Joshua Ofedie, CEO of the VRA, of the agreement with CSRD to remove the trees. Indeed, during a recent ferry ride across Lake Volta, trees are visibly protruding from the water; it’s clear why an American harvesting proposal called this lake “the Fort Knox of Ghana.”
About 50,000 passengers commute across the lake each year via ferries, and more than 20 tonnes of cargo are transported by boat annually.
The dangers of crossing the lake became painfully clear this April when an overcrowded ferry and four canoes struck underwater trees and capsized. More than 100 people were killed in the disaster. Professor Mike Oquaye, Ghana’s minister of energy (now minister of communications), says whether it’s to save lives or harvest profits, the country’s president directed “that every effort should be made to secure foreign support to remove the underwater trees.” And so the history and specifics of the deal unravel. But why Clark? Why Dunn? Why now?
Clark refuses to name names, but says CSRD is working with two Canadian companies that have technology to cut trees at the bottom of the lake using remote-controlled submarine and mechanical harvesting technologies. When first interviewed for this story, Clark indicated that one of the companies was Triton Logging Inc., a B.C. firm that began making waves in the underwater logging business in 2002 when it launched its remotely operated submersible – the Sawfish – in Ootsa Lake in northern B.C.
However, when contacted at the firm’s Victoria headquarters this spring, Triton spokesman Jim Hayhurst said talks with CSRD were off. Dunn later confirmed that his company is now in negotiations with other potential partners. He would not say why discussions with Triton collapsed.
Clark says other Canadian companies have different technologies that might be ¬better suited to the heavier trees in Ghana. “The question as to the technology we use is still up in the air,” he says. “That’s partly because we are still looking around.” Dunn elaborates: “There are companies and technologies that are working in Canada now but they are dealing with smaller trees and much less weight and density… Rather than try to simply retrofit new requirements onto existing technology, we are working on an approach that is designed specifically for tropical hardwoods.” Meanwhile, CSRD is working on an environmental impact study for the project.
The Canadian high commissioner to Ghana, Donald Bobiash, says the signing of this contract benefits Canada-Ghana relations. Innovative Canadian technologies will be put to work and their application will make Lake Volta a safer place, he said, adding that the economic development of underwater timber will also create jobs for the local economy and huge export opportunities. The signed agreement also states that any minerals, precious stones, historical and cultural artifacts found in the lake are the property of Ghana.
Back in Accra, after the deal is signed that day in February, a smiling Clark leaves with a small entourage to attend a corporate social responsibility seminar sponsored by the Canadian High Commission. But not everyone in Ghana is happy about his new flair for dealmaking.
Kofi Coomson, publisher of The Chronicle daily newspaper in Accra, strongly opposes the agreement. During an interview at his home a week after the signing, Coomson says that Ghana’s underwater timber is being undersold. He’s furious that Ghana will receive just 20 per cent of the underwater timber recovered. “We’ve had instances in this country where Ghanaian companies representing foreign interests give us the wrong end of the stick in deals that end up leaving us more impoverished.”
His newspaper has published several stories openly challenging the transparency and due process of the VRA’s dealings with Clark’s company. The Chronicle has also gone to court in the past to oppose measures that Coomson feels go against the public and national interest. The publisher says accountability is his primary concern regarding the sale of Ghana’s assets. “Anything that smacks of malfeasance gets my back up.”
“Documents I received from disgruntled staff at the VRA claim that several foreign companies previously estimated the timber value in the billions of dollars,” he says. Coomson doesn’t believe that the bid was even put to tender. Ghana, not Clark’s ¬company, should get the 80 per cent, he adds. [pagebreak]“Mr. Clark should do the right thing, and he needs to start now. Ghana’s interests should come first, and Mr. Clark’s personal interests come second.” Officials at the ministry of ¬energy say they are looking into Coomson’s allegations of malfeasance.
Wayne Dunn says the 80/20 split takes into consideration the substantial investment and high risk inherent in the venture. He adds that the bidding process was open and transparent, and conformed to Ghanaian law. Two companies apparently responded; one was selected but it showed no further interest and the process was abandoned. CSRD subsequently approached the VRA for the right to conduct a demonstration study and to harvest and process the timber.
Dunn says the project will involve developing a new industry on the ground in Ghana, and financing its inception. “There is a growing recognition, in Africa and elsewhere, that there are some business projects that the private sector can build and manage better… Our agreement requires us to raise all of the financing for this and doesn’t place any financial responsibility on the government of Ghana or the Volta River Authority.”
Joe Clark’s business in Ghana is far from over. Questions linger: Is 20 per cent of the profits equitable for a developing country struggling to make efficient use of a limited resource? Is the government attributing boating accidents to collisions with sunken trees as a way to overlook government neglect of safety standards?
Still, Clark has certainly made an impression on this small West African country. As Coomson observes, “I think it’s mainly ¬because he’s a former prime minister. The Ghanaian government is awestruck by this former Canadian prime minister.”
Harvesting profits: B.C. leads the way – by David Jordan
Chris Godsall believes he has seen the future of forestry, and it involves uniting B.C.’s logging heritage with cutting-edge underwater technology.
“My job was to marry the two,” says Godsall, founder and president of Victoria-based Triton Logging. “It wasn’t a marriage of love,” he adds. “It was an arranged marriage.”
Triton is currently harvesting trees from the bed of B.C.’s Nechako Reservoir, which was flooded by Alcan in the 1950s to power the Kitimat smelter, and Godsall aims to take his technology global. Triton has completed planning work for a project in Missouri and recently submitted a report to Forestry Tasmania.
Godsall comes to under¬water logging from the forestry side. He was working for a log salvage company in 2000 when he had a brainstorm: rig a chainsaw to a remotely operated submarine. He pitched the idea to his employers, who told him he was crazy. So he started his own company.
Godsall isn’t the first B.C. entrepreneur to dream of reaping the bounty of the world’s flooded forests. At about the same time that he founded Triton, Vernon’s Aquatic Cellulose was trumpeting an agreement to log the floor of a reservoir behind Brazil’s Tucurui dam. Founder Gary Ackles touted the environmental benefits of harvesting the world’s lake bottoms instead of its living forests, citing the US$650 million in rare hardwoods waiting to be scooped from the floor of the Brazilian reservoir. Although his company had yet to earn a dime, he was quoted in the Vancouver Sun at the time claiming that Aquatic Cellulose would be profitable within a year, and that thanks to the world’s nearly endless supply of underwater lumber, the company would one day have billions of dollars in timber reserves. It didn’t take long for the dream to get axed. The log salvaging operation went bust in 2003 and today Aquatic Cellulose is a shell company trading on the Over-the-Counter Bulletin Board exchange at less than a penny a share.
Godsall believes the breakthrough that will distinguish Triton from previous failed ventures is the use of airbags as a relatively cheap way of raising cut logs to the water’s surface. Underwater trees sink when cut, and previous salvage ventures used the same machine that cut the trees to deliver them to the surface. It would never be economical to have a multimillion-dollar submarine spend most of its day ferrying logs to the surface, Godsall concluded.
Triton didn’t have to reinvent the wheel: underwater saws are commonplace in underwater log salvaging, and airbags are often used to float sunken ships. The key to Godsall’s venture was to unite the two in a remotely operated submarine. And for that, he found a deep pool of expertise.
This province has a worldwide reputation for know-how in submersible systems, thanks to pioneers such as Phil Nuytten, principal owner of North Vancouver’s Nuytco and its sister company Can-Dive Construction. Godsall also points to such outfits as OceanWorks International Corp., another North Vancouver company that supplies commercial and military clients around the world with diving systems and underwater tools. And on Triton’s home turf, International Submarine Engineering Ltd. in Victoria has built more than 200 undersea vehicles and 300 robotic manipulators. In nearby Sydney, the Institute of Ocean Sciences has its own under-water vehicle dedicated to researching B.C. waters. “Our greatest attribute was our ability to attract amazing people from the marine technology sector and the forestry sector in British Columbia,” Godsall recalls. “Many of these people became investors in Triton and became employees with Triton.”
He points to the example of Norm Keevil, third-generation namesake of the founder of mining giant Teck Cominco. The UBC engineering grad was an early investor in Triton, and today oversees systems development for Triton as VP of engineering. Currently, Triton owns one Sawfish submarine and has two second-generation models in production. The latest model carries a 54-inch chainsaw capable of felling an underwater tree in three minutes. Thanks to a payload of 50 airbags, it can harvest that many trees before resurfacing.
The technology doesn’t come cheap: a Sawfish costs anywhere from $600,000 to $3 million depending on horsepower and the types of trees to be harvested.
Godsall estimates that five billion board feet of high-quality timber are waiting to be harvested from B.C. lakes.
Triton’s biggest project to date has been at Ootsa Lake in northern B.C., where the company has been salvaging trees from the bottom of the reservoir created when Alcan built the Kenny dam in the 1950s to power its Kitimat smelter. Godsall expects to harvest 4,500 underwater trees this year.
Triton has provided consulting services in the U.S. and in Tasmania, but has never operated Sawfish outside of B.C. Godsall sees 2006 as the company’s breakthrough year. It recently raised $5 million in private equity, and he expects Triton to break into the black by year-end.