Ladies and gentlemen, welcome to the annual general meeting of Canfor Corporation. Please note that this meeting will be recorded. I would like to introduce Michelle Ward, Vice President, Corporate Communications at Canfor. Ms. Ward, the floor is yours.
Thank you. Good afternoon, and welcome to the Canfor Corporation Annual General Meeting. Thank you for attending. I will be facilitating today's meeting. I will turn the meeting over to John Baird, who is a Director and Chairman of the Board of Canfor Corporation.
Good afternoon. It's now 12:00 P.M. Pacific Time, and I would like to ask the meeting to please come to order. I will be acting as chairman for this meeting. I'm very pleased to extend a warm welcome to all of you today for Canfor Corporation's 41st annual general meeting. Please ensure you remain connected to the Internet during the course of this meeting. If you need technical assistance, please see the section entitled Technical Assistance in the Management Information Circular respecting this meeting. This meeting is convened as an annual general meeting of shareholders and has been called for the principal purposes of receiving the consolidated financial statements for the year ended December 31, 2022, together with the auditor's report and the report of the directors to the shareholders.
Fixing the number of directors at 13, electing the directors for the upcoming year, and appointing the auditors for the upcoming year. Once we have dealt with the necessary resolutions, I will ask the President and Chief Executive Officer, Mr. Don Kayne, to make a few short remarks. I have asked David Calabrigo, Senior Vice President, Corporate Development, Legal Affairs and Corporate Secretary, to act as the secretary of this meeting. I would now like to introduce you to the other directors of Canfor Corporation joining us at this meeting. Ryan Barrington-Foote, Glen Clark, Dieter W. Jentsch, Don Kayne, Anders Ohlner, Conrad A. Pinette, Dallas Ross S. Smith, Frederick T. Stimson, William W. Stinson, Sandra Stuart, Dianne L. Watts. They have all worked diligently and effectively with the management team at Canfor, and we appreciate their wise counsel.
On behalf of the board of directors, I am very pleased to acknowledge our appreciation for the contribution that all of the company's personnel have made during the last year. With the consent of the meeting, I hereby appoint TSX Trust Company to act as scrutineer for the meeting. I will now call on Mr. Calabrigo to deal with the notice of this meeting.
Mr. Chairman, a notice calling the meeting was mailed to all shareholders of the company entitled to receive such notice. TSX Trust Company has provided us with a certificate as to the mailing, and a copy of the certificate will be kept for the records of the meeting.
Mr. Secretary, would you please summarize the preliminary scrutineer's report?
We are pleased to report that there are 78 shareholders holding 103,638,091 shares represented in attendance online or by proxy at this virtual meeting, representing 85.61% of the total issued and outstanding shares of Canfor.
As chairman of the meeting, I adopt the preliminary scrutineer's report and declare the attendance at this meeting to be as they have set forth. I direct that when delivered, the final scrutineer's report be kept with the records of this meeting. In accordance with the preliminary scrutineer's report, I declare a quorum to be present and the meeting to be duly constituted for the transaction of business. Based on the preliminary scrutineer's report, a sufficient number of proxies have been deposited with TSX Trust Company, voting in favor of all resolutions in the circular in order to pass each item of business in this meeting. I propose that we deal first with all of the formal business requirements of the meeting.
After the formal portion of the meeting has concluded, Don Kayne, the company's President and Chief Executive Officer, will say a few words regarding Canfor's financial, corporate, and ESG developments, and there will be a final opportunity for questions from registered shareholders and proxy holders, which can be submitted online and be dealt with after the presentations, after the polls close. As this meeting is being held virtually, I would like to remind you that a voting on all matters described in the management information circular for the meeting will be conducted by electronic ballot. To allow sufficient time for voting, the polls for all matters being voted on will be open following these introductory remarks and closed at the end of the formal portion of the meeting.
Only registered shareholders and duly appointed proxy holders who have properly logged in to the meeting will be able to vote at the meeting. I also remind you that if you are a registered shareholder and you have already voted by proxy, you do not need to vote again unless you want to change your vote. If you plan to vote at the meeting, you may choose to vote on each resolution immediately or wait to cast your vote until after the motion for an item is proposed. Once all items of business before the virtual meeting have been put forward, I will give registered shareholders and proxy holders an opportunity to discuss these items of business, make comments, and ask questions, and to provide one final opportunity to enter their votes on the open polls if they haven't already done so, and then declare voting closed on all resolutions.
In order to expedite the proceedings today, I will be proposing and seconding all motions, and for any motions not included in the circular, the motions will be determined based on the preliminary scrutineer's report in reliance on the discretionary authority granted in the proxies deposited for this meeting or on a poll at my discretion. I now declare the polls open on all resolutions included in the management information circular for the meeting. The first item of business is to place before the meeting the consolidated financial statements of the company for the year ended December 31, 2022, together with the auditor's report and the report of the directors to the shareholders. These statements and reports are contained in the company's annual report and are available on SEDAR or at the company upon request. I will regard the statements and reports as received by the meeting.
The next item of business is to fix the number of directors of the company. I propose that the number of directors be fixed at 13. I direct that a poll be conducted on the motion and that the scrutineer report the results. If you have already cast your vote online or by proxy, please cast your vote now. I should have said, if you haven't already cast your vote online or by proxy, please cast your vote now. The next item of business is the election of directors. I propose that the following individuals be nominated to act as directors of the company to hold office until the next annual general meeting. John R. Baird, Ryan Barrington Foote, Glen Clark, Santhe Dahl, Peter Jentzen, Don Kayne, Conrad A. Pinette, Dallas Ross S. Smith, Frederick T. Stimson, William W. Stinson, Sandra Stuart, Dianne L. Watts.
These persons are management's nominees for election, as was stated in the information circular mailed to the shareholders of the company. There being no further nominations, I declare the nominations closed. I direct that a poll be conducted on the motion and that the scrutineer report the results. If you haven't already cast your vote online or by proxy, please cast your vote now. The next item of business is the appointment of auditors, and it is the board's recommendation that KPMG LLP Chartered Accountants be appointed auditors of the company. I propose that KPMG LLP Chartered Accountants be appointed auditors of the company. I direct that a poll be conducted on the motion and that the scrutineer report the results. If you haven't already cast your vote online or by proxy, please cast your vote now. That concludes the matters to be voted on.
For those registered shareholders and proxy holders who have not yet raised matters for discussion, made comments, asked their questions, or voted on all of the resolutions for which the polls remain open, please do so now, as I will shortly close all such polls. There being no further discussion at this time, the polls on all such resolutions are now closed. I direct the scrutineer to provide a report on the results of the polls. Based on the scrutineer's initial meeting report, I declare that the number of directors of the company has been set at 13, as only the required number of persons has been nominated to be elected as directors of the company. I declare that those persons nominated have been duly elected by acclamation as the directors of the company to hold office until the next annual general meeting.
That KPMG LLP Chartered Accountants has been appointed as the auditors of the company. After the meeting, upon receipt of the scrutineer's final meeting report on the polls conducted during the meeting, I direct the recording secretary of this meeting to attach the scrutineer's final meeting report to the minutes of the meeting. All of the business for which the meeting was called has been completed. Following termination of the formal part of the meeting, Don Kayne, the company's President and Chief Executive Officer, will say a few words, and registered shareholders and proxy holders who wish to ask questions or make comments will be subsequently invited to do so. I propose that the formal portion of this meeting be terminated. Based on the preliminary scrutineer's report, I declare the motion carried and the formal part of the meeting is now terminated.
I now call upon Don Kayne, the company's President and Chief Executive Officer, to address the meeting. After Don's remarks, registered shareholders or duly appointed proxy holders can ask questions using the messaging icon at the top of the virtual interface.
Thanks, John, and good afternoon, everyone, and thank you for joining us today for Canfor Corporation's Annual General Meeting. I would like to acknowledge that today's meeting is being hosted from the Vancouver head office on the unceded territory of the Coast Salish peoples, including the territories of the Musqueam, Squamish, and Tsleil-Waututh nations. We acknowledge them and the more than 60 nations across our operating regions in BC and Alberta as an important sign of respect and a step towards reconciliation. I would like to begin my remarks by thanking Anders Ohlner as he departs Canfor's board of directors. Anders is the former executive vice president of Handelsbanken in Sweden and was a director of Vida AB prior to joining the Canfor board. His broad global experience has been instrumental to Canfor as we've grown our business in Europe.
On behalf of the Canfor team, I want to thank him for sharing his expertise and guidance with the board and management over the last three years. I also want to extend a warm welcome to our new director, Santhe Dahl. Mr. Dahl is the chair of Vida, the largest sawmill production company in Sweden, of which Canfor is very proud to own 70%. Santhe has been a key driver of Vida's growth and diversification over the last 45 years and brings a wealth of knowledge, experience, and relationships across our business. I am thrilled he has agreed to serve on the Canfor board, and I know he will be a tremendous asset as we continue to grow our business in Europe. I'm pleased to report that Canfor had another very strong year in 2022, recording our second highest earnings ever.
Although we face volatile market conditions and an uncertain political and economic landscape, we remain steadfastly focused on our long-term strategy of geographic and product diversification. I want to extend my appreciation to the entire Canfor team for maintaining a disciplined approach to advancing our strategic objectives and delivering results again this year. In particular, thank you for the sustained daily effort to put our safety-first culture above all else, ensuring that everyone gets home healthy and well at the end of each day. On behalf of the management team and board of directors, I want to thank our employees around the globe for their continued resilience, teamwork, and commitment. Canfor's vision is to be the most innovative and sustainable global resource company, delivering the highest value to our customers.
To achieve this goal, our long-term strategy is to drive to be the supplier of choice for high-value products, the employer of choice for our people, to operate sustainably from a diverse platform of geographies, and commit to grow with our world-class customer base. Over time, Canfor has built a diversified operating platform that provides the flexibility required to respond to ever-changing market dynamics and fluctuations in demand while ensuring we can continue providing customers with the low-carbon products they demand. That's why, despite the uncertainty and volatility of unfavorable lumber market conditions and global macro events, 2022 was another strong year of performance for Canfor. This year, Canfor generated operating income before adjusted items of CAD 1.3 billion and adjusted shareholder net income of CAD 880 million or CAD 7.15 per share. For the lumber segment, adjusted operating income for the year was CAD 1.4 billion, our second highest earnings on record.
This was, however, down approximately CAD 800 million from 2021, principally reflecting an 11% decline year-over-year in North American benchmark lumber pricing. An incremental asset write-down and impairment charge totaling approximately CAD 90 million was also taken in the lumber segment as a result of the announced permanent closure of the Chetwynd sawmill and pellet plant, combined with ongoing certainty with regards to economically viable timber supply within British Columbia. Canfor Corporation is also active in the pulp and paper segment through our 54.8% interest in Canfor Pulp Products Inc., and 2022 is a difficult year for Canfor Pulp. Before taking account of adjusted items, Canfor's pulp operating loss was CAD 59 million, down CAD 91 million from the adjusted operating income of CAD 32 million for the prior year.
Kevin Pankratz, President and Chief Executive Officer of Canfor Pulp, provided detail with respect to the company's financial results at its AGM earlier this morning. For additional information, the pulp AGM web conference will be available for replay in the investor section of canfor.com. With our strong results, our balance sheet and liquidity continued to be in a very healthy position in 2022, ending the year with total net cash of CAD 982 million and liquidity of CAD 2.4 billion. Unlike other market cycles, three years of record earnings have provided Canfor with the financial flexibility to maintain momentum on our strategic priorities. During 2022, we invested a total of CAD 942 million in our lumber business via acquisitions as well as other strategic capital investments across all three of our operating regions. In addition, we repurchased approximately CAD 81 million of shares during the year.
Strategic capital will continue to be deployed to improve our cost structure, advance our global diversification, and grow our production capacity. Utilizing capacity in a measured and purposeful manner will help us to bridge through the current down markets and better position us to take full advantage when the next upmarket comes. As such, we are prepared to remain patient, disciplined, and strategic until the right opportunities present themselves. We will also continue to make the right decisions for the business by proactively balancing production levels with market demand. Turning now to the ongoing softwood lumber trade dispute, we continue to pay cash deposits on Canadian lumber exports to the U.S. and at the end of 2022, we had $888 million on deposit. Canfor paid cash deposits at a rate of 19.54% for the first half of 2022 and 5.87% for the second half of the year.
On January 24, 2023, following its fourth administrative review of anti-dumping and countervailing duty orders, the U.S. Department of Commerce confirmed its intent to extend existing tariffs. Based on the preliminary rates for Administrative Review 4, Canfor's combined cash deposit rate is set to rise to 7.29% in August of 2023. Together with governments and industry partners, we will continue to defend our interests against these unfair and unjustified tariffs. I mentioned earlier that Canfor faced market volatility last year, and nowhere was this more evident than in solid wood products. During the first half of 2022, lumber prices reached near record highs, supported by strong market fundamentals and demand in the new home construction and repair and remodel sectors. However, soaring inflation and rising energy costs contributed to sharply rising interest rates and shrinking consumer buying power as the year progressed.
The result was significantly reduced demand for new home construction and a steep decline in lumber prices over the latter part of the year. Throughout 2022, offshore lumber demand in Asia also weakened. In China, the implementation of a zero-COVID strategy mid-year and the impacts of a severe summer heat wave restricted economic activity and resulted in reduced lumber demand. In Japan and Korea, lumber demand declined throughout 2022, due in part to restrictions in China, coupled with high inventory levels and inflationary cost pressures. In Western Europe and Scandinavia, lumber demand and pricing were strong through the first half of the year, driven mainly by sustained residential construction and increased activity in the European repair and remodeling sector.
However, as we saw around the globe during the latter half of 2022, the combined impact of reduced home building and lower do-it-yourself activity, again tied to high inflation and constrained consumer spending, resulted in a decline in European lumber market pricing. We anticipate the current lumber demand softness will persist in the near term, but believe long-term market fundamentals remain very strong, supported by the favorable demographic trends, pent-up demand for new home construction, and the continuing strength in the repair and remodel sector. We continue to create value by focusing on our objectives of diversification, innovation, integration, and sustainability. As such, we're continuing to prioritize reinvesting in our business to maintain top-quartile assets while ensuring financial flexibility and strategically targeting external growth. In 2022, we made considerable progress on several strategic initiatives.
In Alberta, we completed the acquisition and integration of three former Millar Western solid wood operations and associated forest tenure into our Wood Products Canada business in 2022. This included two sawmills and a high-value specialty millworks facility, which added 630 million board feet of production capacity and access to high-quality Spruce-Pine-Fir in Alberta. This acquisition is helping to ensure that we maintain a strong foothold in Western Canada, and these assets quickly began delivering benefits to key strategic markets, generating higher, more stable returns for the business in 2022. To better align manufacturing capacity in British Columbia with the available long-term fiber supply, in early 2023, we made the difficult but necessary decision to restructure our B.C. operations by permanently closing our Chetwynd facility and pellet plant and temporarily closing our Houston facility to facilitate redevelopment of the site.
Going forward, we intend to build a modern, globally competitive manufacturing facility in Houston with state-of-the-art technology to produce high-value products from the high-quality, sustainable timber supply in the region. Project planning, scoping, engineering, and a thorough project financial analysis are well underway, together with a comprehensive evaluation of the availability of economic fiber. This work is on track to be completed by the end of the second quarter and will be considered by our board of directors in July. While difficult, by implementing these right-sizing initiatives, we are moving to a smaller but stronger operating platform in BC. In the U.S. South, we are building 2 greenfield sawmills in DeRidder, Louisiana and Axis, Alabama and undertaking a major modernization and expansion project in Urbana, Arkansas.
The new $160 million DeRidder facility was substantially completed by the end of last year with the first log through the sawmill in February 2023, and just last week we marked our first customer shipment. The DeRidder facility, which is advantageously located to serve strategic customers and markets, particularly the robust Texas home center market, will continue to ramp up production through the balance of the year. We are also investing $210 million to replace our existing facility in Mobile with a new state-of-the-art greenfield facility a short distance away in Axis, Alabama. The modern Axis facility will help us to continue to transform our manufacturing capacity to keep pace with increasing demand for high-value Southern Yellow Pine lumber from our customers while also improving operating margins, enabling the integration of innovative manufacturing technology, and improving the workplace for our employees in Mobile County.
In Arkansas, our U.S. $130 million Urbana modernization project capitalizes on access to high-quality fiber and will add 115 million board feet to the mill's existing production capacity. In addition, the Urbana expansion will increase its high-value product mix, including mass timber materials like cross-laminated timber and glulam, while reducing its cost structure and creating a modern work environment for our employees. The facility will remain operational throughout most of the modernization project, with construction activity continuing to intensify over the course of 2023 and startup of the modernized facility anticipated in Q1 2024. Collectively, these investments in the U.S. South reflect Canfor's focus on continued diversification through growth and value-added operations. Vida's Swedish operations in Europe have become integral to Canfor's global strategy and now account for approximately 23% of Canfor's total production capacity.
We have several capital projects underway at Vida's facilities in Sweden, including large investments aimed at increasing drying and sorting capacity at Borgstena, Alvesta, and Vislanda sawmills. By integrating innovation enhancements and technologies, we will boost mill margins and enhance manufacturing efficiency, versatility, and flexibility. We are also looking at opportunities to expand in Europe through organic growth, particularly where we can create synergies with Vida's existing operations. Canfor continues to put great emphasis on social, environmental, and economic responsibility in our operations and throughout our value chain. Making sustainability a core value in our business is the right thing and makes us a better company, and we aim to be a global leader in this space. We are well-positioned to respond to our customers who are asking us to grow with them, to provide the low-carbon products the world wants, and to help build the bioeconomy.
To that end, last year, we advanced several proof-of-concept projects through our bioinnovation team and our joint venture, Arbios Biotech. Preparatory site work began at the industrial-scale Chuntoh Ghuna Biofuel demonstration facility in Prince George, BC. This project will demonstrate how we can convert low-value forest residues and waste wood biomass into high-value, sustainable bio-oil that can be used as a renewable transportation biofuel. We are also advancing the development of biocomposite materials with the potential to make lower carbon alternatives for traditional products used in automotive, aerospace, and building sector, and this is a potential growth opportunity for Canfor as well. Building on the comprehensive sustainability strategy launched in 2021, last year, we announced the implementation of a plan to achieve net zero carbon emissions by 2050.
To achieve this, we've developed near-term science-based targets that include reducing the carbon emissions from our pulp and wood products operations by 42% by 2030 compared to our base year of 2020. These are defined as our Scope 1 and Scope 2 emissions. In addition, by 2024, we will measure and assess our global supply chain and woodlands emissions, which are defined as Scope 3, and set a science-based reduction target for those emissions. Our commitment to net zero by 2050 is backed by an investment of at least CAD 250 million in carbon emission reduction projects to help us achieve our 2030 target, and this work positions us further along our path to become a global leader in sustainability. Canfor continues to focus on building meaningful relationships with our Indigenous partners, upon whose traditional territories we operate.
Our Indigenous engagement strategy is built on a foundation of deep respect for Indigenous peoples and an interest in growing their involvement in the forest resource sector through economic partnerships, stewardship of the environmental, social, and cultural values of forests, and sustainable practices to honor and respect the land for future generations. Having strong relationships with Indigenous communities is critical, not only for reconciliation but also for our ongoing business success. That's why we are committed to having agreements with all interested Indigenous nations in our operating areas by 2030 and are already halfway to achieving that objective. The acquisition of additional Alberta operations in March 2022 brought new opportunities to build relationships within that operating region.
This year, we signed a memorandum of understanding with two additional Indigenous nations in Alberta to apply for harvesting permits, and we are working towards formalizing agreements with two other wholly-owned Indigenous companies. In Prince George, we are working with LTN Contracting, a partner company of the Lheidli T'enneh First Nation, to incorporate local knowledge and innovative harvesting operations to enhance our sustainable forest management practices while protecting the Chilako Watershed. Undoubtedly, there is more work to be done in partnership, and we are committed to doing the work required, not only because it is the right thing to do but also because it will make our company stronger.
Turning now to our first quarter results for 2023, Canfor had an adjusted operating loss of CAD 146 million and adjusted shareholder net loss of CAD 145 million or CAD 1.20 per share. This was another challenging quarter for our lumber business, as solid positive earnings from our European operations and more modest earnings in the U.S. South was overshadowed by ongoing weakness in Western SPF lumber pricing, which resulted in further temporary capacity reductions across Western Canadian sawmills. In addition, we announced and began implementing the restructuring of our British Columbia operations to better align manufacturing capacity with the available long-term fiber supply. Similarly, for our pulp business, despite improved earnings, it was also a difficult quarter, driven by the wind-down of a pulp line at the Prince George Pulp and Paper Mill.
While these restructuring decisions will create a more sustainable operating footprint going forward, we sincerely regret their impact on our employees, our contractors, their families, and our local communities. As we look ahead, global lumber market conditions are anticipated to continue to face continued challenges as general economic uncertainty accompanied by affordability pressures are projected to continue to weigh on demand. Notwithstanding these headwinds, in the longer term, underlying global lumber market fundamentals are expected to be solid, principally reflecting strong demographic trends, consistent demand driven by aging housing stock, and low inventories of new homes. The repair and remodeling sector is also expected to improve as existing homeowners look to fix up in lieu of moving up in a high-interest rate environment.
In Asia, we anticipate the weakness in offshore lumber demand experienced in the first quarter to continue through the second quarter, but improve throughout the balance of the year as inventories in that region return to more balanced levels. In Europe, we expect lumber demand to be solid in the second quarter as modest demand in the residential construction segment is combined with a seasonal uptick in the do-it-yourself sector. As I said at the outset, our continued success is a testament to the resilience and commitment of the entire Canfor team. We recognize the responsibility we have for their wellness and have placed a significant focus on ensuring that everyone is safe, feels welcome, and is rewarded. Through purpose-built talent development programs, we're strengthening our future operational and corporate leadership pipelines.
We're also making significant strides on inclusion and diversity through our employee network groups, moving us along the path to ensuring that our workforce reflects the diversity of the communities where we operate. Our people are guided by our company values that are at the core of who we are and how we work. As always, safety comes first because there is nothing more important than making sure our people return home well every single day. Last year, we refreshed these values, increasing the emphasis placed on inclusion, respect, and sustainability, hallmarks of how we want to operate.
To help measure our progress on our commitments to our people, we undertook an engagement survey this past year to better understand how we are doing, where we can do better, and how we can best focus our efforts and resources to ensure we have the talent we need to deliver on our vision. This work is providing valuable guidance as we continue to shape Canfor's culture and employee experience. Ultimately, if our people are happier, healthier, safer, and feel Canfor is the place they want to work, they will be more resourceful, hardworking, and resilient, and they will continue to make this company successful year after year. As I wrap up my comments today, I would like to underscore that while we are experiencing some short-term market challenges, we remain optimistic about the mid to long term and see a bright future for our company.
Canfor is well-positioned with strong demand fundamentals, a great customer base, dedicated employees, well-capitalized assets, and a wide range of quality products that are part of the global carbon solution. As a customer-centric business, we know that we only succeed when our customers succeed. We're grateful for their continued loyalty and remain committed to serving their evolving needs. Finally, in closing, on behalf of our executive team, I want to extend our thanks to our board of directors for their guidance and support and to our shareholders, including our majority shareholder, Jim Pattison, for their continued confidence in Canfor. Thank you, John, and I'll turn it back over to you. Well, thank you, Don, and thank you for your strong leadership on behalf of the entire board of directors and your decades-long commitment to Canfor.
This is an appropriate point in the meeting to deal with any final discussion or questions. Is there any discussion or final questions?
Mr. Chairman, no questions have been submitted.
As there are no further discussions or questions, the meeting is now concluded. Thank you for your attendance.
Ladies and gentlemen, thank you for attending today's meeting. You may now disconnect.