A month after purchasing Tembec's two local mills, Canfor has announced it's spending $40 million in the East Kootenay.

The investment will lead to the reopening of Canfor's Radium mill at the end of 2012, which was closed in 2009, putting 167 people out of work.

Starting next month, Canfor will spend $38.5 million on the Radium facility, creating a new planer facility, the installation of a biomass energy system, and modifications to the existing sawmill.

Another $1.5 million will be spent on the Canal Flats mill to improve drying capacity.

"These investments are critical to support the restart of our Radium division, which was indefinitely closed in May 2009," said Don Kayne, Canfor President and CEO. "The fibre in the Kootenay region is amongst the best in the world, and these investments will secure our ability to make top-quality products here to supply global markets."

The investment is just the beginning for Canfor's improvements to its southern interior mills. The company has planned a multi-year capital investment program to enhance productivity and cost performance.

In November, Tembec announced that, after 13 years, it was selling its Canal Flats and Elko sawmills, and the associated 1.1 million cubic metres of lumber and cutting rights, to Canfor for $60 million. About 455 employees were included in the transaction, with 90 of those located in the head office in Cranbrook. Tembec still owns the Skookumchuck pulp mill.

Kayne toured the region last month to cement the deal. During his visit to Cranbrook, he said:

"We've indicated early on that we're looking to spend 50 to 60 million dollars in capital across the East Kootenay.

"We're in a process now of evaluating where exactly among those three mills we're going to spend the capital and how. There's a lot of work going into that now, so in terms of timing, we should be a lot clearer over the next 30 to 60 days."

In the meantime, B.C. sawmills have faced difficulties with fires in Burns Lake and Prince George sawmills being linked to dust from pine beetle-infected logs.

Earlier this week, WorkSafe BC ordered inspections of all B.C. sawmills, focusing on the hazards of processing dry beetle-killed logs in B.C. Interior sawmills.

"There is a common factor here, and we're all aware of it, and it's sawdust," said Labour Minister Margaret MacDiarmid. "So although we don't know what caused the initial fires or explosions, we know that sawdust may be a factor."