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Friday Offcuts – 1 July 2011

growing trees cutting and milling timber forest products
We covered some breaking news in last week’s issue. There was reported buy-in to a ground-breaking Australian agreement to end logging of native forests and 30 years of conflict in Tasmania. Talk’s facilitator Bill Kelty said last Thursday that conservationists and industry had finally agreed on protection for 430,000 acres of publicly-owned native forest in Tasmania. In a hasty turn-around - just as we went to print - Mr Kelty's office quickly recalled the agreement document, saying it had been sent out because of an "administrative error". Unfortunately the document reached the media before signatories had agreed to its contents, and before it had been presented to the Tasmanian government.

Amidst the confusion, Premier Lara Giddings referred to the agreement as a "draft" on Friday. She pledged though the government's commitment to the process after meeting with Mr Kelty. Earlier in the day Federal Environment Minister Tony Burke also stated that his government would also be likely to fund any industry transition. Other than the mishap with timing, it appears that an historic agreement is likely to be reached very shortly which will change the shape of forestry in Tasmania forever.

As it has done for many months, Gunns is also dominating the news across the Tasman at the moment (see stories below). As part of their asset sales process, an agreement has been reached for the sale of their Green Triangle plantations. The start of the closure of their Tasmanian sawmills has also begun with the Smithton site workers told this week of its closure and other mills, that they’ll be closing within a month unless a buyer can be found.

Finally, registrations to Carbon Forestry 2011 by leading Australasian forestry, finance and investment companies have exceeded all expectations. Remember, there is less than two weeks now until this inaugural event runs so if wishing to participate, check out details and registration information on www.carbonforestryevents.com



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This week we have for you:

Carbon forestry could save marginal farms

 
Cash from carbon makes forestry a much more attractive proposition than livestock farming on poorer hill country according to a collaborative study led by Crown Research Institute Scion for Waikato Regional Council. The study examined three aspects: the opportunity to the land owner, the opportunity to Waikato Regional Council, and investment structures for carbon forestry.

Generally it showed that by planting fast growing exotic trees now, landowners could expect positive cash flows from carbon within 5 years, depending on individual circumstances.

Study leader Graham West from Scion says that by providing an early cash flow from the sale of carbon credits, carbon forestry overcomes the typical 30-year delay in getting a return from forest planting. The study shows that for pruned Radiata pine, timber returns are around $90/ha/year on today’s prices. By combining timber returns with revenue from carbon, returns can increase more than five-fold to between $160-$520/ha/year for carbon prices of $7.50/t CO2-e to $30/t CO2-e.

“The economic benefits of carbon forestry are generally very positive as long as the appropriate sites are targeted,” says Mr West. For poorer classes of land, particularly eroding hill country, carbon forestry offers a number of financial and environmental advantages. The relative returns with livestock farming depend on livestock carrying capacity, the importance of current cash flow, tree species and management.

Waikato Regional Council senior manager John Simmons says the outcome of better land use offers great opportunities for the Waikato region. “Council sees opportunities for regional landowners to benefit from aggregation of credits, and is proposing a regional scheme whereby Council acts as facilitator between landowners and investors,” says Mr Simmons.

“Carbon forestry has for the first time made the cash flow possible to build resilience into farm incomes and help with succession. By aiding land use change, the typical challenges each generation of hill country farmers face of debt, erosion, and scrub reversion can be substantially mitigated.” These findings arise from a report written for Waikato Regional Council by Scion in collaboration with AgResearch and Hardwood Management Ltd. A copy of the report can be obtained from www.waikatoregion.govt.nz/carbonstrategy.

Study leader Graham West will be presenting at the country’s first Carbon Forestry event, Carbon Forestry 2011 planned for Auckland on 13-14 July. The event is already attracting huge interest from forestry, financial and investment companies. Full details on this year's carbon forum can be found on www.carbonforestryevents.com




SawTECH 2011 providing new tools for local sawmillers

A record turnout of over 200 sawmillers’ and all the major equipment suppliers to the industry met in Australia and New Zealand over the last two weeks. This was the sawing technology event SawTECH 2011 organised and run by the Forest Industry Engineering Association and designed in conjunction with a wide cross section of mills on both sides of the Tasman. A selection of images from the SawTECH 2011 series is included here as part of this story. The focus of the technology series was on inexpensive tools that could be used by local companies to improve their sawing efficiencies.

As such, a wide range of practical diagnostic tools, spread sheets, and troubleshooting checklists were supplied to sawmillers’ and saw-doctors to build into their own operations. Practical sessions on bandsaw tensioning and tracking, band and circular saw design and operation were covered by independent sawing experts. Locally, innovative saw monitoring and sawing performance systems developed in conjunction with local mills were profiled. Some mills had also been undertaking their own in-house research. A New Zealand sawmiller explained the excellent results that they’d been getting by using water on their band saws to improve production, sawing accuracy and better control of their operating saw temperatures.

In addition to low cost tools, updates on the very latest sawing technologies from North America and Europe were released for the first time. As reported in a previous issue, two major step changes in sawmilling were unveiled.

CT scanning of logs or internal defect recognition is now finally a reality with three units now being installed in North American, South American and European sawmills by MiCROTEC. EWD, another major European sawmilling equipment supplier, provided details of four years of R&D and in-mill trials. The company’s developed a new magnetic guide system to replace conventional pressure guides used for bandmill operations. The new innovation is expected to significantly improve feed speeds, production and cutting accuracies for mills using bandsaws.



All SawTECH 2011 delegates supplying their contact details will be sent out information today on how to download the array of presentations, information and spread sheets covered in both Australia and New Zealand over the last couple of weeks. These will also shortly be made available for all FIEA Members to download and use.




Tasmanian forestry deal closer

The Tasmanian Forest process being facilitated by Bill Kelty has moved one step further with a draft agreement document being completed by signatories late last week. It is understood that Mr Kelty has provided a copy of the draft, yet to be ratified by signatories, to the Federal and State Governments for consideration. The agreement outlines guaranteed wood supplies of:

• 155,000 m3 of HQ sawlogs (Cat 1&3) per annum
• 265,000 m3 of veneer peeler billets per annum
• 12,5000 m3 of special species per annum

This guaranteed wood supply is to be underpinned by long term compensable contracts to 2027 in accordance with the undertaking from the Tasmanian Premier. Subject to the industry’s wood supply being guaranteed, the agreement will consider scope for reservation of areas identified as part of the ENGO claim.

This potential reserve area will be dependent on meeting long-term industry wood supply from a production area of 870,000 hectares but any proposed reserve area needs to be verified in terms of the conservation merit by government. Source: AFPA Canopy


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The process of making softwood harder

New Zealand’s plantation-grown softwoods such as Radiata pine have potential to compete more effectively with higher-value hardwoods through techniques to change timber properties. Modifying fast-growing wood such as Radiata pine to make it harder, more stable and less prone to decay is the subject of a tech clinic as part of the forestry festival that runs in Rotorua in early September by Mark Smith, of Smith Railey Consulting, and Jeremy Warnes, Scion Business Development Manager.

The principles of wood modification are not new, but increasing environmental concern about felling hardwood forests and treatment of timber with preservatives are creating new opportunities.

Several processes for modifying wood have been demonstrated on laboratory and semi-industrial scales and continued advances in process development will see these materials becoming more commonplace in the near future.

A wide variety of treatments are being tried. The researchers say that some methods which improve the dimensional stability of timber can reduce cracks, keeping out moisture more effectively and improving the performance of paint coatings.

Other Tech Clinics will cover a wide range of topics, from the latest remote sensing technologies and GPS/GIS systems for forest management, harvesting, sawmilling and supply chain logistics, bio-energy and international wood markets. Something for everyone, really.

Full details of the 14 Tech Clinics that will be running on 5-6 September can be downloaded here. Further details and registrations can be done by visiting www.fi 2011.co.nz




Drop in NZ export log prices

 
High inventory levels in Chinese ports have now converted to a lowering of in-market (CFR) pricing for New Zealand logs. A similar situation occurred this time last year when China was importing what were then record volumes of logs. In the January to April 2011 period China imported over 9 million cubic metres of softwood logs which was 33% more than the same period in 2010. Prices in 2010 peaked in April at just over US$140/JASm3 for a KS log. In 2011, prices appear to have peaked in May at close to US$160/JASm3.

CFR prices then plunged more than 15% over a period of four months before again climbing in September. It is anticipated that a similar situation will unfold in 2011. But whether prices can recover all of the ground lost by the end of the year, as happened in 2010, remains uncertain. The majority of the uncertainty centres around potential supply from North America and Russia through this period.

Supply from North America has contributed the most to the rising Chinese log imports. In the 12 months to April 2011, Chinese softwood log imports (by volume) grew 25% compared to the previous year. Two thirds of that increase was contributed by North American log exporters. Almost one third was contributed by New Zealand exporters. The very weak domestic construction market in North America has created a focus on the Asian markets for these producers.

Source: NZX Agrifax at www.nzxagri.com/agrifax




Green Triangle Plantation sale

Gunns Limited announced that it had reached an agreement with a U.S.-based timber investment management organization on the purchase of the Gunns’ softwood plantation estate in the Green Triangle. The agreement is subject to the buyer securing financing and other customary conditions, and the sale would be expected to close no later than 31 October 2011. Subject to completion adjustments, Gunns expects a net return of approximately AU$107M from the sale.




Gunns' starts mill closures in Tasmania

Gunns has confirmed sites at Southwood, Austins Ferry, Deloraine, Somerset and Massy-Greene in Tasmania have up to four weeks before they close, if buyers cannot be found. ABC reports that more than 100 workers at Gunns' sites across Tasmania could be out of work within four weeks, as the company tries to sell off most of its assets.

The site at Smithton will also lose 20 workers, bringing possible job losses over the next four weeks to about 131. Gunns management visited the Smithton sawmill on Tuesday to break the news. The site is expected to close early next year.

In other news, Aprin Logging that has agreed to buy Gunns' Triabunna woodchip mill was given approval earlier in the week for a loan from the Tasmanian government to help buy the mill.


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2012 Forestry Finance event call for presentations

 
The Forest Industry Engineering Association together with most of the major financial and forestry industry associations in Australia and New Zealand ran an inaugural Future Forestry Finance Conference series in Sydney and Auckland in early March 2010. The turnout exceeded expectations. Over 200 key forestry and wood products executives, accounting, investment and financial managers/analysts and product and service providers to the sector were involved with the event.

The second programme of this finance series is planned for 2012. Future Forestry Finance 2012 will be the industry conference of choice for finance industry leaders looking to inform their investment and loan risk strategies for forestry in Australasia. To maximise the coverage, reach and capability of Future Forestry Finance 2012 this FIEA conference will be held in March 2012 in both Auckland, New Zealand and Sydney, Australia.

This is your chance to be a major part of this event featuring Forest Industry leaders and key financiers and professional advisors to the industry. We will soon be developing the programme for Future Forestry Finance 2012 and seek industry experts & advisors who are interested in speaking at this event.

For those interested in participating, click here for further information.




Timber and concrete hybrid built using modular design

By far the largest high-rise building in New Zealand to be assembled in modular fashion is just six months away from completion at The University of Auckland. The last of the 468 modular rooms, individually assembled 161 kilometres away in the Waikato, were being installed at University Hall in Whitaker Place last week.

The prefabricated timber room pods, comprising 429 single bedrooms, 13 study pods and 13 double bedrooms for residential assistants, sit within a steel and concrete framework. Manufactured by Stanley Group in Matamata they were painted, fitted out with windows, doors, carpets and wooden furniture, prepared for electricity and computer links, and shrink-wrapped.

From late January they were taken to Auckland on truck and trailer units, lifted onto concrete floors by crane and stacked vertically three high between each concrete floor. Suspended timber floors were then constructed to connect all the rooms to corridors, bathrooms and lifts.

Gary Coulfield of Stanley Group will present this project as a case study at the BNZ Forest Industries Conference to take place on 7 September in Rotorua, as part of the larger FI2011 event.

A copy of the programme is attached here and further details can be found on www.fi2011.co.nz




Stop propping up plantation forestry

A Parliamentary committee looking into forestry in Australia has been told governments should privatise their softwood plantations. Economist at the Australian National University Dr Judith Ajani said excess production of plantation timber combined with slow growth in demand will lead to a substantial annual wood glut.

Dr Ajani said governments should take this as a cue for a substantial restructure of the industry and that state governments should stop propping up Australia's plantation timber industry. She thought this is a job for the private sector and that governments should look at privatising their plantation resources.


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Increase in Australian forestry research called for

Forestry Tasmania has told a federal inquiry that a concerted effort needs to be made to address a significant decline over the past two decades in forestry research and education.

At his appearance this week before the Standing Committee on Agriculture, Resources, Fisheries and Forestry's Inquiry into the Forest Industry, Executive General Manager Hans Drielsma said as a first step, it was vital to renew funding for CRC Forestry.

"It is critical that CRC Forestry is extended for a further period and is adequately funded. "The current term of the CRC finishes in June 2012. Funding for a further five year period is open for competitive bid, and it is vital to the future of the forest sector that this bid is successful.

Dr Drielsma was particularly concerned at the loss over recent decades in the more applied end of the research spectrum. "This research has concentrated in state-owned forestry businesses such as Forestry Tasmania, many of whom have either entirely shed, or severely reduced their capacity under increasingly stringent financial imperatives. The Australian forest sector is currently drawing down its capital of skill and expertise in this area."

"Research is one component that is required for Australia to turnaround the $2b trade imbalance in forest and timber products."




Managed regrowth forests in Australia event

A one-day symposium is being held at the University of Melbourne on 14 July 2011 to discuss the important contribution and management of regrowth forests across Australia for a range of values and benefits to society. This workshop comes 20 years after the Young Eucalypt Report (Kerruish and Rawlins 1991) was launched, which brought into focus many of the commercial timber management options for young regrowth forest. It will assess the multiple values and benefits of actively managed regrowth forests for commercial wood production, water, carbon, biodiversity and fire management in the landscape.

Further details about the event are attached here.




New FWPA standards manager appointed

The new standards manager for Forest and Wood Products Australia Limited (FWPA) is the well-known timber engineer, Boris Iskra. Boris has an extensive understanding of the Australian forest and wood products sector with over 24 years of direct involvement. He was previously the Technical Manager with the Timber Promotion Council (TPC – Victoria) until it ceased operation in August 2005 following which he co-founded TPC Solutions (Aust) Pty Ltd. In his new role, Boris will be responsible for managing FWPA’s activities in building codes and material standards taking over from Neil Evans, who left recently to join the Housing Industry Association. Boris starts on July 1st.





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Pull Down

...and one to end the week on...a discussion on gardening

It looks long - but it's well worth reading.

God one day said:

"Frank, you know all about gardens and nature. What in the world is going on down there on the planet? What happened to the dandelions, violets, milkweeds and stuff I started eons ago? I had a perfect no-maintenance garden plan. Those plants grow in any type of soil, withstand drought and multiply with abandon. The nectar from the long-lasting blossoms attracts butterflies, honey bees and flocks of songbirds. I expected to see a vast garden of colors by now. But, all I see are these green rectangles."


St. FRANCIS:

It's the tribes that settled there, Lord. The Suburbanites. They started calling your flowers 'weeds' and went to great lengths to kill them and replace them with grass.


GOD:

Grass? But, it's so boring. It's not colorful. It doesn't attract butterflies, birds and bees; only grubs and sod worms. It's sensitive to temperatures. Do these Suburbanites really want all that grass growing there?


ST. FRANCIS:

Apparently so, Lord. They go to great pains to grow it and keep it green. They begin each spring by fertilizing grass and poisoning any other plant that crops up in the lawn.


GOD:

The spring rains and warm weather probably make grass grow really fast. That must make the Suburbanites happy.


ST. FRANCIS:

Apparently not, Lord. As soon as it grows a little, they cut it -- sometimes twice a week.


GOD:

They cut it? Do they then bale it like hay?


ST. FRANCIS:

Not exactly, Lord. Most of them rake it up and put it in bags.


GOD:

They bag it? Why? Is it a cash crop? Do they sell it?


ST. FRANCIS:

No, Sir, just the opposite. They pay to throw it away.


GOD:

Now, let me get this straight. They fertilize grass so it will grow. And, when it does grow, they cut it off and pay to throw it away?


ST. FRANCIS:

Yes, Sir.


GOD:

These Suburbanites must be relieved in the summer when we cut back on the rain and turn up the heat. That surely slows the growth and saves them a lot of work.


ST. FRANCIS:

You aren't going to believe this, Lord. When the grass stops growing so fast, they drag out hoses and pay more money to water it, so they can continue to mow it and pay to get rid of it.


GOD:

What nonsense. At least they kept some of the trees. That was a sheer stroke of genius, if I do say so myself. The trees grow leaves in the spring to provide beauty and shade in the summer. In the autumn, they fall to the ground and form a natural blanket to keep moisture in the soil and protect the trees and bushes. It's a natural cycle of life.


ST. FRANCIS:

You better sit down, Lord. The Suburbanites have drawn a new circle. As soon as the leaves fall, they rake them into great piles and pay to have them hauled away.


GOD:

No!? What do they do to protect the shrub and tree roots in the winter to keep the soil moist and loose?


ST. FRANCIS:

After throwing away the leaves, they go out and buy something which they call mulch. They haul it home and spread it around in place of the leaves.


GOD:

And where do they get this mulch?


ST. FRANCIS: They cut down trees and grind them up to make the mulch.


GOD:

Enough! I don't want to think about this anymore. St. Catherine, you're in charge of the arts. What movie have you scheduled for us tonight?


ST. CATHERINE:

'Dumb and Dumber', Lord. It's a story about....


GOD:

Never mind, I think I just heard the whole story from St. Francis.



And on that note, have a great weekend. Cheers.

Brent Apthorp
Friday Offcuts
PO Box 904
Level Two, 2 Dowling Street
Dunedin, New Zealand
Ph: +64 3 470 1902
Fax: +64 3 470 1904
Web page: www.innovatek.co.nz


This week's extended issue, along with back issues, can be viewed at www.fridayoffcuts.com

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