WoodWeek – 25 January 2012
Greetings from your WoodWeek team. This week the general economic mood
is tentative with
economic indicators fluctuating between positive and negative. While most
major bank economists are certain that wholesale interest rates will remain
static for the forseeable future - the comments come amid a more gloomy
outlook for Europe's recovery from their economic mess.
With this week
being the start of the Chinese New Year - there is also precious little
information from our main market until they finish two weeks of letting off
fireworks to celebrate. One positive is that, in China, its the start of the
'Year of the Dragon' which is considered very lucky. So, here's hoping
that
a
positive attitude from the second most populated country in the world
means
that they shrug off the western world's economists predictions that their
country can't continue to grow at 8 to 9 percent.
In early March, FIEA is bringing together market forecasters, forest managers, trustees and financiers to learn more about forest and wood market
developments. The Future Forestry Finance Conference runs in Auckland on
7-8 March and again on 13-14 March in Sydney. Early-bird registration
discounts are available until this Friday - 27th January! Check out the website
or call one of our FIEA offices to register by phone - freecall in Australia to
1800 126 398 or freephone in NZ to 0800 34 22 69.
News on the wood energy front from Australia is disappointing with the
closure
of a pellet producer. When the project first commenced the predictions
were
very upbeat, but the distance from key markets was but one of the factors
that
led to an uncompetitive outcome. Meanwhile in Australia the tension and
heat
generated around forest negotiations never seem to be far off boiling point.
In New Zealand most of us are happy to see the back of the holiday rain so
that
normal forest harvest production can continue. This week we provide the
third
in our series of what a log commodity levy might mean for our industry.
The
nationwide consultation meetings are scheduled throughout February up
and
down the country - for all forest owners of every shape and size.
Also this week we have practical information from a contractor on the
importance of regular checking of band brakes. This 'near miss'
information has been
very sought after by
everyone since it was released.
Its
usefulness for forest crews and contractors is that it's not unusual for a
contractor to
think that some
recurring issues that they have had - are just specific to them. More often
than
not,
the near miss
information they have can be VERY valuable to many others in industry.
Recognising this - FICA will
now maintain a database of near miss case studies on their website in the
members-only section. Call
John or Lisa in the FICA office on 07 921 1382 to get access to these by joining FICA. FICA
regularly issues information
on how to access that part of the site.
Finally - here's hoping the mega-download of rain currently hitting
Brisbane
and
Fiji doesn't head our way!
This week we have for you:
Forestry Finance Conference Profiles New Developments in Forest Products
Future Forestry Finance will include new developments in emerging forest products which will transform earnings for forest investors in the coming years.
Robin Jack, a successful pioneer of wood manufacturing excellence, will speak about his leading role in bringing cross laminated timber (CLT) to into new commercial building market in Australasia. This product is paving the way for high-rise timber buildings to be made in high density downtown sites, with quick build times and short on-site construction times.
Vertichem’s new green chemicals from wood resources will also be showcased at Future Forestry Finance. Vertichem’s David Milroy is an international entrepreneur with over 20 years of executive leadership experience at high-profile global technology companies in Asia, Europe and North America.
“These new products will take timber into new markets which is good for all investors in the forest products supply chain,” says John Stulen, Event Manager of the conference series.
Further updates on developments in other new-age forest products including airline fuels, bio-energy and bio-char will be presented by leading product developers in these areas.
Check out details on the event website - there are special offers available including 3 delegates for the price of 2, and the
EARLY-BIRD RATE applies until the 27th January. See it all on www.forestryfinanceevents.com
for both the Auckland and
Sydney events. To make it easy you can also call Lisa on 07 921 1382 or Gordon 07 921
1384 in our Rotorua office.
 |
Jobs Go as Pellet Facility Closes
Industry in the Great Southern will be dealt a blow later this month when Plantation Energy’s
biomass fuel pellet facility closes indefinitely, putting 20 staff out of work.
After nearly two years of performing below expectations, the Albany-based export company,
which set out to create a carbon-neutral, coal-alternative fuel source from non-commercial
plantations, will be “mothballed” on January 27.
Plantation Energy Australia chief executive Kevin Heydt said the company fell well short of
achieving its projected 250,000 tonnes of exported biomass pellets each year since it began
operating in 2010.
He blamed this on the cost of producing the pellets, which was inconsistent with their
international sale price.
“It’s a function of two things, as you know the forest industry has changed quite
significantly and the availability of suitable fibre has changed and caused challenges to the
business, coupled with a very high Australian dollar relative to our trading partners where we
sell the pellets,” he said.
“This makes the whole proposition really uneconomic and it has been for some
time."
“We’ve persevered and the major shareholders have sunk additional money into the business
on the basis of hoping for a turnaround in both of those factors, or a massive change in the
global pellet market, but that hasn’t eventuated."
“Six months on, rational economics suggests the decision must be made.”
Mr Heydt said it was very unfortunate to have to cease work on an important
project with a dedicated team of staff.
“There are 20 good people that we have to let go and I think everyone has a sense of pride of
what’s been achieved there and we’ve been in happy association with Albany. It’s upsetting
for everyone,” he said.
Should the economic climate become more favourable, Mr Heydt said the facility might
reopen.
Gordon Parker, who works at the facility as production administrator, said it was
disappointing the current economy could not support the venture.
He said employees were now looking for work outside of Albany.
“I’ve had a good job and good money, the company has looked after me and I really love
Albany,” Mr Parker said.
“I don’t particularly want to go to the mines but I’ve got a young family and to
earn…the sort of money we need to upkeep mortgages and commitments, some of us may
have to leave Albany.”
|
Troubled Chinese Forest Firm has NZ Links
A few months ago we brought you a story of a Chinese-controlled forestry company which
had fallen foul of Canadian stock market authorities and now may well be investigated for
suspected fraudulent business dealings. We ran it for a number of reasons - not because
there were Chinese involved; not because it was a publicly listed vehicle with shady
beginnings - but because one of the forests it purchased in its fairy tale rise to riches, is in
Northland.
The dramatic drop in share price for Sino-Forest came early in June last year. As a ‘forest’
company with an unusual start-up – it was done through a back-door listing on the Toronto
Stock Exchange – it’s now having a near-death experience. Sino-Forest’s shares dropped 74
percent in early June Toronto trading after Carson Block, a short seller of shares, said the
company had overstated its timber assets.
At its peak it was the largest forest company – valued at over CAD $6 billion. Now the final
chapter in the sorry tale for its investors appears set to play out. The company's debt holders
are ready to strip the company of it assets. Investors have launched a class-action suit. Sino-Forest's insolvency appears imminent.
Why then, you might ask, do folks down-under need to know about it? Two connections to
New Zealand are of note – one is relevant, the other just interesting.
Connection #1 – Greenheart bought Mangakahia Forest from Global Forest Partners.
Now here is where it gets interesting. Sino-Forest has a controlling 59 percent in Greenheart.
Prior to the Mangakahia purchase Greenheart planned to raise $US37m via a share issue to
help fund the transaction. The $US40m balance was to be funded through a loan either
provided by or guaranteed by Sino-Forest. So – will this guarantee fail? Watch this space.
Past stressed forest sales have tended to be followed by renewed commercial pressure being
brought to bear on those working in the forest as contractors or other service providers.
Connection #2 – One of its largest shareholders is New Zealand-born Richard Chandler a
billionaire investor now based in Singapore. His company, Richard Chandler Corporation,
owns at least 19% of Sino-Forest.
|
Benefits of Log Commodity Levy
This article is the third part in our series to explain
details of a proposed commodity levy on forestry production. This week we highlight how uses
of the levy are related to the interests of production forest owners.
The proposed levy will be administered by New Zealand Forest Owners Association
Incorporated (FOA). The funds will be used to address issues affecting plantation forest
owners.
The steady increase in log harvest over the past five years may very well continue in the
coming 15 years as the theoretical harvest level in New Zealand is set to double to 55 million
m3 by 2024. Most observers in the industry agree that, for a number of reasons, this timber
harvest scenario is less likely. Depending on market conditions, a more realistic level of
annual timber harvests in 15 years would be between 35 and 45 million m3 annually. Even
this lower harvest outlook alternative would increase available log supply from the current
levels by over 70 per cent in a little over ten years.
Currently FOA members own just over 65% of the plantation forest estate. There are 119
members. There is a significant plantation area and thousands of forest owners who are not
association members. They neither contribute to association funds nor have input into
association activities. The majority of these owners own small forest areas and over 2,200
belong to the NZ Farm Forestry Association (NZFFA), which is associated with FOA. The NZFFA
has a member on the FOA Executive and representatives on most FOA committees.
A commodity levy would reduce the financial contributions from existing members, spreading
the financial commitment over the entire plantation growing sector.
To
read more click here
ENGOs rewrite history on Tasmanian forest negotiations
The integrity of the green groups involved in the Tasmanian forest negotiations is in question
after they failed to support ongoing supply to Tasmania’s timber industry in the recently
released Conservation Agreement between the State and Federal Governments.
The Wilderness Society, Environment Tasmania and the Australian Conservation Foundation
(ACF) have publicly criticised the announcement that 2,000 hectares of their forest reserve
claim will remain available to supply Tasmania’s remaining sawmills and veneer mills. This is
despite 99.5 per cent of their claim being set aside in interim reserve pending verification and
is in line with the original Statement of Principles, which they signed, agreeing that current
supply contracts would be delivered.
“These groups agreed to such ongoing supply in the Statement of Principles signed by them
in December 2010, but have now publicly criticised the provisions made by government to
meet this requirement,” said AFPA Chief Executive David Pollard.
“The wood requirements were assessed by independent experts agreed to by the groups.
This was the only concession provided to the industry in return for its agreement to
additional
reservation of verified high conservation value forests, following Gunns Ltd’s exit from native
forests, and extinguishing of their contracts,” he said.
AFPA has called on the groups to confirm whether or not they remain committed to the
agreement.
“They should be co-operating with the governments and industry in progressing an equitable
implementation of this historic agreement.
“The ENGOs are adding to suspicions that they will never be satisfied and are not serious
about delivering a lasting outcome unless they get everything they want. The needs of
industry, workers and timber communities are equally important to their demands,” Dr
Pollard
said.
|
MAF Statistics a Tale of Two Halves
Last week we brought you MAF's report on how forest planting grew in the past year. Now we
turn to the production side of the report. Meanwhile, statistics reported in MAF's September
quarter production and trade update show
total forestry export earnings increased NZ$32.7 million (3 percent) to NZ$1.1 billion in the
three months to September 30. This took the annual earnings to end of September to $4.6
billion, accounting for 10.1 percent of total merchandise exports. Export earnings for logs
remained relatively strong in this quarter, rising by $NZ77.2 million (25.8 percent) due to
strong demand and high log prices. China continues to dominate New Zealand's log export
market, with volumes rising 32.6 percent, to a record high of 2.2 million cubic metres.
However, at the same time sawn timber export earnings fell NZ$31.4 million (13.6 percent).
Sawn timber production went down 0.113 million cubic metres over the quarter – due to high
log prices, weak domestic demand and a high exchange rate. Wood processors have become
more pessimistic about their prospects.
Demand from Japan for wood panel products, though, remains strong following the natural
disasters in March 2011. MAF analysts have also done a half-yearly update of forecasts in the
annual Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) report which
was published in June.
This half-yearly report indicates that the Chinese demand for New Zealand logs is now
easing, as inventories there are now at record levels and there is increasing competition from
other supplying nations. This, combined with subdued construction activity, had led to a
revision down from a NZ$4.69 billion forecast for the year to June 30 2012, to NZ$4.26
billion.
|
Safety Corner:Near Miss Bandbrake Failure
For all contractors operating cable yarders please make your crews aware of this information.
Click here for the near miss incident report
Chinese Commentators Agree on One Thing
Despite conflicting data, commentators are in broad agreement regarding China’s wood fibre
supply deficit. Even allowing for the already considerable and ongoing investment in plantation
forests and significant investment in the protection of its forests, China continues to face
challenges in meeting its demand for wood fibre and forest products. The shortfall in wood
supply and increasing timber imports are unlikely to be addressed by domestic timber supply in
the short to medium term, particularly given that timber demand is rising in line with the very
high rates of GDP growth. This outlook appears to be shared by the State Forest Administration
(SFA). While the SFA optimistically expects domestic timber supply to reach 300 million
m3/annum in 2020 from 180 million m3/annum today.
To read more on this topic click here.
Source: New Forests
Flying Cats
It may not sound like it, but this is relevant to forestry. This link answers the question - What do
you do when you have two million board feet of timber to log on a remote flat across a deep
ravine and there is no road into it?
You hitch your machines to a powerful tower yarder and you fly them in!
Click here for more - including pictures.
SCION Study Claim: MTB beats Timber for Revenue
The economic value of mountainbiking in Rotorua's Whakarewarewa Forest has been estimated
at five times its annual timber revenue and looks set to increase as promotions raise awareness
of what is on offer.
A study by Crown Research Institute Scion shows the median annual recreational value of
mountainbikers using the forest is $10.2 million - well above the $4.6 million earned through
export revenues.
To read the full story click here.
Jobs
- Wood Processing/Manufacturing
|
....And Finally ... Have You Ever Noticed?
Have you ever noticed:
1. You can't respect a man who carries a dog.
2. A penny saved is a government oversight.
3. The sole purpose of a child's middle name is so he can tell when he's really in trouble.
4. The Miracle of Aging – Eventually you will reach a point when you stop lying about your
age and start bragging about it.
5. The easiest way to find something that’s lost around the house is to buy a replacement.
6. There's no panic like the panic you momentarily feel when you've got your hand or head
stuck in something.
7. The Roman Numerals for forty (40) are XL.
8. The most painful household incident is wearing socks and stepping on an upturned
plug.
9. People who don't drive slam car doors too hard
10. You know you've turned into your dad the day you put aside a thin piece of wood to
specifically stir paint with.
11. Everyone has had an uncle who tried to steal their nose.
12. Bricks are horrible to carry.
13. Its impossible to look cool whilst picking up a frisbee.
14. In every plate of chips there is a bad chip.
15. Beneath every floating balloon is a tearful child.
16. Driving through a tunnel makes you feel excited.
17. Prodding a fire with a stick makes you feel manly.
18. Rummaging in an overgrown garden will always turn up a bouncy ball.
19. One of the most awkward things that can happen at the pub is when your pint-to-toilet
cycle gets synchronised with a complete stranger.
20. Nobody ever dares make cup-a-soup in a bowl.
That's all for another Wednesday. We hope you enjoyed the news and this
week's joke. Have a safe and prosperous week.
John Stulen
Editor - WoodWeek
PO Box 6160
Building X91, Scion Campus
99 Sala Street, Rotorua, New Zealand
Tel +64 27 275 8011
Web www.woodweek.com
We welcome comments and contributions on WoodWeek. For
details on advertising for positions within the forest products industry or
for products and services, either within the weekly newsletter or on this web
page, please contact us.
Copyright 2004-2011 © Innovatek Ltd. All rights reserved
|
