WoodWeek – 16 June 2010

This week we have for you:

• Contractors' Key Indicators
• Harvesting Research Aims High
• FICA Network for Women Meeting - Rotorua 25 June
• CO2 Group Joins with Tukia Group in New Zealand
• FICA Tokoroa Meeting Wednesday 30 June
• Ocean Freight Index
• Gunns Revises Earnings Expectations
• Australian Forestry Statistics Released
• Forestry Graft Said to Cost Indonesia $100b
• South Africa's Green Stadiums - Some Great Shots
• Thanks to FICA Sponsors
• Buy and Sell
• ... and finally ... A Man was Looking for Water in the Desert

Contractors' Key Indicators

Check out the latest changes in diesel prices, interest rates and exchange rates on both sides of the Tasman in this week's Key Indicators.

NZ CONTRACTORS' KEY INDICATORS 16 June 2010
Interest Rates		Diesel Price Watch
	90-day bill rate = 3.07%	NC	Average (excl GST / all regions) = $1.05
Exchange Rates			Change (month) = -2%
	NZD/USD = 0.6920	NC	Change(quarter) = +2%
	NZD/Yen = 63.45		Change (year) = +7%
Labour Cost Index - Ag/Forestry/Fishing		Consumer Price Index
	Mar 10 quarter = 1006		Mar 10 quarter = 1097
	Change (quarter) =+0.2%		Change (quarter) = +0.4%
N/A	Change (year) = N/A*	NC	Change (year) = +2.0%

*Note:The LCI has been re-expressed on a June 2009 quarter base (=1000).

AUSTRALIAN CONTRACTORS' KEY INDICATORS 16 June 2010
Interest Rates		Diesel Price Watch
	90-day bill rate = 4.90%		VIC (excl GST) = $1.13
Exchange Rates		NC	NSW (excl GST) = $1.11
	AUD/USD =0.8449		TAS (excl GST) = $1.20
	AUD/Yen = 77.34	NC	SA (excl GST) = $1.12
Wage Price Index - All Industries		Consumer Price Index
	Mar 10 quarter = 103.6		Mar 10 quarter = 171.0
	Change (quarter) = +0.9%		Change (quarter) =+0.9%
	Change (year) = +2.5%		Change (year) =+2.9%

Harvesting Research Aims High

The Forest Owners Association (FOA) is leading a business plan aiming for substantial productivity gains through improved harvesting technologies.

More effective methods for harvesting trees on New Zealand’s steep country are vital if the forest industry is to remain competitive and to grow.

A Government/industry partnership of up to $6.5m has been agreed, with PGP funding up to $3.27m over seven years, matched by industry, and will produce estimated total net benefits of over $100 million by 2016.

The problem:
The New Zealand forestry sector and the New Zealand Government have both identified steep country harvesting as a key bottleneck in achieving greater profitability in forestry. They have set a target of reducing harvesting costs by 25 percent; substantially growing harvest machinery manufacture in New Zealand in order to future-proof the forest industry; and making harvesting jobs safer and more attractive for workers.

The solution:
The vision for this plan is encapsulated in the statement -“no worker on the slope, no hand on the chainsaw”. The technical outcomes of the programme are to create novel remote-controlled machines that can work on the harvesting slope and to develop high speed cable extraction systems.

To carry out the business plan, FOA has formed an alliance of research providers, the forestry sector and tree harvest engineering and machinery companies, which is underpinned by a robust research and development programme. Future Forests Research will manage the programme for the FOA.

The benefit:
This business plan offers innovative solutions well beyond business as usual. It identifies direct economic benefits of more than $100 million by 2016, rising to over $400 million by 2020. These benefits arise from both cost savings over current practices and machine sales here and overseas. There are also indirect benefits in: improving the safety and quality of the workplace; building technical capability in harvesting and machinery development to future-proof the industry; and further reducing the environmental footprint of harvesting in New Zealand.

FICA Network for Women Meeting - Rotorua 25 June

Networking ‘Women in Forestry’
Rotorua Regional Meeting – 25 June 2010
‘Kingsgate Hotel & Conference Centre’

Purpose
Our objective is to: ‘Organise an inaugural series of regional conferences to bring together a large number of women to build on initial network capabilities and set in place regional support mechanisms for improved communications among forestry women.’

Networking ‘Women in Forestry’ could provide an opportunity for forestry women to:
1. Share knowledge and experiences,
2. Share resources,
3. Share practical skills,
4. Receive updates and advice on changes in the industry,
5. Explore buying power opportunities, and
6. Take time out of their busy schedules to enjoy the company of like minded women in the same industry.


Evening Agenda
3.30pm Meet and greet
4.00pm Introductions & Background
4.30pm Guest Speaker – To be confirmed (Rural Women)
5.30pm Mix & mingle
6.00pm Dinner

To register for this event (numbers are required for catering) please contact either Sonya Elmiger (sonya@blackburnegroup.co.nz or 07 378 5270 ext835) or Damita Pearse (damita.pearse@gmail.com or 07 8726708 ext77708, mobile 021 721371) ASAP

CO2 Group Joins with Tukia Group in New Zealand

Australian environmental services company CO2 Group Limited (CO2 Group, ASX:COZ) just announced the company’s first overseas venture - an expansion into New Zealand. The expansion of CO2 Group services outside Australia allows it to extend its commercial footprint into international carbon markets; the first Australian dedicated carbon forest sink planting firm to do so.

This initiative follows the passing of the New Zealand Emissions Trading Scheme (NZ ETS) and New Zealand parliamentary confirmation of the emissions compliance market commencing 1 July 2010.

A key feature of the NZ ETS is the ability to generate and sell carbon credits into the international carbon market which in 2009 had a market value of US$143 billion.

CO2 Group has formed a partnership with Maori commercial development company Tukia Group, and New Zealand based investment and advisory firm Carbon & Energy Partners (CEP). The partnership will trade in New Zealand under the name “CO2 New Zealand”. CO2 Group holds a 45 percent interest in CO2 New Zealand, with Tukia Group and CEP holding the remaining 55 percent.

Tukia Group is committed to providing CO2 New Zealand with about 5 million New Zealand Emissions Units (NZUs) by the end of 2010, and access to undeveloped land to support the commercial needs of CO2 New Zealand. Tukia Group is land manager of 176,000 hectares of existing forest lands in the Central North Island Region.

CO2 New Zealand will trade the NZUs and develop new sustainable carbon forests on behalf of third party investors. Tukia Group’s Chairman, Mr Lennie Johns, said: "Tukia Group welcomes CO2 Group to New Zealand. We conducted a global search for the best organisations to help us deliver on our carbon strategy. Both our organisations are leaders in our own countries in developing large, long-term commercial reforestation projects. Our joint aim now, through the newly formed CO2 New Zealand, is to become the premier reforestation company in New Zealand. We are also committed to generating the most efficient long term contracts between buyers and sellers of carbon credits."

"The passing of the NZ ETS means that CO2 New Zealand will now be able to generate carbon credits in the form of NZUs and Assigned Amount Units (AAUs). These can be sold in both the NZ and international carbon markets. We will invite investment from our partners and capital markets into carbon projects here in NZ. These projects will be developed on behalf of investors who require significant volumes of carbon credits in order to meet their compliance obligations," said Mr Johns. "In addition to helping our climate by removing carbon from the atmosphere, these projects will bring many benefits to our landscapes. Some of our land lies bare and idle, while other portions are at risk of erosion. Reforestation can help restore an environmental balance to these lands while also delivering an economic return."

“We applaud the Government for holding the line on the Emissions Trading Scheme. Having the ETS on the books creates an opportunity for us to create a significant commercial venture, and attract world class organisations to participate." "Tukia Group invites all New Zealand companies which now require compliance under our ETS to consider the commercial, environmental and local community benefits of CO2 New Zealand's reforestation programs as part of that commitment."

CEO, CO2 Group, Mr Andrew Grant, said: “This is an important step for CO2 Group; it comes at the end of a long review process by our Company of suitable growth opportunities. Our expansion into New Zealand is well considered and is based on a number of very solid commercial attractions this side of Tasman."

“CO2 Group has been especially impressed with the commercial strengths and approach of Tukia Group. In many ways our organisations are similar: we look forward to working together."

----------------------
BACKGROUND

More about Tukia Group

Tukia Group was created by and for the Central North Island Iwi Collective to promote and develop long-term global commercial interests of iwi-owned business. Tukia Group is owned by six iwi (Maori tribes) based in New Zealand’s central North Island. These iwi are Ngti Tkwharetoa, Ngi Tkhoe, Raukawa, Ngti Whare, Ngti Manawa and Ngti Rangitihi. Tukia is governed by a Board of Directors that includes representatives from each of these iwi.

Tukia Group have been engaged with a variety of both pre-1990 and post-1989 forest owners to aggregate their carbon assets. Total Maori land in New Zealand is estimated to be approximately 820,000 hectares (or 3% of New Zealand). It is estimated that approximately 600,000 hectares (73%) of this land is ‘undeveloped’, with the majority being in the North Island. Tukia Group works with the owners of these assets to develop large, long-term commercial enterprises.

FICA Tokoroa Meeting Wednesday 30 June

FICA will hold a members update meeting and a Logging Costing Workshop at the Waratah office meeting room on the main highway in Tokoroa on Wednesday 30th June. The members meeting will start at 9:00am followed by lunch at 12noon. Then from 12:30pm the Logging Costing Workshop will run until 4:30pm. This will be followed up by refreshments for all FICA members and sponsors attending. There are still a few places left for the Costing Workshop. See the attached pdf form PDF for information. Print out, complete and return to FICA by fax (07 921 1381) or email (innovatekadmin@clear.net.nz). Alternatively you can register by phone with Jasmine on 07 921 1382 - please have payment details ready when you call (credit cards and direct credit options available).

Ocean Freight Index

The Baltic Supramax Index (BSI) closed on Friday at 3095 points, an increase of 0.62% or 19 points since last months report.

The BSI (Baltic Supramax Index), published by the Baltic Exchange, is the weighted average on 5 major time-charter routes. It is based on a 52,454 mt bulk carrier carrying commodities such as timber.



(Source: Cotzias Shipping)

Gunns Revises Earnings Expectations

Gunns Limited Chairman Chris Newman advised last week that the company had revised its earnings guidance, with expected full-year earnings before interest and tax (EBIT) of between A$50 to A$60 million.

He cited a number of positive factors in this announcement including:
• renewed revenue forecasts from their Great Southern MIS responsibilities
• the write down of approximately $9 million on their investment in Forest Enterprises Australia
• the end of loss-making hardwood woodchip sales into China (first half losses were blamed on the appreciation of the Australian dollar against the US dollar)
• certainty with agreed pricing for eucalyptus mixed grade woodchips into the Japanese market
• improved trading conditions in the sawn timber business in the March quarter, although some softening in the market has been experienced subsequently, with synergies extracted as a result of the acquisition of the ITC sawmilling business
• tight cost control across all business units.

Details from the full announcement can be found at http://www.gunns.com.au/Content/uploads/documents/ASX%20Releases%202010/2010%2006%2011%20ASX%20Release%20-%20%20Gunns%20Revises%20Earnings%20Guidance.pdf

Australian Forestry Statistics Released

Australian Forest and Wood Products Statistics publication (AFWPS) Dec 2009 Qtr, released by the Australian Bureau of Agricultural and Resource Economics (ABARE) last week, confirms the extent of the impact of the global financial crisis on key indicators in Australia’s forest industry. This AFWPS report includes data on plantation areas, log harvest volumes and values, sawnwood estimates and paper production for 2008-09, and additional trade data up to the Dec Qtr 2009. Note the data is now close to 12 months old and further substantial changes have occurred since then (see article on the Timber Market Survey below).

Key points from the publication include:
• Timber plantations have expanded in 2009 but at a significantly reduced rate.
• Australian housing activity (a key indicator of domestic demand for structural timber) declined in 2008-09. Although it has trended upwards since, albeit erratically.
• Total volume of logs harvested in 2008-09 fell by 10.7%, logs harvested from coniferous plantations and native forests fell by 13% and volumes of hardwood plantation logs rose.
• Sawnwood and wood-based panels consumption and production declined in 2008-09 except for veneer production.
• Native forest woodchip export volumes decreased while hardwood plantation exports increased. The total value of forest product exports decreased by 5.2%. This trend continued into the Dec Qtr.
• Imported volume of paper and paperboard fell slightly in 2008-09 but look to be trending up thru to the Dec Qtr.

Based on this and the timber market survey data, A3P sees positive signs since the end of 2008-09 for most key forest product indicators but competition by imports remain. A3P will continue to engage with Governments and stakeholders at all levels about the timeliness of data gathering and dissemination of this data, continued plantation investment ,and trade issues. The latest AFWPS can be found on the ABARE website.
(Source: A3P)

Forestry Graft Said to Cost Indonesia $100b

An anti-graft commission in Indonesia is investigating claims of rampant corruption by hundreds of forestry and mining companies operating in Kalimantan that may have cost the state more than $100 billion in forestry, an official said last month.

Corruption Eradication Commission (KPK) deputy chairman Mohammad Jasin said investigators had found “indications of violations” of industry rules by 470 companies, most of them miners working in Kalimantan. Deforestation and rampant illegal logging are the main reasons Indonesia has earned the unwanted label of the world’s third-biggest emitter of greenhouse gas emissions, blamed for man-made global warming.

“They misused forest permits, chopped down trees for wood without replanting, destroyed forests for mining activities and avoided tax payments,” Jasin said. “These violations cost the state more than Rp 1,000 trillion [$110 billion].” Jasin said the country’s forestry industry was notoriously corrupt and graft “permeates every level” of the business.

“Those with power take advantage of weak forestry regulations, and local government officials who are supposed to supervise the forests take bribes from plantation companies,” he said. “It’s hard to catch corruptors because supervision costs a lot of money. The forests are vast and we need helicopters and expensive equipment to check illegal practises on the ground.”

A report released in the United States this month by a coalition including the BlueGreen Alliance and Rainforest Action Network found that 40 percent to 55 percent of Indonesia’s timber is illegally harvested. The report also warned that unless immediate steps were taken, 98 percent of the archipelago’s lowland forests could be gone by 2022. Indonesia Corruption Watch last month claimed that state losses as a result of corruption and mismanagement in the forestry sector could be even higher still. “We estimated the forestry revenue shortfall in Riau province alone from 2002 to 2006 was Rp 1.855 trillion,” ICW researcher Anggita Tampubolon said.

This translates to average annual losses in Riau of Rp 371 billion over this period. ICW based its calculation on comparisons between official deforestation estimates and production estimates. ICW’s finding eclipses recent research by the Supreme Audit Agency (BPK) that said losses from Riau’s forestry sector between 2008 and 2009 amounted to Rp 491 million. Indonesia, Brunei and Malaysia introduced a joint conservation effort on Borneo Island five years ago, but political indecision has left it largely impotent.

South Africa's Green Stadiums - Some Great Shots

Soccer World Cup 2010: South Africa’s Top 5 Stunning Green Stadiums

Click on the link below to see some stunning views of the World Cup Stadiums - We're not sure how and where timber features in their "green-ness" but hey they look great!

South Africa's Green Stadiums

Thanks to FICA Sponsors

We would like to thank all of the organisations who support FICA, which in turn works to promote business growth and improved safety and efficiency amongst forestry contractors for the benefit of New Zealand's Forestry Industry.

STRATEGIC PARTNERS






MEMBERS' BENEFITS – BUSINESS PARTNERS
Blackburne Group (ACCOUNTANCY & MANAGEMENT SERVICES)
UDC Finance (BANKING & ASSET FINANCE)
Sweeney Townsend & Associates (INSURANCE SERVICES)
TLC Insurance (INSURANCE SERVICES)


GOLD SPONSORS
Goughs CAT
Cableprice NZ Ltd
Mini-Tankers (Shell)
Komatsu Forests NZ
Shaw's Wire Ropes (John Shaw NZ Ltd)


SILVER SPONSORS
FITEC
Ensign
Liebherr
Timbersaws (Levin Sawmakers)
Taupo Rigging & Safety Services
Pirtek

Buy and Sell

... and finally ... A Man was Looking for Water in the Desert

.... as you do

A fleeing Taliban, desperate for water, was plodding through the Afghan desert when he saw something far off in the distance. Hoping to find water, he hurried toward the oasis, only to find a little old Jewish man at a small stand, selling ties..
The Taliban asked, "Do you have water?"
The Jewish man replied, "I have no water. Would you like to buy a tie? They are only £5."
The Taliban shouted, "YOU Idiot! I do not need an over-priced tie. I need water! I should kill you, but I must find water first!
"OK," said the old Jewish man, "It does not matter that you do not want to buy a tie and that you hate me. I will show you that I am bigger than that.
If you continue over that hill to the east for about two miles, you will find a lovely restaurant. It has all the ice cold water you need. Shalom."
Cursing, the Taliban staggered away over the hill. Several hours later he staggered back, almost dead & said "Okay, here’s your £5 … Your bl**dy brother won't let me in without a tie!"

And on that note, enjoy the rest of your week. Cheers.

John Stulen