WoodWeek – 17 July 2019

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Greetings from your WoodWeek news team. Now that the mainstream media has moved its spotlight away from the latest boom and bust outburst they associate with forestry, it's back to business as usual, albeit quite a bit slower for some. Any speculation among industry participants now will be whether this is a minor glitch or a bigger shift in markets. Depending on the actual volumes arising from the Euro-sourced beetle wood, one would expect this to be a short-term aberration in our most favoured market. Everyone will have a view, but for now, the market price drops are going to be a strong test for how deep your business relationships really are.

Always one to accentuate the positive, let’s look on the bright side. Dominion Breweries is planning to switch its brewery at Timaru onto wood chip next year to reduce their emissions. DB runs six beer brewing sites around the country, but their Timaru plant is the biggest user of coal-fired steam and thus the single-biggest contributor to the group’s emissions.

Meanwhile, we've got another opinion piece this week: this time on the tree-planting plans by Te Uru Rakau. The week's comments come from Anne Salmond. She raised the issue that the Emissions Trading Scheme currently pays much higher prices for carbon sequestered by pinus radiata plantations than by natural forests. Read it and make your own mind up. She uses the word 'scandal' which is a tad misleading.

Looking to forestry supply chains, we're excited with all of the new technologies coming into play for forest management through to the sawmills now. In that vein, this week we have an update on truck platooning. Our next big forest technology conference is in Vancouver - the WoodFlow Logistix Conference - on 22-23 October. It's set to be another international forum as we attract delegates from beyond North America to Europe and South America as well to this one. Watch this space for conference updates.

And finally, for our tech-savvy readers, we recommend to you the latest monthly issues of our specialist industry technology updates. We have www.woodtech.news for people in sawmilling and wood manufacturing. For those of you in forest management consider subscribing to www.foresttech.news. It’s been specifically written for resource managers, remote sensing and GIS specialists and inventory foresters. Our latest news update from these was released last week. Check out the latest issues. If not already receiving these tech updates, you can sign up directly through the newsletters – and they’re free. On top of this we can now say that in Q3 we'll bring you another new news service that we are certain is going to be popular.

That’s it for another wet week in July (nice to see the sun staying around a bit later each day now though, eh). Enjoy our updates for you this week.

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Our 'IJK' log export markets

IJK being India, Japan and Korean, in alphabetical order. Look at the details for these log export markets outside of China. It's the classic 80/20 statistic. Yes, its a short story, when you look at our lack of diversification. However, this is how free markets work.

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Eastland Wood Cluster Centre of Excellence

Over in Gisborne, the Eastland Community Trust is set to receive its first funding instalment this month for the Wood Cluster Centre of Excellence. The Centre is being developed as a hub for wood processing, wood products, marketing and distribution, and training and research.

The first funding tranche will be for $5 million and will generate at least 30 full-time jobs. We expect employment will continue to grow as the Centre is developed in stages.

Shane Jones said “Forestry is a significant economic driver in Tairawhiti and we want to make sure the region is able to take full advantage of the opportunities the sector provides.”

He added, “The $19.5 million investment is a commitment to the region. This will lead to higher- value forestry products being produced and more money going back into the community via pay packets for local workers.”

The PGF invested $500,000 to the centre in 2018 for its first stage of development.

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2019 changes in log exporters to China

German log exports to China soar - In January-May, log imports to China from Russia declined 26.2% y-o-y to 3.6 million m3 with import value dropped 27.2% to $439.8 million, according to China Customs data. US log exports to China fell 39.5% to 1.6 million m3, export value decreased 44.6% to $338.4 million. Share of Russia in Chinese log imports slid 4.97 pp to 14.3% and share of U.S dropped 4.16 pp to 6.5%.

From January through May, log imports to China from New Zealand expanded 15.4% to 7.4 million m3 with import value surged 13.2% to $1.04 billion. Australian log exports to China jumped 29.9% to 2.5 million m3, while average price declined 18.5% to $109 per m3. Log exports from Germany to China soared 243.0% to 959.0 thousand m3, average price fell 39.8% to $153 per m3.

Total Chinese log imports slid 0.59% to 24.9 million m3, while average price decreased 12.1% to $169 per m3.

Source: International Forest Industries

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Opinion: Billion trees policy being rorted

Anne Salmond: Billion Trees policy being rorted (Newsroom) - Forestry commentators have noted that the industry is facing a perfect storm, with the trade war between the US and China affecting confidence, and trees infested with bark beetle in Russian and Scandinavian plantations being felled, processed and arriving in China by rail, undercutting New Zealand pine.

As I learned recently from forestry experts in Germany, these are not the only factors affecting the future of plantation forestry. Recent articles in Nature and Science strongly advocate growing trees as an effective way to tackle climate change, but point out that on average, natural forests sequester forty times more carbon than plantation forests.

According to the author of one of these studies, "There is a scandal here. To most people forest restoration means bringing back natural forests, but policy makers are calling vast monocultures 'forest restoration'. And worse, the advertised climate benefits are absent."

Indeed in New Zealand, the Emissions Trading Scheme currently pays much higher prices for carbon sequestered by pinus radiata plantations than by natural forests. For this reason, despite a promise that two thirds of the Billion Trees policy would be devoted to native trees, foresters are overwhelmingly using this fund to plant pine trees (88 percent) rather than natives (12 percent).

This makes little sense, because many other countries have their own ‘Billion Trees’ programmes, planting trees as a way of securing their carbon debts, and increasing the global supply of timber. China alone has planted millions of hectares, and like many other countries, is turning to ‘close to nature’ forestry to get better environmental outcomes.

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Source: Newsroom

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ANZ Commodity Price Index

What goes up must come down - The ANZ World Commodity Price Index fell 3.9% m/m in June, to record its first decrease this year. Weaker dairy prices were the main culprit for the drop. The index has fallen 2.4% in the past year.

The fall in the index was exacerbated by the stronger New Zealand dollar resulting in the NZD Index down 4.5% m/m in June.

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Woodflow: New platooning trials in pipeline

Encouraged by what they learned during last year’s test campaign, FPInnovations and its partners plan to continue evaluating cooperative truck platooning technology in the coming months. This year’s goals are more ambitious.

Researchers, in addition to confirming developments in the technology since last year, will be focusing on steering control in the following trucks. The data collected will be used to get an accurate picture of the technology’s current capabilities and how it must be adapted for use on unpaved resource roads. This will allow us to confirm and update the roadmap for introducing the concept of truck platooning on unpaved roads.

FPInnovations is also exploring the possibility of working with other sectors that have organizational and technological challenges similar to those facing the forestry industry in order to develop partnerships to speed up the required developments.

Key takeaways from the November 2018 trials in La Tuque, Québec:

- Platooning technology, with adjustments, is viable on resource roads;
- Application for the forestry industry is to automate the following trucks in order to address the driver shortage and not to achieve fuel savings;
- The forest environment has an impact on platooning: receiving a GPS signal, maintaining a following distance between vehicles, braking;
- No impact was observed on message transmission by dedicated short range communication (DSRC) protocol; and
- Specific platooning challenges are associated with resource roads.

Source: fpinnovations.ca

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Dominion Breweries choosing chips

DB Breweries is planning to switch its brewery at Timaru onto wood chip by the end of next year as part a plan to halve the group’s emissions by 2030. Thee company operates six breweries around the country. But DB Draught's plant at Timaru is the biggest user of coal-fired steam and thus the single- biggest contributor to the group’s emissions.

A DB spokesperson says Timaru is the logical focus given it accounts for most of the steam emissions, which in turn accounted for almost a third of the group’s carbon footprint last year. In 2018, natural gas use across the group was the biggest contributor at 34 percent, with electricity at 18 percent, transport fuel at 7 percent, refrigerant losses at 5 percent and LPG at 4 percent.

DB is looking to switch entirely from coal-fired steam, which it says would require almost 3,000 tonnes of wood chip a year. It is still considering its options for that supply, but expects it will be a forestry residue by-product.

Capitalising on DB's decision, Bioenergy Association says woodlot owners could look to local biofuel markets as an alternative to exporting logs - “Recent news that the log export logs to China are dropping off and harvesting of some trees for export is unprofitable means woodlot owners could look to new outlets for their wood. Using the wood to make wood fuel is one of those immediately available options – and it requires no research,” says Brian Cox, executive officer of the Bioenergy Association.

His comments come after reports of New Zealand logs piling up at ports in China as other wood makes its way by train into the People's Republic from Russia and Scandinavia.

"The growing demand for wood fuel to replace coal and gas is a potential opportunity for woodlot owners close to industry requiring process heat to move their farm from being only a food producer, to being a food plus fuel producer. ” Mr Cox said. “With large energy users such as Christchurch and Otago hospitals, Fonterra and DB Breweries transitioning to use wood fuel means that for some farmers there is a potential revenue stream waiting fo them to pocket if they live near to one of these sites.”

In addition farmers can use bioenergy as a tool for offsetting the biological emissions from their animals. The BioenergyAssociation has identified that 1.8Mt CO2-e of greenhouse gases could be reduced by using wood fuel instead of coal and gas.

Mr Cox said that “Using our logs within New Zealand for timber or fuel, instead of unprofitable exporting, should be on ever tree growers radar so that their business resilience is improved.”

Source: Scoop News

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This week's 1BT news roundup

For updates on the growing debate about the virtues (or otherwise) of the One Billion Trees plan, here is this week's summary:
One Billion Trees supporting native seedlings research - Funding for research to improve New Zealand’s native seedling production will boost survivability and create more efficient ways to produce high-quality seedlings, Forestry Minister Shane Jones said.

The One Billion Trees Programme is providing a funding boost of $422,500 for research – led by Scion in partnership with other Bay of Plenty organisations – to identify more effective native seedling propagation techniques and technology.

“The One Billion Trees Fund we launched last year isn’t just about seeing trees in the ground,” Shane Jones said.

“We have a significant amount of money available for partnerships like this that focus on reducing the barriers to tree planting through research, innovation or sector development. This project ticks all of those boxes.

“The aim is to understand what is and isn’t working and address those key issues including seedling survivability and how to create more efficient ways to produce good quality native seedlings.

“There’s also the potential to see a more environmentally friendly approach to seedling production through the use of paper wrap instead of the usual plastic wrap – reducing waste in the industry.

“What’s important about this partnership is that it goes beyond just theory. Scion’s aim is to ensure their research into improving native seedling propagation is scalable and available to the industry at large,” Shane Jones said.

Scion Chief Executive Dr Julian Elder said research of this kind underpins the Government’s investment in native forestry.

“This funding boost will accelerate the planting of native trees through improved and cost-effective propagation technologies. Our unique nursery research facilities combined with our other research capabilities in bio- products allows us to pursue a more sustainable approach for New Zealand.”


The One Billion Trees Fund will support a Maori Incorporation in the Gisborne District to move to a more productive and sustainable land-use model, Forestry Minister Shane Jones says.

The Fund will provide $450,000 to Mangatu Blocks Incorporation, which is the guardian of Te Aitanga a Mahaki ancestral lands and manages 48,100 hectares for its 5,500 shareholders. Over half of this land is in pastoral farming.

“The Trust has identified areas where they can integrate trees into their existing farming operations - a key goal of the One Billion Trees Fund,” Shane Jones said.

“I am pleased to be able to partner with Mangatu to realise the potential of their land through funding that will establish over 240 hectares of exotic and native trees.

“In total, Mangatu is committed to planting or supporting reversion of over 3000 hectares of marginal land for environmental and economic benefits. We’ll also see the Mangatu trial ecosourcing their own M?nuka seedlings from local sources.

“Working with Maori to protect and enhance their whenua is an important part of the One Billion Trees Programme and I am encouraging more Maori to come forward to partner with the Government through this initiative,” Shane Jones said.

(Planned project details: > Mangatawa Te Hua Te Apiti – This includes supporting 115 hectares of radiata pine and 2.29 hectares of regeneration. This grant has committed funding for $202,010.
> Waihirere Station – This includes supporting 119.26ha of radiate pine, 11 hectares of eucalyptus and 3.4 hectares Manuka.)


Forests are fastest way to soak up carbon dioxide, but not all trees are equal - Which is better, pine or native? If we want to absorb carbon rapidly, nothing can beat pine. Not only does it capture it faster, it would need at least four times the area of native forest compared to radiata pine forest to get the same rate of absorption.

It's also much cheaper to plant than natives, unless the native forest is a hands-off, regenerating one. Canterbury University forestry Professor Euan Mason says he has seen figures of $14 a tree for native forest, five to 10 times the cost of establishing radiata pine.

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New training facility for John Deere

In the US, John Deere recently completed the construction of a 7,500 square foot facility in Coal Valley, Illinois, to better meet internal training demands, along with supporting customer visits and events. The building is part of the Construction and Forestry (C&F) Training Campus and includes three classrooms that can be used separately for training purposes, or combined to hold over 250 people for larger events. In addition, there is nearly 4,000 square feet of covered canopy space for outdoor training and equipment walkarounds.

“The primary function of this new facility is to provide much-needed additional classroom space for dealer sales staff and technician training,” said David Reilly, manager, worldwide training, John Deere Construction and Forestry. “Training is a core part of our program, but beyond that, the C&F Coal Valley Training Campus also hosts other important events throughout the year.”

The facility will also include a John Deere simulator – further bridging the gap between the classroom and jobsite. Onsite events include customer-specific activities where they can demo equipment and interact with John Deere experts.

“With this new facility customers and dealers can walk out of the classrooms and directly into the demonstration area,” said Tim Hilton, manager, Demonstration Sites, John Deere Construction and Forestry. “We’re excited to share this new experience with dealers, technicians, customers, and media.”

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Napier Port IPO details

Napier Port share offer $2.27-$2.60; will raise net $110 million - Napier Port expects to raise up to $234 million from the planned sale of 45 percent of the business through a public share offer.

The offer, indicatively priced at $2.27 to $2.60 a share, will raise gross proceeds of $204.3 million to $234 million. After expected costs of $14 million, and $80 million for current owner Hawke’s Bay Regional Council – including a $44 million special dividend - the net proceeds will be $110.2 million. Pricing at the top end of the range will increase the sum the council receives.

The council is selling down its stake to free up capital for its other activities and to enable the port to raise funds for its ongoing expansion, the first element of which is a $173-to-$190 million Wharf 6 development the company hopes to start work on later this year.

That work is needed to reduce congestion behind the port’s breakwater, which is restricting cruise ship arrivals and caused about 200 secondary vessel movements at the port in the past year. When the new wharf is completed mid- 2022, the company is expecting secondary vessel movements to fall to fewer than 20 a year.

“The IPO is essential to funding this investment programme,” chief executive Todd Dawson said. “Napier Port is embarking on the next phase of its history and we welcome new investors in the port that share our aspirations.”

The indicative pricing implies a market valuation of $454-to-$520 million and an enterprise value of $431.6-to-$497.6 million. Post-IPO, the company will be debt-free and have $20 million of cash on its books for its development capital expenditure. It has arranged a $180 million debt facility to fund its plans.

The company is forecasting earnings before interest, tax, depreciation and amortisation of $39.7 million in the year ending Sept. 30, rising to $40.9 million the following year. It reported ebitda of $37.2 million last year. Revenue is forecast to increase to $97.4 million and $102.5 million respectively from $91.7 million.

The indicative offer price gives a 2020 per-share price-earnings ratio of 22.7 to 26 times. Final pricing is expected to be confirmed on August 7 with listing expected on August 20.

Source: BusinessDesk via Scoop News

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Two Sides advocates for paper

Thanks to information being provided by an anti-greenwash campaign in North America, over 440 companies across the world have removed their misleading “go green – go paperless” messaging - Environmental claims such as “go green – go paperless” and “save trees” are regularly used by banks, telecoms, utilities, insurance companies and many other service providers, as they encourage their customers to switch from paper to lower cost electronic bills and statements. However, a Two Sides global anti-greenwash campaign operating since 2010 has found that the majority of these claims are unsubstantiated and misleading.

To date, Two Sides has successfully engaged with 441 companies worldwide to remove or change such claims about print and paper. Sectors showing the highest occurrence of greenwashing include telecom providers, banks and financial institutions, utility providers and governmental organisations.

In North America, 120 companies, including many of the Fortune 500, have changed or removed their environmental claims following discussions with Two Sides.

“Environmental claims in the U.S. and Canada must meet the guidelines and rules of the US Federal Trade Commission¹ and the Competition Bureau of Canada² which include having credible and specific science-based facts to support claims." "Unfortunately, we have found that these requirements are rarely met and corporations use ‘go green’ claims purely for marketing and enticing more customers to digital options. Companies are also ignoring the growing environmental footprint of their electronic infra-structure, including the use of non-renewable resources, energy and the large amounts of e-waste generated,” says Phil Riebel, President, Two Sides North America.

Martyn Eustace, Chairman of Two Sides Europe/UK, said: “We are really pleased that our ongoing effort is having such a significant effect on some of the world’s largest and most influential companies and organisations. However, our latest research shows that misleading environmental messages are having an impact on consumer perceptions of print and paper – particularly regarding the impact on forests. This is why it is so vital for Two Sides to continue working with organisations to remove greenwashing claims and educate them about the unique sustainable aspects of print and paper. Paper comes from a renewable resource and is one of the most recycled materials in the world. When responsibly produced and used, it can be a sustainable way to communicate.”

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Buy and Sell

... and finally ... if cats and dogs kept diaries

… and finally … dogs vs cats

Excerpts from a Dog's Diary:

8:00 am - Yum, dog food! My favourite thing!
9:30 am - A car ride! My favourite thing!
9:40 am - A walk in the park! My favourite thing!
10:30 am - Got rubbed and petted! My favourite thing!
12:00 pm - Lunch! My favourite thing!
1:00 pm - Played in the yard! My favourite thing!
3:00 pm - Wagged my tail! My favourite thing!
5:00 pm - Milk Bones! My favourite thing!
7:00 pm - Got to play ball! My favourite thing!
8:00 pm - Wow! Watched TV with the people! My favourite thing!
11:00 pm - Sleeping on the bed! My favourite thing!

Excerpts from a Cat's Daily Diary:

Day 983 of my captivity – My captors continue to taunt me with bizarre little dangling objects. They dine lavishly on fresh meat, while the other inmates and I are fed hash or some sort of dry nuggets. Although I make my contempt for the rations perfectly clear, I nevertheless must eat something in order to keep up my strength.

The only thing that keeps me going is my dream of escape. In an attempt to disgust them, I once again vomited on the carpet. Today I decapitated a mouse and dropped its headless body at their feet. I had hoped this would strike fear into their hearts, since it clearly demonstrates what I am capable of. However, they merely made condescending comments about what a 'good little hunter' I am … arghhhh … hissssss!

There was some sort of assembly of their accomplices tonight. I was placed in solitary confinement for the duration of the event. However, I could hear the noises and smell the food. I overheard that my confinement was due to the power of 'allergies.' I must learn what this means and how to use it to my advantage.

Today I was almost successful in an attempt to assassinate one of my tormentors by weaving around his feet as he was walking. I must try this again tomorrow – but at the top of the stairs this time.

I am convinced that the other prisoners here are flunkies and snitches. The dog receives special privileges. He is regularly released – and seems to be more than willing to return. He is obviously retarded. The bird in the house has got to be an informant. I observe him communicating with the guards regularly. I am certain that he reports my every move. My captors have arranged protective custody for him in an elevated cell, so he is safe. For now ...

That's all for this week's wood news.

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John Stulen
Innovatek Limited
PO Box 1230
Rotorua, New Zealand
Mob: +64 27 275 8011
Web: www.woodweek.com

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