WoodWeek – 9 October 2019

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Greetings from your WoodWeek news team. Plenty of wood in the news this week. With climate change being popular in mainstream media (possibly for its emotional impact) it follows that forest industry news rises to the business headlines more as well.

Our next conference series – ForestTECH 2019 – coming soon is currently busy with registrations from across the forest management sector. Now is the time to register your people. There are workshops associated with the conference series too so it pays to get in early.

Next week we will be launching our Canadian conference – ForestTECHX 2020– running in March in Vancouver. It has a strong following with foresters in Canada, USA and Europe so keep your eyes peeled for that too.

This week the revelation that was not new to most people in our industry about foreign ownership of land is a bit of a yawn. Clearly the history of forest asset ownership slipped past the average person all those years ago, when our politicians sold several major crown assets. So here is a quick recap for some of our younger readers. Until 1990, most of the forests were owned by the government, but it decided to sell them and many of the forests were bought by companies from overseas.

Privatisation - By 1989, the government decided to sell the plantation forests, though not the land they were on, and the first sales began in 1990. That year 22 forests, totalling 135,622 hectares, were sold. New Zealand firms bought the majority of the forests, with much of the rest purchased by companies from Japan, Hong Kong, Singapore and China. In 1992 a further 97,000 hectares were sold, mainly to the local subsidiary of US firm ITT Rayonier. The major forests of the central North Island were sold in 1996 to the Central North Island Forest Partnership, comprising Fletcher Challenge Forests and (until 1999) Brierley Investments.

Moving right along, but still on the subject of asset sales we have a current news story. In Australia, UBS' investment bankers have been called back in to NSW Treasury to help consider options for the state's commercial softwood plantation business. Continuing with news from the left hand side of the Tasman Australia's $1.4- billion plantation woodchip industry has been dragged down with a number of shipments to China cancelled recently.

On the east coast there has been a welcome boost of $2.27 million in government funding for locally-led Tairawhiti skills and employment projects. Over in Whanganui and New Plymouth, KiwRail announced increased freight capacity of some 45,000 tonnes of logs a year to be transported to Port Taranaki.

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Log export markets update

Update: Log export markets - This week we've got our monthly update from the Champion Freight team.

The chart shows total log export values to China year-on-year to the end of August were still up 11 percent at $NZ2.8 billion contributing to overall log exports growing 9 percent across all markets compared to the same period last year.

Month-on-month to the end of August, the log export value of shipments to China were down 20 percent (to NZ$193 million; shipments to India were up 16 percent to and shipments to South Korea were down 23 percent, bringing overall log exports down 19 percent.




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NSW mandates UBS for Forestry scoping study

NSW government mandates UBS for forestry scoping study - In Australia, UBS' investment bankers have been called back in to NSW Treasury to help consider options for the state's commercial softwood plantation business.

Hot on the heels of advising NSW on its three-pronged poles and wires privatisations, Street Talk can reveal UBS has been mandated to run a scoping study on the assets housed in NSW's Forestry Corporation.

While it is understood NSW Treasury's deliberations have just started, and ink has barely had time to dry on UBS' mandate, the fact NSW has called in the investment bankers is a clear sign the assets may well end up as the state's next chunky privatisation.

NSW's move comes after Victoria sold its softwood plantations in 1998, while Queensland reaped $603 million when it sold Forestry Plantations Queensland in 2010.

Bankers reckon NSW's business could be worth as much as $1 billion, although there is little information in the market about exactly what the state would consider selling and terms attached to any sale.

More >>

Source: Financial Review






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Australia: Export of wood chips dips

US-China trade war hits Australian woodchip industry as shipments cancelled - Australia's $1.4-billion plantation woodchip industry has been dragged into the US-China trade war, with a number of shipments to the Asian economic powerhouse cancelled in the fallout from the dispute.

Amid fading hopes of a speedy breakthrough in the trade war, timber exporters have been hit by falling demand for woodchips from Chinese paper mills, which have become the industry's biggest customers.

Since July, at least three ships that were supposed to take Australian woodchips to China have been cancelled or deferred, and there are fears further consignments could be affected.

While shipments from Albany on Western Australia's south coast have been hit hardest, it's believed other woodchip export hubs in South Australia and Victoria have also been disrupted.

The setbacks have put the brakes on an industry that had been enjoying sustained growth since a wave of turmoil brought on by the failure of the managed investment scheme scene a decade ago.

More >>

Source: ABC


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ForestTECH 2019 speaker preview

Presenter profiles – ForestTECH 2019 - For our upcoming conference series in November we've got a great lineup of speakers.

Full details on the programmes along with details on the four workshops being run in conjunction with this year’s series, can be found on the event website; ForestTECH.events. This week we profile some more of this year’s presentations.

Mark Noonan, NSW Department of Planning, Industry and Environment, Australia

Incendo is a low-cost and innovative spatial web and mobile tool for managing bushfire risk on New South Wale's Crown Land estate. The tool is a live bushfire management plan that provides the latest information from multiple sources to bushfire officers across NSW. In this presentation you will learn how Crown Lands moved from a desktop environment to a fully mobile and web- based system in under 3 months.

Shaun McBride, Thinxtra, New Zealand

Real-World Applications for the Internet of Things in Forestry Operations. In the last couple of years most of the discussions on IoT where about how this new technology could impact the Forestry Industry - now we are seeing with real life forestry IoT deployments the impact this is making. Shaun will cover an overview of IoT developments and real-world examples of how it is being used in both forestry and other industries with similar working conditions.

Grant Pearse, Scion Research, New Zealand

New methods are emerging from the field of data science that could revolutionize remote sensing approaches. However, these new deep learning methods are not optimised for use in remote sensing and can struggle with geospatial data.

This presentation will cover recent work done by Scion research to re-purpose these algorithms for use with low-cost UAV imagery. The accuracy and transferability of the resulting models exceeded all other approaches tested at Scion and can be readily transferred to end-users.

Sean Krisanski, University of Tasmania, Australia

Unmanned Aerial Vehicles (UAVs) are conventionally used above the forest canopy, however, in areas of dense canopy cover, photogrammetry and even multi-echo LiDAR can be limited in how much detail it can capture from the sub-canopy due to canopy occlusion. This project focuses on exploring how UAVs can be applied beneath the forest canopy to capture information from areas which were previously difficult to map. This presentation will focus on the learnings and advancements made in the project since this publication.





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Rail capacity lift for Taranaki logs

Rail boost avoids more log trucks on Whanganui-Taranaki roads - KiwiRail's addition of log wagons on our freight trains to Port Taranaki will avoid the need for 2,700 truck trips on the regions roads, KiwiRail Group Chief Executive Greg Miller says.

From today six log wagons will be added to the daily freight service between Whanganui and New Plymouth, enabling up to 45,000 tonnes of logs a year to be transported to Port Taranaki for storage and export.

"The addition of these log wagons highlights the real benefits rail can have for New Zealand's regions," Mr Miller says.

"Six wagon loads a day will avoid the need for about 2,700 truck trips each year. This not only helps reduce congestion on Whanganui and Taranaki's regional roads and highways, it also reduces road maintenance costs and transport emissions - given rail has 66 per cent fewer emissions per tonne of freight carried than trucks.

"Rail improves the resilience of the forestry supply chain - giving more options for logging companies to get their harvests to port. The additional wagons to Port Taranaki are a solid start and, if there is demand, KiwiRail could run a dedicated log train to the port in the future."

According to statistics published by the Ministry for Primary Industries, forestry harvests across New Zealand have been growing dramatically since 2008. They are currently at around 36 million tonnes per year, and are forecast to remain at high levels for the next decade. In the Western part of the Southern North Island, which includes Whanganui, harvests are forecast to increase from 1.5 million tonnes in 2019 to 2.3 million tonnes by 2024 and remain at that level until the mid-2030s.

"The fact is, with significant harvests forecast for the years ahead, rail is a must have," Mr Miller says."

"The trucking sector alone cannot cope with the volumes of logs, so road and rail have to work together."

"Delivering logs by truck from the forests to Whanganui, to be railed to Port Taranaki, and then be shipped overseas shows how the different transport modes can work together to support regional growth."

KiwiRail is working on number of other forestry projects across the North Island, with support from the Government's Provincial Growth Fund. These include reopening the Napier to Wairoa line to transport logs to Napier Port and investigating a potential new log hub in Dannevirke.

KiwiRail has also extended logging capacity between Masterton and Wellington's CentrePort.


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Foreign foresters dominate

Foreign forestry companies NZ's biggest landowners - The four largest private landowners in New Zealand are all foreign-owned forestry companies, an RNZ investigation has found.

Despite a clampdown on some overseas investment, including a ban on residential sales to offshore buyers, the Labour-led government has actively encouraged further foreign purchases of land for forestry through a stream-lined 'special forestry test'.

Since the government was formed, the Overseas Investment Office (OIO) has approved more than $2.3 billion of forestry-related land sales - about 31,000 hectares of it previously in New Zealand hands.

Of that, about half has been sold via a streamlined 'special forestry test' introduced by the government last October. Overall, nearly $5b of sensitive land has changed hands through the OIO since the government was formed.

The information comes from an RNZ investigation into land ownership in New Zealand.

Using Land Information New Zealand data, Companies Office searches and other research, RNZ has compiled a list of what we believe are the 100 biggest private landowners in New Zealand by area, not including the Crown and public entities (which control at least 28 percent of the land) or iwi.

Together, these landowners have freehold ownership of 1.42m ha of land - more than 10 percent of all privately-owned land and about 5 percent of New Zealand's total land area of 26.8m ha.

That comes close to the 6.7 percent of total land RNZ could conclusively identify as Maori- owned. Tuhoe, Ngati Tuwharetoa, and the Central North Island grouping of eight iwi were the largest iwi landholders - although Tuhoe's holdings include Te Urewera, which has special independent legal status.

The analysis found at least 3.3 percent of New Zealand's land is foreign-owned.

Forestry companies dominate top 10 - RNZ has only counted freehold land - that is, land owned outright. A separate analysis of lease titles found that many of the largest landowners were also large leaseholders. That includes forestry companies, who often buy surface rights - known as 'cutting rights' - to plant and harvest trees, but not the land itself.

Overseas forestry companies dominate the top of the freehold landowners list, taking the first four places, and account for six of the top 10 land-holders overall.

One of the companies, New Forests Asset Management, amassed its entire land portfolio of more than 77,000 ha in less than four years - bumping it from owning nothing in 2015, to being the country's third biggest private landowner today.

The company was allowed to go ahead with an application to buy more land - which was ultimately approved - while some of its earlier purchases were still under investigation by the Overseas Investment Office.

Forestry features prominently in the rest of the top 100, along with farming - due to the many large farming stations still in individual ownership. The various Christian denominations, including the Exclusive Brethren and Gloriavale, collectively own nearly 14,700ha - placing the church at 24th on the list.

Individual homeowners own very little of New Zealand's land mass. People who own five hectares or less of land - a generous estimate of what might count as a single residential property, such as a lifestyle block - collectively own about 1.5 percent of New Zealand.

More >>

Source: RNZ


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Emissions trading changes summarised

Last month Margules Groome published a summary of the recent changes to the New Zealand Emissions Trading Scheme with their insights into the how they might change the investment potential for forestry land.

In July 2019 the Ministry of Primary Industries (MPI) announced the third in a series of proposed changes to the Climate Change Response Act 2012, which affect the function of the Emissions Trading Scheme (ETS).

This announcement follows further updates in December 2018, and March 2019, based upon the feedback from consultations the Ministry of Primary Industries and the Ministry for the Environment ran throughout 2018.

Why the need for change? – The ETS has had limited effect on encouraging plantation forestry in New Zealand, with the total area of post 1989 forests registered under the ETS having decreased since inception. Much of this removal was either driven, or enabled by, the crash in unit prices from 2012 to 2015, where unit prices reached as low as NZD2.00.

As the ETS is a key pillar underpinning New Zealand’s ability to meet its emissions targets, change is required to encourage more planting to help meet these goals.

Major changes announced

Introduction of Average Accounting - This is the change with the largest potential effect on forestry investment in New Zealand. A significant departure from the previous method of calculating (New Zealand Unit) NZU flows, the averaging approach allows for liability free NZUs to be sequestered to a pre-determined level based on species, region and rotation length. Provided that the forest is continually replanted after harvest, the NZUs sequestered under averaging will never need to be paid back. The mechanisms of how the averaging age will be calculated are still to be finalised, but there is likely to be provisions for flexibility in harvest age without impacting the averaging age.

Ability to offset – This change provides forest owners with the ability to replant an equivalent forest elsewhere without incurring any liabilities. This will be helpful in the case of high value land being able to be converted into alternative uses.

De-risking investments in the case of adverse events – In the case of a significant adverse event, such as fire or windthrow, provided the forest is replanted in time, there will not be a liability incurred.

These changes will have a significant effect on the viability of bareland forestry investment in New Zealand, considerably altering cashflows in early stages of the rotation without the associated liabilities.

More >>

Source: Margules Groome


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PGF boost for Tairawhiti skills growth

A boost of $2.27 million was announced for locally-led Tairawhiti skills and employment projects in a joint statement from Hon Shane Jones, Minister for Regional Economic Development and Hon Willie Jackson, Minister of Employment last Friday.

The Provincial Growth Fund will invest over $2.27 million to promote skills, training and employment in disadvantaged areas of Tairawhiti, Regional Economic Development Minister Shane Jones and Employment Minister Willie Jackson announced.

“This funding from the PGF’s Te Ara Mahi (TAM) and He Poutama Rangatahi (HPR) allocations means getting more people work-ready through the support of locally-led initiatives. We know this is essential for our regions to thrive and grow, which is a key priority for this Coalition Government,” Shane Jones said.

The projects receiving funding are:
Te Ara Mahi (TAM) projects:
• Tairawhiti Road Transport – Recruitment and Training Project (Eastland Wood Council) - $999,000
• GDL2Mahi (Tairawhiti Rural Education Activities Programme/REAP) - $697,000

He Poutama Rangatahi (HPR) projects:
• Rangatahi Pathways to Trades (Gisborne Development Incorporated) - $425,000
• Generation Programme (Eastland Wood Council) - $90,000
• ASET Poutama Rangatahi (Aotearoa Social Enterprise Trust) - $63,000

“These projects exemplify the purpose of Te Ara Mahi and He Poutama Rangatahi - to give regions the capability to support local people with skills, training and employment.”

“The funding announced for Tairawhiti Road Transport – Recruitment and Training Project will attract and upskill almost 80 truck drivers for local industries including road freight transport, forestry and agriculture. With the current shortage of drivers predicted to increase, this programme is vital to make sure the region has access to skilled labour, while also improving the employment prospects of local people.

“I have also announced support for GDL2Mahi, which tackles the lack of driver licencing more broadly in Tairawhiti. Run by Tairawhiti REAP, this funding will scale-up an existing programme and train 300 people in rural Tairawhiti over the next two years for restricted, defensive driving and full licences, meanwhile helping people find work,” Shane Jones said.

Minister for Employment Willie Jackson said the HPR funding announced today supports community initiatives to help solve community problems.

“Rangatahi Pathways to Trades will receive $425,000 to expand the programme’s support of local rangatahi aged 20-24, to help more into industry-based apprenticeships, employment and further training. With a focus on construction, engineering and automotive industries, this project will fuel major sectors in Tairawhiti with the right labour supply from local rangatahi who want a future career in the industry but need support to get started,” Willie Jackson said.

“We’re also seeing a number of HPR projects achieve early success and exceed anticipated demand. Eastland Wood Council will receive an additional $90,000 to support a further 24 rangatahi aged 16-24 through The Generation Programme, and add driver and literacy skills. Aotearoa Social Enterprise Trust’s Poutama Rangatahi Programme will also receive a further $63,000 due to a significant increase in the demand from rangatahi.”

Support for worthy initiatives like these is another step towards reversing the neglect of our regions and their people, and I look forward to seeing what else these projects will achieve,” Willie Jackson said.


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WindTech: Wood for turbine towers

A Swedish company has come up with a novel design to make wind turbine towers more cost-effective to manufacture, transport and install while reducing lifecycle LCoE. And it is made almost entirely out of wood.

Engineering and industrial-design company Modvion is the driving force behind the reintroduction of wood as a structural material for turbine towers. Set up in Gothenburg, Sweden, in 2016, the firm specialises in developing a novel, modular, segmented "full-wood" tower concept.

Modvion claims its patented technology for modular high towers delivers enhanced yields and a lower levelised cost of energy at less favourable wind sites, while potentially making wind power carbon-neutral.

The tower is produced in close collaboration with Moelven, a leading Nordic manufacturer that recently completed what is currently the world’s tallest timber building in Norway.

The current main design focus is at a structure with 150-metre hub height for the 4-4.5MW volume class. However, a first step is to install a 1:5-scale prototype tower with a 30-metre hub height on an island near Gothenburg this year, according to CEO Otto Lundman.

"We are about to finish all five tower sections for the prototype with them. We also work closely with Chalmers University of Technology in Gothenburg for developing the towers, site construction and a joint testing programme," Lundman explains. Chalmers University and the Swedish Wind Technology Test Centre are the prototype customers. The university supplied a research turbine with a 16-metre rotor, which, according to Lundman, is well suited to study how the tower performs. The downsized structure should become a stepping stone towards building the much larger 150-metre commercial tower. It is also expected to become a landmark for advanced tower designs using wood construction, once the concept has proved itself.

More >>

Source: Wind Power Monthly


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... and finally ... John Clarke on Fred Dagg

John Clarke on Kiwi war humour - The following is a old newspaper article on how John Clarke came up with the "Fred Dagg" persona for his comedy work:

He begins by saying, "When people ask me where Fred Dagg came from, I'm reminded of an old army war story."





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

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John Stulen
Editor
Innovatek Limited
PO Box 1230
Rotorua, New Zealand
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Web: www.woodweek.com

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