WoodWeek – 30 October 2019

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Greetings from your WoodWeek news team. In this week’s roundup the Government is taking steps to ensure its goal of planting 1 billion trees over 10 years doesn't come at the cost of valuable farmland.

Looking to export markets where there has been an increase in the AWG prices during October. The PF Olsen Log Price Index for October increased $3 to $119. The index is currently $9 below the two-year average, $8 below the three-year average, and $1 lower than the five-year average.

Picking up on last week’s call for speakers for our FIEA Forest Safety & Technology conference, we are in discussion with several parties. If you are keen to be a speaker at this conference and you are an early adopter, developer, innovator, technology supplier, service provider or researcher within the forestry sector specifically around safety, we would like to hear from you. Also, make contact if you are keen to be part of our focus group determining the key focus for this May 2020 event.

Things are getting busy as we prepare for next month’s ForestTECH Conference series running in Melbourne and Rotorua. Then, in March 2020, the series continues with our Canadian version of the event – the 2020 ForestTECHX 2020 Conference in Vancouver. Registrations and programmes are available online for the complete conference series. Kiwis and Aussies should take note that the BC version of this event draws a very wide international audience in addition to foresters and senior industry leaders from across North America.

Looking to forest expansion, Land Minister and Green MP Eugenie Sage has given Pan Pac special approval to bypass the OIO to purchase land for forestry for the next three years. Amid the backlash in some rural quarters, Pan Pac Forest Products managing director Doug Ducker has defended his Japanese-owned company’s fast track path to buying land without Overseas Investment Office approval for every purchase.

Meanwhile in Australia, consultants from Minter Ellison and KPMG are to help with a scoping study for the state's commercial softwood plantations. They join investment bank UBS in helping the state consider options for the assets, including a potential sale.

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Clampdown on forestry speculators

The Government is taking steps to ensure its goal of planting 1 billion trees over 10 years doesn't come at the cost of valuable farmland - Agriculture Minister Damien O'Connor addressed concerns that overseas investors are buying large tracts of farmland to convert to forestry on Newshub Nation on Saturday morning.

"In some areas, there are genuine concerns about this where there have been a number of farms bought up," he said. "We are looking into it. I've had discussions with Forestry Minister Shane Jones, and we'll have to tweak things. We'll look to intervene where we've got large-scale speculation by just a bunch of land traders."

Changes to the Overseas Investment Act in 2018 streamlined purchases of land by overseas investors if it was used for forestry. This led to an increase in speculators buying land to convert to forest, betting on an increase in the price of carbon. As at April this year, North Island forestry land rose from a median price of $6656 per hectare to over $13,000.

Information from the Overseas Investment Office shows that until the end of August 2019, there have been 19 approvals for sales under the new 'special forestry test'. Eight of those were farm conversions, amounting to 14,229 ha of farmland converted to forest.

However Julie Collins, deputy director-general of Te Uru Rakau, says the special forestry test has many specific caveats designed to protect the land.

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Source: Newshub

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PF Olsen Log Price Index

October 2019 - Due to the increase in the AWG prices, the PF Olsen Log Price Index for October increased $3 to $119. The index is currently $9 below the two-year average, $8 below the three-year average, and $1 lower than the five-year average.

Basis of Index: This index is based on prices weighted in proportions that represent a broad average of log grades produced from a typical pruned forest with an approximate mix of 40% domestic and 60% export supply.
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Log export market update

Market update - At Wharf Gate (AWG) prices for export logs delivered to ports around New Zealand in October increased by an average of 8 NZD per JAS m3.

From the nadir that was July AWG prices, the average AWG prices have now increased by approximately 20 NZD per JASm . Log stocks are relatively low in China and we expect AWG prices to continue their steady increase until the end of the year, due to increased CFR log prices in China.

Export port update - Cargo volumes flat through Port of Tauranga in last quarter. The Port of Tauranga, New Zealand’s international hub port, reported a slight decrease in cargo volumes for the first quarter of the 2020 financial year.

From 1 July 2019 to 30 September 2019, Port of Tauranga handled nearly 6.8 million tonnes of cargo, a 1.1% decrease on the same period last year. Log exports dropped 5.2% in volume to just over 1.7 million tonnes, following a sharp decrease in international prices and demand in the past few months.

Overall export update - Dairy exports boom - Key commodity exports of dairy products and meat increased in value in September 2019, but these rises were partly offset by a fall in the value of log and fruit exports, Stats NZ said yesterday. In September 2019, the value of total goods exports rose $216 million (5.1 per cent) from September 2018 to $4.5 billion, mainly driven by exports to China.

For more details on monthly log exports see: www.stats.govt.nz.

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Napier volumes in line with forecasts

Napier Port (NZX.NPH) trade volume data for the year to 30 September 2019 released today shows trading volumes in line with forecasts released at the time of the launch of its initial public offer in July of this year.

Napier Port intends to provide volume data updates on a quarterly basis as part of its reporting program on an ongoing basis. Napier Port’s 2019 financial results will be published on 19 November 2019.

Container Services

Combined export and import trade TEU volume of 267k was 2.5% above forecast for the year and 3.2% higher compared to 2018. Combined with fewer Discharge, Load, Restows (DLRs or ‘other container movements’) the total container TEU volume of 271k was 1% ahead of forecast and 2% ahead of the prior year.

Higher export volumes were driven by a record export season for apples, increased meat exports and decreased canned food / other food exports.

Missed calls due to weather events and shipping service changes contributed to lower container vessel calls than forecast.

Bulk Cargo

Bulk Cargo total volume of 3,404k Tonnes was 1% above forecast for the year. Log volumes were in line with forecasts, supported by higher log volumes from the Gisborne region during the fourth quarter. Other exports were lower than forecast due to fewer exports of bulk timber and lower tallow volumes, amongst other smaller categories.

Cruise Services

The 70 cruise vessel calls for the 2019 financial year were in line with forecasts and represented 22.8% growth compared to 2018.

Source: Scoop

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Sage pirouette removes OIO hurdle

Government gives Japanese-owned forestry company Pan Pac Forest Products free pass to buy NZ land – Green Rush - Land Information Minister and Green MP Eugenie Sage has given a foreign-owned forestry company a free pass to buy thousands of hectares of New Zealand land without applying to the Overseas Investment Office (OIO).

Japanese-owned Pan Pac Forest Products was given the special approval to bypass the OIO to purchase land for forestry for the next three years as the government sought foreign forestry money to help meet its tree planting targets.

The pre-approval was given to Pan Pac despite the Green Party having strongly protested land sales to foreigners and Forestry Minister Shane Jones saying he was sympathetic to rural concerns that converting productive farm land to forestry could cost jobs.

Associate Finance Minister David Clark signed off on Pan Pac's pass, known as a 'standing consent', alongside Ms Sage. The free pass allows Pan Pac to make 25 transactions involving 20,000ha of land and is valid until 2022.

Ministers signed off on the decision on 19 September but kept it under wraps until now. Ms Sage defended the decision, saying Pan Pac had been in New Zealand since the 1970s, was a large exporter of quality timber and needed to secure its wood supply.

"They've got a long standing reputation in New Zealand. They've increased their investment here, they've got a strong workforce. We want to add value to our forestry exports not just have log exports and Pan Pac is a company that can do that."

OIO group manager Vanessa Horne confirmed to RNZ that the deal allowed Pan Pac to buy farm land to convert to forestry.

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SnapSTAT - Recent log export trends

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Ducker defends decision for Pan Pac

Pan Pac Forest Products managing director Doug Ducker has defended his Japanese-owned company’s fast track path to buying land without Overseas Investment Office approval for every purchase.

Land Information Minister Eugenie Sage gave the company approval to buy up to 20,000ha of land for forestry between now and 2022 with a maximum of 25 transactions without specific OIO approval for each purchase.

Ducker strongly disputes claims the company has been given a free pass around OIO regulations.

“We do not in any way shape or form get a free pass on the purchases. This standing consent just eliminates the need to make every purchase conditional on OIO approval. However, the OIO conditions on being able to do so are more stringent than those traditionally required and we have to demonstrate to OIO we are meeting those conditions.”

The company was granted the standing consent based on its long, successful history in NZ with a proven track record for forest management and processing.

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Source: Farmers Weekly

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Lawyers and accountants join NSW study

In Australia this week the NSW Treasury has mandated law firm Minter Ellison and KPMG to help with a scoping study for the state's commercial softwood plantations. The two firms join investment bank UBS in helping the state consider options for the assets, including a potential sale.

The commercial softwood plantations are housed inside NSW's Forestry Corporation.

When NSW Treasurer Dominic Perrottet announced the scoping study in August, he said it would seek to determine whether the commercial softwood business was best managed by the government or a private operator.

The scoping study is expected to include talks with potential buyers, including specialty forestry funds and domestic and offshore pension funds which already have significant investments in the sector.

It will focus on Forestry Corporation's profitable softwood division, which consists of about 230,000 hectares of radiata pine forests, primarily producing timber for use in house construction. The plantations - which are located in the central west, south and north of the state - employ about 190 staff.

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Source: Financial Review

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Scientists develop fuel friendly leaf

‘Artificial leaf’ successfully produces clean gas - A widely used gas currently produced from fossil fuels can instead be made by an ‘artificial leaf’ that uses only sunlight, carbon dioxide and water, and which could eventually be used to develop a sustainable liquid fuel alternative to petrol.

The carbon-neutral device sets a new benchmark in the field of solar fuels, after researchers at the University of Cambridge demonstrated that it can directly produce the gas – called syngas – in a sustainable and simple way.

Rather than running on fossil fuels, the artificial leaf is powered by sunlight, although it still works efficiently on cloudy and overcast days. And unlike the current industrial processes for producing syngas, the leaf does not release any additional carbon dioxide into the atmosphere. The results are reported in the journal Nature Materials.

Syngas is currently made from a mixture of hydrogen and carbon monoxide, and is used to produce a range of commodities, such as fuels, pharmaceuticals, plastics and fertilisers.

“You may not have heard of syngas itself but every day, you consume products that were created using it. Being able to produce it sustainably would be a critical step in closing the global carbon cycle and establishing a sustainable chemical and fuel industry,” said senior author Professor Erwin Reisner from Cambridge’s Department of Chemistry, who has spent seven years working towards this goal.

The device Reisner and his colleagues produced is inspired by photosynthesis – the natural process by which plants use the energy from sunlight to turn carbon dioxide into food.

On the artificial leaf, two light absorbers, similar to the molecules in plants that harvest sunlight, are combined with a catalyst made from the naturally abundant element cobalt.

When the device is immersed in water, one light absorber uses the catalyst to produce oxygen. The other carries out the chemical reaction that reduces carbon dioxide and water into carbon monoxide and hydrogen, forming the syngas mixture.

As an added bonus, the researchers discovered that their light absorbers work even under the low levels of sunlight on a rainy or overcast day.

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Source: University of Cambridge via Tree Frog News

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Carbon Match market update

This week we have extracted one section from the regular market update for 24 October from our friends at Carbon Match:

What's the Rub for the NZU Market? - It's the details that matter, and for those in many respects we are still waiting. But to capture again some themes, we have the following:

1) Industrial allocation is to be phased down from 2021

2) International units look likely to be used with constraint and if used will be subject to a volume limit.

3) The Government, as already announced, intends to launch auctions by the end of 2020. The ETS Amendment Bill is going to set out the tools that the Government will have to manage supply into the ETS.

4) Importantly, for both emitters and other NZU holders, auctions will see the end of the fixed price option ($25) as we know it, with that very blunt (but clear) safety valve to be replaced by a "Cost Containment Reserve".

We've said it before and we will say it again, as an entity with a compliance obligation, being able to simply pay a known fixed $ amount to atone for every tonne of CO2e for which you are responsible has been an incredibly valuable and simple safety valve.

The current price ceiling, the $25 fixed price option, will either be removed when auctioning begins or no later than 31 December 2022. It will be replaced with a cost containment reserve price ceiling.

What makes this slightly different is that there will be an overall cap on units supplied into the ETS, and the MfE have said that will set limits on the units available under the auctions, units available via the CCR and on the use of any future international units.

"The cost containment reserve will be incorporated into NZ ETS auctions. Units provided through the reserve will be backed by an equivalent tonne of removals. The volume of units available and the trigger price at which these units will be released will be set out in regulations. We expect to consult on these regulations later this year." says the MfE.

We have known for some time that the status quo is not sustainable and anything but consistent with New Zealand's Paris commitments or with our longer term commitments on the World stage.

Modelling used in the NZ Productivity Commission Low Emissions Inquiry suggests NZ carbon prices need to rise to $75 a tonne of carbon dioxide equivalent, and possibly over $200 a tonne, over the next three decades.

Today's announcements are another milestone on the road.

Carbon Match - every weekday from 1-5pm.

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Could YOU re-start someone's heart?

Every year, cardiac arrest kills more New Zealanders than road accidents, a statistic everyone can change.

Death from cardiac arrest is our silent toll. It can happen to people of any age at any time, but the chance of survival can be greatly improved with bystander CPR and use of an AED (automated external defibrillator).

Wednesday 16 October was International Restart a Heart Day (RAHD) and St John, in partnership with Wellington Free Ambulance, Fire and Emergency NZ and the NZ Resuscitation Council are joining together to teach everyone how to save a life.

St John Medical Director Dr Tony Smith says that every minute that goes by without CPR or defibrillation reduces the chance of survival by 10-15 percent, with only 15% surviving a cardiac arrest.

“This survival rate can be doubled by people taking three easy steps: call 111 for an ambulance, immediately start CPR and find and use the nearest AED."

“Using an AED is simpler than using a mobile phone. Anyone can do it, just turn it on and follow the voice instructions,” Dr Smith says.

St John Head of Clinical Audit and Research Professor Bridget Dicker says having access to AEDs or ‘heart starters’ in the community is critical. “Our clinical research tells us we need more AEDs in remote and socio-economically deprived communities.”

“Think about where to place the AEDs and make fundraising for them a community event.”

Training events with competitions and prizes are being held throughout the country today including Auckland, Wellington, Christchurch and Queenstown airports so come along and join in. St John and the RAHD partners want everyone to get involved so why not set up your own local event? Visit Restart a Heart to find out more.

Notes to editors: Watch the Restart a Heart Day video. Learn the Three Steps for Life Register for the GoodSAM app if you are trained in first aid and CPR

Download the free St John mobile CPR app for instructions on how to do CPR

The Restart a Heart Day partners and supporters are:
• St John New Zealand
• Council of Ambulance Authorities (CAA)
• Fire and Emergency New Zealand
• Wellington Free Ambulance
• New Zealand Resuscitation Council
• Surf Life Saving NZ
• New Zealand Police
• Auckland University of Technology

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Late BREAKING NEWS - PGF funds for Otago forestry

(4:00pm Wednesday)The Provincial Growth Fund (PGF)’s skills and employment programme will help young Otago people into long-term forestry careers, Regional Economic Development Minister Shane Jones announced today.

Te Ara Mahi will invest $63,000 in the 2020 school year to support eight 17 and 18 year olds to enter careers in forestry.

“Forestry is currently enjoying a renewed lease on life thanks to the One Billion Trees programme and the Government’s emphasis on the sector for both regional development and environmental outcomes,” Shane Jones said.

The funding will see these young people trained, upskilled and supported into local full time employment. They will gain first-hand experience in the forestry industry, from establishment to production, while gaining industry-related qualifications,” Shane Jones said.

“Forestry is a major industry in the Otago region but forestry companies are short of workers. Additionally, there’s an ageing workforce so it’s important that we encourage more young people into sustainable and exciting forestry careers,” Shane Jones said.

“And there are wider public benefits – the forestry industry offers opportunities to optimise land use, help mitigate the effects of climate change, protect the environment, and ensure sustainable fibre has a key role in the future low carbon economy,” Shane Jones said.

Participants for the programme will be recommended by their schools and will be interviewed for suitability before being accepted.

The PGF funding will pay for a qualified industry tutor, support the transport of trainees to the course and to work experience, and cover the administration costs required to run the course.

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… almost finally … think you're a great communicator?

Think you're a great communicator ... look at this depiction of reality ... and think again!

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Buy and Sell

... and finally ... commiserations to the country

Commiserations for ABs fans from English rugby fans after the weekend? … not a chance!

Finally, the last word on the RWC is this:

Thanks for keeping up with the latest wood news with us!
Have a safe and productive week.

John Stulen

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