WoodWeek – 1 April 2020

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Greetings from the home office. Here in the Bay of Plenty, the major paper producers are struggling with the lockdown rules on our industry. Paper maker Norske Skog wants to keep its Tasman mill at Kawerau operating for another week while it still has fibre supplies rather than go through a costly plant closure.

Oji Fibre Solutions is shutting its Tasman pulp plant and its Penrose recycling plant and concentrating production at Kinleith. Its five packaging plants, which primarily supply the food and beverage sector – including the likes of Fonterra and Zespri – will remain operating.

For a country largely locked down and working from home, there is plenty of forest and wood products news. We have a surprising number of updates for you so we hope you enjoy this week’s updates. Also, to help you get the most from your home work experience we have a video link from a well-known FIEA Forest Safety Conference keynote speaker. Lance Burdett has kindly offered our readers a short interactive video message for every one of us to help adjust to our new "Stay home" workplaces.

With conferences being cancelled or postponed, to keep your products and brand in front of your target audience we have other ways to keep people informed. Perhaps you’re launching a new laser scanner or indoor mapping solution, or you want to share knowledge about innovative methods that achieve real efficiency gains… but what platform can you use instead of physical events?

It’s probably counter-intuitive to what most do when times get tough, but brand building should be an integral part of your business thinking right now as we head into a global slowdown. An excellent article on the importance of maintaining brand awareness in conditions like these can be read here. Innovatek and the Forest Industry Engineering Association offers several possibilities to fill the gaps in your communication strategy.

You can showcase your project or product through two of the industry’s most widely recognised and read newsletters, www.fridayoffcuts.com and www.woodweek.com. Have you recently completed a great new project? Or have you developed a new state-of-the-art software solution for collection of data out in the forest? Both weekly newsletters are the ideal place to share more details, so why not contribute an article? out in the forest? Both weekly newsletters are the ideal place to share more details, so why not contribute an article? Click here to email Gordon Thomson or call him on +64 7 921 1384 to place your advertisement order now!

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MPI Covid19 update

MPI - For those in the wood process and manufacturing supply chain which have been identified as an essential service, as part of the food and beverage supply chain and are still operating please see further guidance on:

> Guidance for staff health and safety at Alert Level 4
> Hygiene requirements for primary processing industries with work station distances between 1 and 2 metres
> Please note if you have any staff with English as a second language, translations of these key documents can be found at covid19.govt.nz

It is important that you follow these protocols in order to keep yourselves and your staff safe. Everyone has a role to play in stopping the spread of COVID-19.

Please note by now you should have registered on the MPI website and received an acknowledgement and a registration number.

To overcome some technical issues, which means not everyone is receiving the email, we have created a series of emails groups for sub-sectors within forestry. This will help to ensure you are kept up to date on the COVID-19 situation and what it means for your business.

If you see that an organisation is not included in this email, please let us know by emailing Adele.Maurice@mpi.govt.nz providing the name of the business and their contact details. We will ensure that they are in an email list, rather than you forwarding the email to them.

To reduce the burden on New Zealand’s network capacity I ask that you only reply to this email if you have any relevant information to provide. Thank you for your cooperation.

The following can also be used to contact MPI Customer Enquiries Centre: info@mpi.govt.nz or phone 0800 00 83 33

More >>

Source: Julie Collins, Deputy Director-General Te Uru Rakau / Forestry New Zealand

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Oji: Wood supply lockdown concerns

Oji Fibre: Wood supplies a 'potential challenge' - Wood processors and contractors are wary about fibre supplies as the government enforces a complete lockdown on forestry harvesting as part of its bid to contain covid-19.

Most of the country’s major sawmills and pulp plants are being shut as the government focuses production on deemed essential products like newsprint, food and beverage packaging and wood chips and pellets for home and industrial heating.

Oji Fibre Solutions is shutting its Tasman pulp plant and its Penrose recycling plant and concentrating production at Kinleith. Its five packaging plants, which primarily supply the food and beverage sector – including the likes of Fonterra and Zespri – will remain operating.

Environment and external relations manager Philip Millichamp said fibre supply from the Tasman plant and the diverted paper recycling will be important in ensuring ongoing supplies. The company will also be looking for wood supplies from other sites, including possibly the shuttered Pan Pac Forest Products plant in Hawke’s Bay.

“There is a potential challenge with fibre supply,” he told BusinessDesk. “We certainly believe there’s sufficient to keep us going but we are going to be scratching around the place for that.”

Wood processors were told on Wednesday that harvesting needed to stop immediately and that a high bar had been set deliberately on what activities would continue as essential services.

Norske Skog was cleared to run for nine days to produce enough newsprint for domestic use during the coming four weeks. Oji was also cleared to operate the chemical plant at Tasman to provide chlorine for water treatment.

But the rest of the sector was expected to shut down unless it was making pallets, packing cases and boxes. Chip and pallet production, for essential services such as hospitals and food processors, could continue, but using only existing raw fibre stocks.

Logs already at ports could be shipped to make space for other cargo, but exports were otherwise banned.

Jon Tanner, chief executive of the Wood Processors and Manufacturers Association, said his organisation is working with the Ministry for Primary Industries to try and understand inventory levels around the country and develop a plan to use them and restart production as required.

“But in order to do that, we need to be able to see the supply right back to the forest,” he told BusinessDesk.

MPI has undertaken to review the restrictions every seven days, he said, but depending on location, wood stocks may be only sufficient for seven to nine days’ supply. All parts of the supply chain, from forest owners, to contractors and processors, need more notice than that to mobilise resources.

Source: BusinessDesk

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2020 Forest Products Map out now

Every two years we highlight who's who in Australasia’s wood processing and manufacturing industry on our popular FIEA Forest Products Industry Map. Our 2020 map has just been printed.

This is our fourth edition of the full colour 980mm x 680mm map. It features 171 wood processing operations including over 65 sawmills cutting in excess of 25,000m3 sawn lumber per annum (with sawn production levels), all fibreboard, particleboard, plywood, pulp & paper, veneer/LVL/CLT, paperboard and chip export operations along with major wood manufacturing operations.

Since the last edition produced in early 2018 there have been over 50 major updates to mill locations, ownership and production. Changes in the last two years have indeed been significant. Our new map is now the most up-to-date industry reference providing an essential mapping resource for New Zealand and Australian forest products companies.

A folded copy of the map will be inserted into FIEA's industry partner magazine issues in April/May. But they often disappear from the magazines quickly, so you can purchase your own folded or flat laminated copies of the new map now before we sell out.

So, you can place your own orders now on the FIEA website (www.fiea.org.nz) or by clicking here.

Note: Orders are being taken now and the maps will be posted as soon as we can.

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Export update: Logs down

Exports rise as dairy gains while logs and fish fall - Total goods exports increased in the February 2020 month due to an increase in the value of dairy products, Stats NZ said last week.

The total value of meat exports was little changed, but higher quantities were exported to the United States instead of China. The increase in total good exports was despite falls in exports of logs and fish, particularly to China, in the wake of the COVID-19 outbreak.

The value of total goods exports rose by $212 million (4.5 percent) from February 2019 to reach $4.9 billion in February 2020.

“This month’s total goods exports were up on the same month of 2019, led by dairy exports, in particular milk powder,” international statistics manager Darren Allan said. “Dairy product exports to China remained high, but logs, meat, and fish exports were lower.”

The rise in total goods exports was led by milk powder, up $191 million (28 percent) from February 2019. This was price-led as quantities were little changed. Partly offsetting the rise were falls in forestry products (down $124 million or 27 percent, mainly reflecting a fall in untreated logs), and fish (down $47 million or 27 percent).

Exports to China fall In contrast to rises in exports to all New Zealand’s other main markets, exports to China fell $120 million in February 2020.

The leading contributors to the fall in exports to China were:
• untreated logs (down $80 million)
• sheep meat (down $73 million)
• beef (down $65 million)
• fish (down $40 million).

These falls were offset by a rise in milk powder, up $90 million on February 2019. This was led by a 30 percent increase in average unit values. The quantity exported also rose, up 13 percent.

Goods imports fall

The value of goods imports in February 2020 fell $475 million (9.9 percent) from February 2019, with falls across all major categories of imported goods. The leading contributor to the fall was industrial transport equipment (such as aircraft), down $161 million from high levels a year ago. Intermediate goods (products imported as inputs in the production of other goods and services, such as crude oil), fell $134 million; consumer goods fell $92 million.

Imports fell across many of New Zealand’s top markets (except for the US). The largest of the falls was China (down $218 million or 22 percent), with falls in clothing, furniture, and laptops.

“In February 2020, imports from China fell by over 20 percent from same month in 2019,” Mr Allan said.

More >>

Source: Stats NZ

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Norske Skog struggles with order

Newsprint-maker Norske Skog grapples with shutdown order - Paper maker Norske Skog wants to keep its Tasman mill at Kawerau operating for another week while it still has fibre supplies rather than go through a costly plant closure.

The operation was declared essential by the government last week but cleared to operate for only nine days to provide sufficient newsprint to keep the country’s newspapers supplied during the four-week lockdown. It is scheduled to stop operating midnight, April 4.

The Oslo-headquartered company said if it does have to cease production at Kawerau, it wants to be able to slow production to a “crawl” rather than completely turn off the one remaining paper machine at the site.

After April 12 “we would run out of fibre unless additional fibre becomes available."

"As we source 80 percent of our fibre from sawmills it would be very hard to continue to operate unless sawmills were operating,” a spokesman said by email.

Norske Skog typically makes 800 tonnes of newsprint a week for the local market, about half of which goes to the major media groups. Another 100 tonnes go to regional and community papers and the balance is bought by commercial printers.

Daily newspapers have been deemed essential industries during the national lockdown, but the government has said magazines and community newspapers are not essential. It relented a little today by allowing community newspapers in difficult-to-reach communities to apply to be allowed to reopen, as long as they can meet strict covid-19 health and safety requirements.

The mill usually employs up to 170 staff and contractors, but on-site staff is being kept to a minimum, the company said.

The company has already laid off workers at some of its European mills as demand drops and recycled paper collection becomes more difficult.

The government ordered a halt to harvesting and timber processing last week as part of its efforts to keep workers at home and slow the spread of covid-19. Oji Fibre Solutions was cleared to keep its Kinleith pulp mill operating in order to supply the packaging it and others make for the food sector, but its mills at Penrose and Kawerau were shut.

Other combined sawmills and pulp makers, including Pan Pacific Forest Products and WPI International were also shut. All other sawmills were also shut.

Officials were due to review the restrictions after seven days but industry executives are concerned the government doesn’t understand the how the sector’s timber and pulp and paper operations mesh together, nor the lead times involved in establishing new safe working protocols for forestry crews and at the various processing sites when fresh timber and board supplies start to be needed.

Norske Skog's Nature’s Flame wood pellet plant at Taupo has been deemed essential for domestic, industrial and public heating but there is no certainty about on-going raw material supply as all the local sawmills that it supply it are shut.

It bought the former Solid Energy pellet business in 2015 as part of strategy to shift out of commodity paper grades and into higher value fibre products, bio- energy and bio-chemical products.

Norske Skog, itself rescued from insolvency in 2018, last month sold its Tasmanian forestry interests for A$62.5 million to provide capital for investment in those new products.

In October it agreed to sell its Albury mill in New South Wales to packaging giant Visy for A$85 million in order to reduce newsprint over-capacity in Australia and reduce its reliance on export paper sales.

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Lance Burdett - Adjusting to home-work

Well-known FIEA Forest Safety Conference keynote speaker Lance Burdett has kindly offered our readers a short interactive video message for every one of us to help adjust to our new "Stay home" workplaces.

For those of you who are both WoodWeek subscribers and conference delegates you may know Lance from his highly rated and very personal messages. When Lance has been on the stage at our forest safety and harvesting conferences in both Rotorua and Vancouver the entire room goes quiet.

Here is a link to his latest message which is very practical and helpful: Click here for video

Source: Warn International

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PF Olsen log index down for March

The PF Olsen Log Price Index decreased $1 in March to $106, due to some lower domestic log prices. The index is currently $18 below the two-year average, $19 below the three-year average, and $14 lower than the five-year average.

Basis of Index: This Index is based on prices in the table below 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.

Source: PF Olsen Wood Matters

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Nelson Forest is now OneFortyOne

Well known Nelson Tasman and Marlborough business Nelson Forests has been rebranded as OneFortyOne New Zealand effective from 25 March 2020.

The move follows on from OneFortyOne’s purchase of Nelson Forests (including Kaituna Sawmill, near Blenheim) in 2018. OneFortyOne Chief Executive Officer Linda Sewell says that nothing has changed in operational terms for the management company and its associated staff in Nelson and at Kaituna Sawmill, both of which have remained as they were at the time of the OneFortyOne purchase.

“What has happened is that the new branding has galvanised our sense of a single business across Australia and New Zealand, communicating a collective purpose,” says Sewell.

Sewell says the start to 2020 had been unprecedented with the Australian bushfires and now the impacts of COVID-19, which were completely unforeseen.

“We had already started the rebranding project long before these events were on the horizon,” Sewell says. “We feel fortunate that we took an approach that was extremely mindful of waste and cost and so we felt we could finish the project very pragmatically. Ultimately, the branding project speaks to the unity of the business, which is very important in the current climate.”

While there will be a transition period in the community because Nelson Forests is a well known brand in the areas in which it operates, there is now an opportunity for everyone in OneFortyOne New Zealand to share the great story behind the OneFortyOne name, says Executive General Manager New Zealand Lees Seymour.

“We are very mindful of the context in which we will be rolling out our new brand,” says Seymour. “The process will be gradual but will give our team a morale boost. They have put a lot of hard work into the project and we want to complete it to honour the effort made by them.”

Seymour says that OneFortyOne’s new brand represents the fibre that is at the heart of everything the company does.

“The new logo is based on the cross-section view of an individual wood fibre from one of our trees. It represents not only the physical shape of fibre that is at the heart of our business, but also the three strands of our purpose: strengthen, integrate, and extend. It has a dynamism to it. It’s energising, fresh and new and it fits with the wood industry we’re in. The team and I love it.”

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China Forestry Group buys RMS FGI NZ

CFPC Singapore is pleased to announce that it has just finalised the full company acquisition of RMS FGI New Zealand. Overseas Investment Office approval was received for this transaction in early March 2020. As part of the ownership transition, the company has been renamed Remutaka Forests Ltd.

The purchase includes 5,235 hectares of mixed age pine plantations on land leased from Greater Wellington Regional Council. These estates will be operated by CFGC Forest Managers. CFGC Forest Managers is a leading forest products and management company, with 30,000 hectares of forest land under management across the NZ North Island. The company is both an important regional supplier of logs to domestic sawmills and operates a major export trading business.

Initial engagement has been undertaken with key stakeholders, including Regional council, contractors and key domestic customers. The company will continue under a ‘business as usual’ framework, with all previous arrangements for community access and public use maintained.

CFG Chief Operating Officer, Mr Steve Walker, has said “our team are extremely pleased to be associated with this estate, the community, local sawmills and contractors. This transaction provides certainty to our business and our existing clients in the Wellington region. We now look forward to bringing further investment that can enhance the economic and social contribution these forests make to our communities”.

This purchase was supported by a number of parties including Buddle Findlay in Wellington, New Zealand who acted as legal adviser, Deloitte in Auckland, New Zealand for Taxation and other financial advice, and FORME group who provided forest valuation and modelling services, in association with Apical Solutions of Geelong, Australia.

CFPC Singapore is a subsidiary of China National Forest Products Company Ltd (CFPC). Founded in July 1979, the company is a state-owned enterprise directly under the Ministry of Forestry. In 1998, it was delinked from the State Forestry Administration and merged into China Forestry Group Co., Ltd. In the 40 years since its establishment, the company has actively carried out trade in forest products and played a leading role in Chinas’ national forestry industry.

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Tech leap: LiDAR scanner in new iPad

LiDAR technology is nothing new to Lim Geomatics and their leading edge teams love seeing innovation with LiDAR technology. As Apple released a new iPad Pro last week with a LiDAR scanner, Nick Gralewicz, Director of GIS, shared his thoughts around their announcement

"There is lots of excitement around the LiDAR scanner in Apple's newest iPad Pro and what this means for augmented reality (AR) applications. LiDAR technology has been around for decades (driver-less cars, city mapping, enhanced forest inventories) and improvements to the technology have brought cost, size, and portability to a point where it can be included in a consumer-grade device. Many speculate that the iPad tech is a precursor to what may be included in Apple AR glasses, another step towards practical AR use in our everyday lives.

Practical use of AR is what excites me. Our goal has always been to provide users with powerful data, presented in a simple and useful way, right when they need to make impactful decisions. Lightweight and inexpensive sensors are making it easier to create AR applications but meshing useful real-time data with solid user experience is still the end goal. The iPad Pro is a great first step in that direction."

Read Apple's announcement here >>

Source: Lim Geomatics

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New Forests to acquire Peppermint Estate

New Forests Appoints Property Manager for Planned Hardwood Plantation Acquisition in Western Australia – Australia-based forestry investor New Forests today announced that following a competitive procurement process it has appointed Ents Forestry Pty Ltd (Ents Forestry) to manage the plantation assets of Peppermint Estate Pty Ltd (Peppermint Estate) in Western Australian.

Peppermint Estate is owned by New Forests’ Australia New Zealand Forest Fund 3 (ANZFF3), an institutional investment fund that targets long-term, sustainable management of high-quality timber plantation estates in Australia and New Zealand. Peppermint Estate will take ownership of the plantation assets being acquired from Bunbury Fibre Plantations Pty Ltd, pending Foreign Investment Review Board approvals. The Peppermint Estate assets will include around 12,000 hectares of certified plantation hardwood, located around Bunbury, Western Australia. The new ANZFF3 entity is named in recognition of the local coastal peppermint tree (Agonis flexuosa), which is endemic to the state’s South West.

Ents Forestry is a sophisticated forest management and consulting company known for developing independent, bespoke management solutions for domestic and international clients. Ents Forestry has a robust network within the Western Australian forest industry and a strong track record of plantation management for a range of private clients. Managing Director Andy Wright said, “We’re delighted to partner with New Forests to care for the Peppermint Estate. We hope to build the same in-depth working relationship with New Forests that we achieve with all our plantation partners, marrying the deep experience of Bunbury professionals with our established team on the south coast.”

In a competitive field of proponents New Forests considered Ents Forestry’s proposal attractive for its contribution of strong local knowledge paired with the ability to expand its services and experience by establishing a Bunbury office. New Forests’ Director of Operations for ANZFF2 & 3, Matt Crapp, noted, “We are pleased to secure the services of Ents Forestry for this important asset in the ANZFF3 portfolio. We are confident that Ents is the right company to manage the transition from the current team at Bunbury Fibre Plantations and position the estate for long-term success, founded in responsible plantation management.”

“As a locally based investor, and one of the largest in Australia, New Forests will continue supporting local businesses to provide services to our fund assets while ensuring we have appropriate regional expertise to deliver superior operational results,” said Crapp.

Peppermint Estate will continue to be managed for certified woodchip supply, principally targeting export markets. The plantation purchase includes the establishment of a long-term timber supply agreement to Bunbury Fibre Exports Pty Ltd, managed by Mitsui Bussan Woodchip Oceania.

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Port withdraws guidance on lost log loadouts

Port of Tauranga has withdrawn its full-year earnings guidance citing the government’s restriction on log harvesting and processing. The company, the country’s largest export port, had trimmed its guidance last month, citing the potential impact of the coronavirus on its log volumes. On Friday it scrapped the guidance altogether. While many of its cargoes, including exports of meat, dairy and kiwifruit are classed as essential goods by the government, forestry products are not.

“Log and other forestry product exports will be significantly impacted,” chief executive Mark Cairns said. “This is unfortunate as we were seeing positive signs emerging in China, our major log export market. Business there had been returning to normal with log consumption recovering towards pre-Chinese New Year levels.”

“Under the current circumstances the Port of Tauranga board considers it prudent to suspend profit guidance for the time being.”

The port is the country’s biggest handler of logs, shipping almost 3.4 million tonnes in the six months through December, 8.4 percent less than the same period a year earlier. Container volumes were 3.4 percent higher at more than 642,200 twenty-foot equivalent units.

The government has ordered the lockdown of the economy to contain the spread of covid-19 but is trying to keep essential services like food producers, energy suppliers and healthcare providers operating.

Food exporters have generally been allowed to continue operating, as has the Tiwai Point aluminium smelter, but others have not. Newsprint maker Norkse Skog was declared an essential service but expects to run out of pulp as wood processing will come to a halt unless the government grants wider exemptions. Cairns said that while some customers will stop shipping product during the lockdown, the firm is in a strong position to weather the impact of the pandemic.

It comfortably paid its $40.8 million interim dividend last week, has a strong balance sheet and strong operating cashflows from across a diversified business.

“Many of our major exports, including meat, dairy products and kiwifruit, are classified as essential cargoes. Imports of oil products, food and medical supplies are also essential cargoes.”

Port of Tauranga shares rose 3.9 percent to $6.13 in a generally stronger market.

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Buy and Sell

... and finally ... some lockdown humour

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