WoodWeek 13 December 2017
Further to last week’s news about OneFortyOne Plantations buying into the Nelson region, this week New Forests’ managing director Mark Rogers signalled they have up to $500 million set aside for investing in New Zealand forestry. He said the money had been recently raised from mainly European investors.
Now that the new government is halfway through it’s 100-day plan (does it include the holidays?), meetings are taking place with industry leaders on how to achieve the ambitious plans for planting new native and pine forests. In fact, we got a bit excited ourselves late last week when the wagons of Shane Jones’ entourage circled, not once, but twice, right outside our Innovatek office here on the Scion Rotorua campus next to the tree nursery. Turns out they were lost, not here to see our friendly WoodWeek team.
Others too are focused on the growth prospects associated with a jump in tree stocks and planting as Rubicon plans to sell Clearwood stake for $15.3M to focus on ArborGen, their forest genetics business. So with the New Year looking like one for some serious planning to organise the seedling stock, land and quite a few people to plant trees in the 2019 winter, there could be quite a positive vibe now that forestry is back on the radar of our fiscally-friendly politicians in Wellington.
That's us for another year. So, from our team here at Innovatek, we hope you and your family have a safe and relaxing summer holiday. We wish you all a very Merry Christmas. See you at the beach, on the bikes in Whakarewarewa forest or out fishing. Thanks for your wonderful support, hope you all enjoy the break.
See you in 2018 to do it all over again!
This week we have for you:
Forests on farms - Viable again?Farmland viable for some forest planting with changes coming. The Forest Owners Association says there are terrific opportunities for farmers to get into forestry now the government's announced an ambitious scheme to plant an extra billion trees in the next decade.
The government wants an extra 50 thousand hectares of trees to be planted each year, and this is on top of the 50 thousand a year that comes from existing forests being replanted after harvest.
This of course is music to the Forest Owners Association's ears. This scale of planting hasn't happened for years, and is needed for the government to meet commitments made at the Paris Agreement on Climate Change in 2015.
The Forest Owners Association says farmers should be excited too.
MPI updates forestry forecastsThe growth in New Zealand’s primary industry exports is impressive and provides the sector a strong base to deal with the challenges ahead, says Agriculture Minister Damien O’Connor.
The latest Situation and Outlook for Primary Industries report shows the sector’s exports will grow by 8.5 per cent in 2018, to $41.4 billion.
“This would be the largest annual increase since 2014 when dairy prices rose to very high levels,” says Mr O’Connor.
“Growth this year is spread across all sectors and these gains are expected to be built on a more sustainable foundation.”
“The forestry sector is on pace for a third consecutive year of strong export growth with exceptional demand from China. Forestry exports are forecast to reach nearly $5.7b in 2018.”
Ministry for Primary Industries has just released is quarterly update of the 'Situation and Outlook for Primary Industries' (SOPI). The updated report and spreadsheets show historical and forecast export volume, prices, and revenue for the primary industries.
Actual and provisional data from 2004 to 2017 is sourced from Stats NZ, and the forecast data from 2018 to 2022 are provided by the MPI economic data and analysis team.
The information is up to date as of 11 December 2017. The next update is scheduled to be published in March 2018.
More data >>
China log importsUS logs dominate shipments through Yantian port - According to the Shenzhen Entry-Exit Inspection and Quarantine Bureau, log imports through Yantian Port in Shenzhen City were 961,900 cubic metres valued at US$203 million between January and October this year. This represents a 54% increase in the volume of deliveries. Some 85% of all log shipments arriving at the port were from the US.
In order to efficiently clear imported logs the number of sites for inspection and treatment at Yantian Port increased to 320 from 60. The speed at which logs could be fumigated and cleared was shortened saving money for importers.
New wood product trading centre - The Chongqing Traffic and Transportation Group has invested RMB2.5 billion to establish an international wood products trading centre in the Jiangjin Comprehensive Bonded Zone in Chongqing municipality. This is the third Special Customs Supervision Zone in Chongqing municipality.
The centre has an online trading platform for wood products such as logs, sawnwood, wood-based panels, wood pulp. The wood products trading centre will service western China.
Currently, timbers used for processing in the Chongqing region are sourced mainly from Zhangjiagang in Jiangsu province so transport costs are high. Transportation costs will be lowered when the trading centre in Chongqing municipality is in full operation.
The Jiangjin Comprehensive Bonded Zone was established on 17 January 2017 and is located on Jiangjin Luohuang Industrial Park.
The centre covers an area of 2.2 square kilometres and is well placed combining port, road and rail links and will become an important centre in the Yangtze River Economic Belt as it links Chongqing, Kunming and the Tran-Asia Railway the starting point for the China/Europe International Railway Corridor.
Source: ITTO TTM Report
New Forests looking to purchaseAustralian forestry company New Forests has a war chest of up to $500 million set aside for investing in New Zealand forestry.
Managing director for Australia and New Zealand, Mark Rogers, said the money had been recently raised from mainly European investors.
"We raised $873 million and we need to spend a big slab of it here, at least $400-500m for trees and infrastructure, but not trucking and harvesting because the locals to do that."
"Pre-election we were thinking it might be quite difficult [to operate] but post- election it's clear both sides understand that if foreign capital dried up in forestry, New Zealand would have a smaller sector."
The Forest Owners Association said the Government would be keen to tap into these funds as well as other overseas investment for forestry, partly for environmental reasons.
"My understanding is that the new Government's intention to see a billion trees planted in the next ten years was largely reasoned on plantation forestry being the only immediate and available tool to reduce New Zealand's net greenhouse gas emissions to a level anywhere near Paris Agreement commitments," Association president Peter Clark said.
The Government has attached a rider to its policy on forestry investment to the effect companies need to develop local processing.
Rogers said besides having invested in forests, New Forests already owned a mill in Blenheim employing about 85, and was investing $10-15m into that in order to bring it up to scratch.
New Forests has four radiata pine plantations in New Zealand, totalling 18,800 hectares: Taupo Estate (3900 hectares), Wairarapa Estate (9700 ha, Blenheim Estate (4600 ha), and Southland Estate (600 ha).
Source: Stuff News
BC quick to adopt NZ traction assist harvestingWorkSafeBC - Mechanised harvesting machines could improve worker safety - It’s an exciting time for British Columbia’s steep-slope-harvesting forestry workers and employers. Approximately 25 new mechanised-harvesting machines equipped with winch-assist technology are operating in the province, and another 20 are anticipated to be put into use over the next two years on British Columbia’s rugged, often treacherous forested landscape.
These new machines can be used to fell, process, and forward wood to the roadside.
Advancements in mechanised steep-slope harvesting have the potential to improve occupational health and safety by getting more workers off the hill. But new technology also presents unique hazards and risks that employers need to identify, assess, and account for to prepare workers to operate new machinery safely.
Hand-falling is a dangerous occupation. The injury rate for manual tree fallers in B.C. in 2016 was 27.3 – by comparison the overall provincial injury rate for the same year was 2.21. Out of 127 accepted time-loss claims in 2016 for manual tree fallers, 30 were for serious injuries – 24 per cent. New technology that reduces the risk hand fallers face by allowing them to stay inside a cab while performing their duties, or operate equipment remotely, is a significant development for the safety of these workers; fully remote-controlled equipment is still relatively uncommon in B.C. and is currently limited to some yarders, carriages, and cameras on grapple yarders.
WorkSafeBC is keeping pace with these mechanical advancements by developing new health and safety resources so employers can ensure this equipment meets the requirements of the Workers Compensation Act and Occupational Health and Safety Regulation.
Source: John Ligtenberg, WorkSafeBC
Champion Freight Export ReportThanks to the great team at Champion Freight we've got the latest export market activity update for you in a series of really self-explanatory charts. They have some easy-to-read labels on the charts so they are readily identifiable even when printed in black & white.
To download the full report, click here.
Rubicon plans to sell Tenon interestRubicon plans to sell Clearwood stake for $15.3M to focus on ArborGen business - Rubicon, the NZX-listed forestry biotech company, has agreed to sell its remaining holding in its Clearwood manufacturing business for about $15.3 million, to focus on its ArborGen forestry genetics business.
Auckland-based Rubicon will sell its 44.88 percent interest in Tenon Clearwood Ltd Partnership for US$14.2 million, which is the cost of its investment in the company in April, plus its share of the reduction in the company's net debt since then, it said in a statement.
The proposed buyers are Dorset Management Corp. and Libra Partners NZ LLC, who will each take 20 percent, with the existing owners of the Clearwood partnership taking the remaining 4.88 percent, it said. Dorset is affiliated with Rubicon's biggest shareholder Knott Partners, which owns 28 percent of the company, while Libra is its second-biggest investor with an 18 percent stake.
Rubicon has been exiting its peripheral investments to focus on its ArborGen business, which it believes will benefit from the new Labour-led government's policies to support the forestry sector and expand afforestation.
ArborGen turned positive on an earnings before interest, tax, depreciation and amortisation basis in the last financial year and is expected to be cash positive from now on as its focus turns to commercialising past investment in research.
Funds from the sale of its Clearwood stake would be used to make two deferred- settlement payments relating to Rubicon's recent acquisition of 100 percent of ArborGen and to repay its outstanding subordinated notes, which total US$21 million. The sale will also simplify Rubicon's business, reducing overhead costs and increase the attractiveness of its shares, the company said.
"We believe that these three factors – ie the removal of any overhang in the stock price relating to uncertainty as to the funding of our upcoming payments, simplifying Rubicon to be a pure-play on the upside inherent in the ArborGen business, and reduction of overhead cost, will all be beneficial to building positive momentum in the RBC share price moving forward," said Stephen Kasnet, chair of the independent committee which is managing the share sale.
The proposed transaction is subject to shareholder approval which will be sought at a meeting of Rubicon shareholders slated for mid-January, with the deal expected to close on Jan. 31, the company said.
Advisory firm Grant Samuel will prepare an independent report on the plan, which will be included in the notice of meeting to be sent to Rubicon shareholders later this month.
Grant Samuel prepared an independent adviser's report on the sale of Clearwood by Tenon earlier this year. That put an enterprise value of between US$52 million and US$62.5 million on Clearwood. The consortium bought Clearwood for US$55 million.
Rubicon shares last traded at 19 cents and have dropped 14 percent this year.
Source: BusinessDesk via Scoop
Two-way trade with APEC exceeds $100 billionNew Zealand’s two-way trade with APEC reached $102 billion for the year ended September 2017, Stats NZ said earlier this week.
The Asia-Pacific Economic Cooperation (APEC) forum brings together 21 Pacific Rim member economies, including Australia, China, and the United States – three of our main trading partners.
"Asia-Pacific is the fastest-growing economic region in the world," international statistics manager Tehseen Islam said. "Over the last decade, New Zealand's two-way trade with APEC has grown $31 billion, and a $2.6 billion deficit is now a $4 billion surplus."
APEC is the Asia-Pacific's main economic forum where a number of trade agreements are reached. Talks are currently underway at APEC on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Eleven of the 21 APEC countries are in the trade talks.
In the September 2017 year, New Zealand had a $4 billion surplus with APEC – we exported $53 billion worth of goods and services to APEC, and imported $49 billion. Most of our surplus with APEC countries is due to our $3 billion surplus with China. This is mainly due to New Zealand's exports of dairy products to China, and spending by visitors from China in New Zealand.
Dairy products our largest export to APEC nations - Dairy products are our largest export to the combined APEC nations. New Zealand exported $9 billion worth of milk powder, butter, and cheese to these countries in the September 2017 year, $2 billion short of the $11 billion high exported in the September 2014 year.
China is New Zealand’s largest export market for milk powder, butter, and cheese, totalling 28 percent – nearly $4 billion in the September 2017 year. Our next-largest export market for these products is Algeria, which makes up 5 percent. APEC countries (China, Australia, and Malaysia) account for three of our top five dairy export markets.
Vehicles lead the way in imports - New Zealand’s main imports from APEC are vehicles, machinery, and equipment. New Zealand imports a large amount of cars and trucks from Japan, Thailand, the US, and South Korea, all of which are APEC nations.
New Zealand imported $2 billion worth of electrical machinery and equipment from China in the September 2017 year, and nearly $4 billion worth of mechanical machinery and equipment from China, the US, and Japan combined.
Travel spending contributes to trade surplus -Travel also contributes significantly to our trade surplus with the APEC nations. Visitors and students from APEC nations provided $9 billion to the New Zealand economy in the September 2017 year through exports of travel services, mainly by visitors from Australia, China, and the US.
Spending by New Zealanders visiting APEC nations (imports of travel services) totalled $4 billion in the September 2017 year, with personal travel accounting for $3 billion of this. The majority of New Zealanders’ personal travel spending was in Australia, followed by the US. Visitors from the US added $1 billion to the New Zealand economy in the September 2017 year, while New Zealand visitors added $531 million to the US economy.
Source: Statistics New Zealand
ANZ Commodity Price IndexThe ANZ Commodity Price Index slipped 0.9% m/m in November. The index has fallen in four out of the last five months and is now only 6% ahead of this time last year – down from 25% y/y in June. Dairy was again the main culprit, although nine of 17 subcomponents fell and only five rose, so the softening was broad-based. The NZD continued to fall against major trading partners, with the TWI down 2.1% m/m. This helped offset the fall in international prices, with local returns up 1.5% m/m (now +12% y/y).
All up, the cyclical top is in for New Zealand’s export values, with dairy prices under more pressure. Supply considerations will continue to hold sway, but solid demand in most markets and sectors should provide some durability. Combined with a lower NZD this is helping buffer local exporter returns.
Primary industry training free of feesPrimary industry training fees-free for eligible trainees- Two years of Primary ITO industry training will be fees-free for eligible trainees and apprentices who start in 2018.
Primary ITO Chief Executive Dr Linda Sissons says, “Those of our 600 Trades Academy or Gateway students who are leaving school at the end of this year could be some of the first to benefit from two fees-free years of industry training and be well on their way to completing an apprenticeship as a result. The Federated Farmers Apprenticeship Dairy we have teamed up on is one training option they could take up, and there are many others across our sectors, from horticulture to seafood.”
“Our trainees work and learn at the same time, so with their training fees paid every cent will go directly to them. It’s also a practical way to start growing their skills and knowledge, and to gain NZQA-recognised qualifications, as most of our learning and assessment takes place in the workplace.”
Linda says industry training is the smart choice. “Not only are many primary sector roles outside and energetic, working with animals and machinery, there’s also often the chance to work with cutting-edge technology, to be part of a great team and to keep moving up.”
“For people already in the sector who haven’t undertaken tertiary training before, it’s an opportunity to start getting some qualifications behind them at no cost. Starting the Diploma in Agribusiness Management is a great way to grow the business management skills so needed in today’s industry.”
“Fees-free is also great news for primary sector employers, providing an incentive for them to encourage their eligible staff to begin growing their skills and knowledge at no cost to either of them - which will in turn support their business to grow.”
The Ministry for Primary Industries have estimated that New Zealand will need an extra 50,000 qualified workers in the sector in the next eight years. “We hope fees- free will encourage people to join our current 28,000 Primary ITO trainees next year. Our sector needs smart, tech savvy, ambitious and innovative people as we work towards the governments target of doubling the value of our primary sector exports by 2025,” adds Linda.
For eligible industry trainees and apprentices, fees-free covers up to the first two years of their programme. To find out if you qualify to study with Primary ITO fees- free see feesfree.govt.nz. To find out more about training with Primary ITO see primary.ito.ac.nz or call us on 0800 20 80 20.
Scotland to divide Forestry CommissionIn Scotland, the Forestry Commission is soon to be divided - with the part responsible for grants and licenses becoming a new dedicated forestry division within the Scottish Government. The part of the Commission that manages the forests will continue as an external agency, under the name Forestry and Land, Scotland.
It has also been announced that the Scottish government has raised its annual planting target for new forests from 10,000 hectares a year to 15,000 hectares a year by 2025.
An eight-page special report provides a spotlight on one of Scotland’s vital industries.
Canada Wood trains Korea building engineersCanada Wood Korea Provides Seismic Design Solutions for Architects, Engineers and Builders - Korea used to be considered as safe from earthquakes. However, a 5.8 magnitude earthquake, the strongest one seismic recording began in 1978 in Korea, occurred in September 2016. Since then the Ministry of Land, Infrastructure and Transport (MLIT) has strengthened the seismic design requirements and soon the requirements will be extended to 2 storey buildings and houses.
In response to growing needs for seismic design solutions, CWK organized the Seismic Design Workshop with local and overseas lecturers: David Joo (PE, President of King Engineering, Canada), Sang-sik Jang (Professor of Chungnam National University, Korea) and Damon Ho (PE, Engineering Supervisor with Simpson Strong-Tie, USA).
The three speakers have introduced Mid-rise Wood Construction in Canada focused on seismic design, Simplified Seismic Design Method for using OSB sheathed shearwalls and North American Lateral Force Provisions and Seismic Design Method respectively, providing seismic design solutions for various types of wood frame buildings.
The workshop was attended by more than 170 architects and designers, engineers and builders showing growing interest in seismic design and wood construction.
Source: Canada Wood Today
Finnish forestry folks make music with machinesYou've got to love those hard-working Finns - If you've ever been to a European logging show you might have met one of their hard working forestry men or women from Finland. Well this year as they are celebrating 100 years of independence those hard taskmasters took some time out to use their bright yellow forest machines to break out into joyous song.
You'll need to know a bit more than we do about the Finnish culture to understand the tune but hey, when a man decides to sing in the forest - you've gotta stop and listen right?!
Over to you to listen and decide for yourself.
A Tribute to Finnish work ? for Finland's 100 years of independence
Our country turns 100 years on the 6th of December 2017. When foreigners are asked to describe the people of Finland, two words usually pop up: hard-working and humble. Maybe that’s why 52% of us Finns think that we could be prouder of our work . We wanted to remind us to celebrate the crazy, creative, innovative and persistent work of each and every Finn of the past, present and future.
Click here for the experience: http://finlandiabyforestmachines.com/en/
... and finally ... hectic day at the chemist
Upon arriving home, a husband was met at the door by his sobbing wife. Tearfully
she explained, “It’s the Pharmacist. He insulted me terribly this morning on the
Have a safe and productive week.
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