WoodWeek 20 November 2019
A quarterly market update from Stats NZ this week showed prices of logs for export dropped 21 percent in the September quarter, while prices in the domestic market were down 5.1 percent. Trade data shows China is the largest consumer of New Zealand’s export logs with $3.0 billion sent to date in 2019.
In training news, Competenz has secured a $300,000 grant from the Wood Industry Development and Education (WIDE) Trust, to increase and improve training opportunities across the forestry and wood manufacturing sectors. The WIDE Trust is a charitable trust formed in 2018. Its focus is on supporting development and education in the forestry and wood industry sectors through the provision of grants and scholarships to New Zealand students and institutions.
As we all know, trees can play a lead role in New Zealand’s transition to a low emissions economy. This is reflected in a new request for research into innovative ways to use wood fibre, announced by Forestry Minister Shane Jones earlier this month.
Also this week, MPI Minister Damien O'Connor said forestry is no threat to farming. He quoted the latest OIO statistics showing about 8,800 hectares of farmland has been converted to forestry under the new special benefits test, or about one thousandth of NZ's total sheep and beef land.
Finally, wrapping up your midweek updates, at the Port of Tauranga, plans are being put in place to increase methyl bromide monitoring following a theoretical modelling report about how the log fumigant disperses into the environment after use. This is additional monitoring, over and above the routine monitoring that industry is required to carry out every time methyl bromide fumigation occurs.
This week we have for you:
Investor buying mills denies 1BT applicationEarlier this week NZ Future Forest Products Ltd (NZFFP) announced expansion plans - The company, which plans to purchase Claymark Industries focused on making sustainable New Zealand finished wood products one of the core export pillars of the New Zealand economy.
It was established by 35-year-old New Zealand citizen David Henry upon his return to the country after working in Australia and the UK in natural resources investment management. His family has been involved with the New Zealand forestry industry for more than 150 years, dating back to 1860.
As trees planted during the timberlands boom of the 1990s are harvested, NZFFP’s mission is to maximise their value to New Zealand by investing in value-added processing and technology to upskill workforces, improve productivity, and manufacture higher-value sustainable consumer products for growing export markets.
This includes manufacturing modular residential apartment buildings that are then flat- packed and containerised for both the export and domestic markets, improving export earnings for New Zealand and accelerating construction of new, cost-effective houses in New Zealand respectively.
NZFFP’s strategy is based on the acquisition of existing New Zealand wood processing businesses to develop the critical mass necessary to realise its vision for the industry and New Zealand. Its flagship project will be its greenfield engineered timber processing plant, which will be the only plant of its type in the Southern Hemisphere once constructed.
The company has just completed a strategic transaction with North Sawn Lumber Ltd, which has production plants at Ruakaka and Tauranga. North Sawn has a highly regarded operations management team, produces high-quality finished products for the construction industry, has high Health and Safety standards and its sites are in close proximity to the deepwater Northport operation at Marsden Point and Port of Tauranga respectively.
The company is also in the process of purchasing Claymark Group Holdings Ltd, which employs 600 people across six manufacturing sites in the Upper North Island. A third acquisition is already in progress, for announcement in due course, and further acquisitions are still being contemplated by the company. NZFFP plans to increase the production, productivity and workforces of the companies it is acquiring.
NZFFP is entirely financed by private equity, with initial capital coming from David Henry’s Kinleith Continuation LP. Additional capital is currently being committed, to be drawn as its acquisitions are completed, and will be announced in due course. NZFFP will always be majority New Zealand-owned, with a policy of capping any non-New Zealand investment to no more than a total of 24.9% in compliance with the Overseas Investment Act.
The company made an application to New Zealand’s Provincial Growth Fund for a $15 million loan to complete a feasibility study that would make Gisborne the centre of its greenfield engineered timber operations, but was informed by the Provincial Development Unit last week that this application has been turned down. Despite reports that it planned to seek a $95 million planting subsidy from New Zealand’s One Billion Tree programme, no such application has been made. The company has no further plans to apply for financial support from the New Zealand Government.
The company’s board currently consists of David Henry (Managing Director); Auckland barrister Brian Henry; former South Australian state premier, diplomat and UK businessman Michael Rann; Auckland businesswoman Jan Trotman; and US-based New Zealand business leader and former GHW Bush, Clinton Administration official Peter S Watson. Following the acquisition of North Sawn, Garth Mortensen and Grant Syminton will soon join as directors.
NZFPP is aware that two of its directors have personal links to the New Zealand Deputy Prime Minister. NZFFP maintains high standards of corporate governance beyond that required of a private New Zealand company. Given recent publicity, the NZFFP board has decided it is in the best interests of the company for it to maintain a higher degree of transparency than is required of it as a private New Zealand company. This will be done through the company’s LinkedIn page and regular media updates.
NZFFP managing director David Henry commented, “Throughout the world and in New Zealand, wood is the preferred construction material of the future. No country in the world grows faster, better or more sustainable wood than New Zealand. We are a key solution to the low carbon future that NZFFP envisages for the world.”
“Right now and in the years ahead, there is a wall of New Zealand wood becoming available for processing thanks to the timberlands boom of the 1990s. At the same time, global customers, consumers and regulators are looking for a construction solution that stores carbon, such as wood, rather than emitting it, such as concrete and steel.
“Our vision is for New Zealand to truly maximise the return from this unique combination of opportunities, rather than seeing our country merely ship off low-value raw logs offshore. We plan to grow export earnings and jobs in our industry, particularly in New Zealand’s regions.
“We are proud of what we are doing and we look forward to keeping our investors, our stakeholders and the New Zealand public updated on our future progress.”
Statistics: Log prices choppedThe forestry and logging industry is facing lower prices for their products Stats NZ said this week - Prices received for raw materials produced by the forestry and logging industry dropped in the September 2019 quarter by 9.1 percent due to low global demand for logs. In contrast, the prices received by sheep and beef farmers rose 7.6 percent due to higher prices paid by meat product manufacturers.
“The prices of logs for export dropped 21 percent in the September quarter, while prices in the domestic market were down 5.1 percent,” business prices manager Bryan Downes said.
“Domestic and export log prices don’t always move in line because of factors such as exchange rates, differing log grades and types, and market demand – for example, manufacturing activity can influence demand for timber pallets used for shipping goods.”
Trade data shows China is the largest consumer of New Zealand’s export logs with $3.0 billion sent in 2019.
“The fall in log prices coincides with the US–China trade dispute and reports of growing log stockpiles in China,” Mr Downes said.
Wood funding boost for trainingWood Industry Development and Education Trust to increase forestry industry training opportunities - Competenz gets major funding boost.
Industry training organisation (ITO) Competenz has secured a $300,000 grant from the Wood Industry Development and Education (WIDE) Trust, to increase and improve training opportunities across the forestry and wood manufacturing sectors.
Competenz CEO Fiona Kingsford said the funding will be applied to three key areas, with delivery across 2020.
“We are delighted to have the WIDE Trust’s backing and will use this funding to grow apprenticeships through one-year scholarships and technical training support grants across both sectors. We have begun work on these already, and we look forward to sharing application details for this financial assistance in early 2020.
“In addition, we will target upskilling, coaching and training of assessors in forestry and wood manufacturing, most likely in partnership with other like-minded organisations. This will be rolled out in the later part of next year,” she said.
The WIDE Trust is a charitable trust formed in 2018. Its focus is on supporting development and education in the forestry and wood industry sectors through the provision of grants and scholarships to New Zealand students and institutions.
WIDE Trust Fund Manager Sue Patterson said the Trust is pleased to support Competenz in its bid to address the skills gap in New Zealand.
“The Trust is aware of the shortage of skilled trades people in the forestry and wood sectors and is keen to encourage young people into these industries. We look forward to seeing the proposed initiatives come to fruition,” she said.
Government seeks biotech expertiseWood fibre to unlock our low emissions future
Trees can play a lead role in New Zealand’s transition to a low emissions economy, and this is reflected in a new request for research into innovative ways to use wood fibre, announced by Forestry Minister Shane Jones at the blessing of the new government forestry hub site in Rotorua earlier this month.
Te Uru Rakau (Forestry New Zealand), the Ministry of Business, Innovation and Employment and the Forestry Ministerial Advisory Group is currently seeking a commercially focused report on viable opportunities for investment in bio-based products and biorefinery processing technology.
These investments must use wood and wood fibre and be internationally competitive.
“We know about the ability of trees to absorb carbon and we’ve invested heavily in rapidly strengthening our forestry estate through initiatives such as the One Billion Trees programme and recent changes to the Emissions Trading Scheme. These forests will act as a carbon sink in the short-to-medium term,” Shane Jones said.
“However, they are also vital to increasing wood and fibre supply over the next 20 to 30 years as we position our forestry system, or parts of this system, to manufacture a wide range of products that will help us adapt to climate change and meet our emissions target.
“We know that consumers want alternatives to concrete, steel and plastic. In theory, everything that can be made from oil or non-renewable resources can be made from trees. The big question is one of commercial viability and how the big ideas can be made into reality.”
Many countries have examined options for future reductions in greenhouse gas emissions and defined a bio-economy solution in which forests and forest products play a significant role.
“Through this call for research, I’d like to see a report that will identify investible opportunities for the production and manufacturing of high value, wood fibre-based bioproducts that will bring innovation and employment to our regions and increase onshore processing of logs.
“I’m excited to see the opportunities that emerge and will help establish forestry as the cornerstone of our future economy,” Shane Jones said.
MPI minister backs forest growthDamien O'Connor: Forestry is no threat to farming - There's some agitation out there at the moment about farming being under threat from forestry. In my opinion, much of what's circulating is based on misinformation so it's time to lay out the facts.
It is my understanding that we have 12.1m hectares of farmland in this country and 1.7m hectares of forestry. Under the One Billion Trees target the amount of forestry land would increase to 2 million hectares by 2028 and help us meet our climate change objectives.
We had 2 million hectares of forest land in 2002, this would be a gradual redistribution that brings us back to that. There is no Government policy that encourages high-value pastoral land to be planted in pine trees and there is no evidence of this happening.
The latest Overseas Investment Office statistics show about 8,800 hectares of farmland has been converted to forestry under the new special benefits test – that's one thousandth of New Zealand's total sheep and beef land.
The Government is not subsiding whole farm conversions or allowing foreign carbon speculators to buy up farms and plant permanent forests for carbon credits.
NZ First-linked company pushed for 1BT fundsA powerful New Zealand First figure helped establish a forestry company that then pushed for money from two key funding streams controlled by a New Zealand First Minister.
A Radio NZ investigation has found Brian Henry, lawyer for Winston Peters and judicial officer for the New Zealand First party, became a founding director of NZ Future Forest Products in March. The company immediately began its bid for money from the Provincial Growth Fund and also sought funding from the One Billion Trees programme - both overseen by New Zealand First Minister Shane Jones.
The Billion Trees funding bid was rejected by officials at Te Uru Rakau, Forestry New Zealand, on 22 August. Less than a week after that rejection, Future Forest Products appointed the partner of New Zealand First Leader Winston Peters as a director of the company.
Jan Trotman, who has extensive experience as a director and senior manager of commercial businesses, shares a home with Mr Peters, who is also deputy prime minister, in central Auckland. Ms Trotman was made the fourth director of the forestry company on 27 August, when the company bid for at least $1 million from the Provincial Growth Fund was still live. Company Office records show it was Mr Henry who completed Ms Trotman's application for a director's certificate.
Yesterday RNZ reporters Guyon Espiner and Kate Newton issued an updated press released with two headlines and an additional story on the matter:
(18 November) NZ First-linked company applied for $15m govt loan - NZ First- linked company applied for $15m govt loan, pledges transparency. A forestry company with close links to New Zealand First has revealed it applied for a $15 million loan from the Provincial Growth Fund, which is overseen by NZ First minister Shane Jones.
Australia's State of the Forests Report 2018Australia’s forests are recognised and valued for their diverse ecosystems and unique biodiversity; for their cultural heritage; for their provision of goods and services such as wood, carbon sequestration and storage, and soil and water protection; and for their aesthetic values and recreational opportunities.
At the same time, Australia’s forests are subject to a range of pressures, including extreme weather events, drought and climate change; invasive weeds, pests and diseases; changed fire regimes; clearing for urban development, mining, infrastructure or agriculture; and the legacy of previous land-management practices.
Australia's State of the Forests Report 2018 (SOFR 2018) is the fifth in the series of Australia's State of the Forests Reports. The purpose of the report is to keep the public informed about Australia's forests, their management, use and conservation, and to provide information on how they are changing. It is also used to report on the state of Australia's forests to the world.
SOFR 2018 is a key source of comprehensive, current information on Australia's forests for use by industry, state, territory and Australian governments, and research and educational institutions. It also underpins a range of international reporting requirements.
Australia's State of the Forests Report 2018 is available as an accessible PDF (27 Mb). An accessible PDF of SOFR 2018 with higher resolution maps and images is also available (62 Mb).
Executive summary - Australia's State of the Forests Report 2018 – Executive summary draws together the material presented in SOFR 2018 into nine key themes. It is available as an accessible PDF (8.3 Mb) and on the Executive summary page.
The information presented in SOFR 2018 covers primarily the five-year period from 2011 to 2016, or otherwise using the best available data. The report is organised under a framework of seven criteria for sustainable forest management developed by the international-level Montreal Process Working Group on Criteria and Indicators for the Conservation and Sustainable Management of Temperate and Boreal Forests, and then under 44 separate indicators. This Executive summary draws together data from the material presented under these 44 indicators into a number of key themes.
The sustainable management and conservation of Australia’s forests, whether on public or on private land, requires a sound understanding of their extent, type, use and management. Australia’s State of the Forests Report 2018 (SOFR 2018) provides comprehensive information from a wide range of sources that can contribute to a better understanding of the broad range of values relating to Australia’s forests and their current management.
Tauranga: More MB monitoring planned at portPlans are being put in place to increase methyl bromide monitoring following a theoretical modelling report about how the log fumigant disperses into the environment after use.
This is additional monitoring, over and above the routine monitoring that industry is required to carry out every time methyl bromide fumigation occurs.
The mathematical modelling of operations at the Port of Tauranga was commissioned by the Environmental Protection Authority (EPA) as part of a modified reassessment currently underway to review the rules around methyl bromide use.
This modified reassessment is a statutory process where an independent decision-making committee considers evidence in relation to the way methyl bromide is used. The additional monitoring, to be carried out by WorkSafe, will feed into that process.
The Ministry of Health is maintaining a watching brief on the monitoring programme and stresses there is no immediate public health concern.
Gayle Holmes, Acting GM of the EPA’s Hazardous Substances Group, says: “We know New Zealanders are concerned about methyl bromide use so it’s important that we get accurate data on which to base our decisions.
“Our mathematical modelling report conflicts with that put forward by industry as part of the current reassessment process, and others undertaken when methyl bromide was last reassessed in 2010. It is also at odds with routine monitoring data which industry is required to undertake whenever methyl bromide is used at ports around New Zealand.
“Computer-based modelling is a tool that uses an array of mathematical assumptions which can differ from the actual measurements of air quality. Because the reports all reflect different outcomes, the EPA commissioned an independent peer review to further test the hypothesis of its own report. It confirms that more detailed data is necessary.”
To gain more data, WorkSafe will begin monitoring air dispersal patterns following timber fumigations at the Port of Tauranga this week.
Almost finally ... Save the climate ... drink vodkaEco-vodka removes carbon dioxide - This $65 bottle of eco-vodka removes carbon dioxide from the air.
Each bottle of Air Co. vodka, which launched Thursday, soaks up as much carbon dioxide from the atmosphere as eight fully grown trees, according to Air Co. co-founder Gregory Constantine.
“In other words, each bottle removes one pound of carbon dioxide from the air through its entire life cycle,” Constantine tells CNBC Make It.
The vodka, which costs $65 for a 750 ml bottle, is made from only two ingredients, carbon dioxide (a greenhouse gas) and water. That’s unlike traditional vodka, which is typically made by fermenting grains such as corn, potato and wheat. Producing a typical bottle of vodka could create around 13 pounds of greenhouse gases, according to Fast Company, while Air Co.’s product is carbon negative, removing a pound of carbon from the air with every bottle produced.
Air Co. says its patented system works by using (renewable solar) electricity to turn carbon from the air into pure ethanol.
Its process is “inspired by photosynthesis in nature, where plants breathe in CO2. They take up water, and they use energy in the form of sunlight to make things like sugars and to make other higher-value hydrocarbons, with oxygen as the sole by- product. Same thing with our process: The only by-product is oxygen,” electrochemist and co-founder Stafford Sheehan told Fast Company.
“The process uses the same principles as photosynthesis in plants but does so more efficiently,” Constantine tells CNBC Make It.
Air Co.’s technology splits water into hydrogen and oxygen, then combines the hydrogen with carbon dioxide (collected from factories near its Brooklyn, New York headquarters), which creates alcohol and water, only emitting oxygen into the atmosphere. The water is then removed via distilling, leaving behind the alcohol. Air Co. says its vodka is also free of the impurities that can left behind from the grains used in traditional vodka production.
Buy and Sell
... and finally ... something for a laugh
A fleeing criminal, desperate to escape the police, runs into the desert with hardly any water. Very soon, he runs out of drinking water, and hours later, he is already plodding under the merciless desert sun.
That's all for this week's wood news.
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