Oji: Wood supply lockdown concerns

Wednesday 1 Apr 2020

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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