WoodWeek 4 December 2019
Meanwhile, we have positive news again from Northland. The very upbeat newsmakers at NZ Future Forest Products announced they will fast-track a new sawmill and manufacturing capacity at Ruakaka with North Sawn Lumber. The expansion will see more premium wood products shipped in containers from Northport. They are forecasting an additional $40 million in annual export receipts to South East Asia and Europe. Watch this space next year for whether it happens or not. This should get Shane’s nephews off several couches.
Looking to equipment milestones this week – the 15,000th Ponsse harvester rolled off their assembly line in Finland. Coincidentally, Ponsse will celebrate their 50th anniversary in 2020. This logging technology milestone will be celebrated with a global roadshow for their customers. Starting in Finland, they are planning celebrations with their logging customers in Asia, Australia, North and South America and Russia.
If you are the planning type, get out your new 2020 work diary and mark the dates for our fresh new series of 2020 conferences by FIEA and Innovatek – starting with ForestTECHX in Vancouver in March (network with your logging and forestry mates in BC and do perhaps get in some skiing); then MobileTECHAg in April …
WoodWeek holiday break dates: Our last WoodWeek issue for 2019 will be 18 December, and we’ll be back in your inbox again on 15 January 2020.
This week we have for you:
BREAKING NEWS - Claymark in receivershipReceivers’ appointed to Claymark Group - As publicly reported, the Claymark Group entered into a sale and purchase agreement for the sale of the business and assets to New Zealand Future Forest Partnership (‘NZFFP’).
As a result of NZFFP not yet settling, the Group came under increasing working capital pressure to stabilise the business and fund future growth. The Group has been unable to secure additional funding and, as a result, the Board of Claymark has had to take the unfortunate step of requesting its senior debt provider to appoint Receivers.
Grant Graham, Brendon Gibson and Neale Jackson of financial advisory firm KordaMentha have today been appointed as receivers to Claymark Limited and its related entities. Their appointment covers all Claymark’s operations in Rotorua, Katikati, Thames and Auckland.
The Claymark Group is a long-established business producing high quality radiata pine wood products with a global blue-chip customer base.
The Receivers’ intention is to continue to trade the business while they work through the key issues. This is, however, reliant on the support of many stakeholders including log suppliers and key customers.
Mark Clayton, Managing Director of Claymark, confirmed that he is committed to working with the Receivers to maximise the return to all stakeholders. His immediate focus is to help the Receivers to focus on the protection (and realisation) of assets and communication with employees, creditors, customers and other stakeholders.
Mr Gibson said, “NZFFP had entered into an agreement to acquire the Claymark Group. We will obviously be having discussions with NZFFP regarding its contract. Ultimately, the business will have to be sold.”
Claymark employs approximately 510 people across six manufacturing sites in the Bay of Plenty, Thames and Auckland.
The following companies are in receivership:
Claymark Group Holdings Limited, Claymark Limited, Claymark Assets Limited, Claymark International Limited, Claymark Europe Limited, Claymark Us Limited, Claymark Group Trustee Limited, Profiles Woodproducts Limited.
The receivership does not affect Claymark USA, Inc, the Group’s US-domiciled business, which continues to trade as normal.
Champion Freight ReportThanks to the Champion Freight team here is a graphic summary of the latest monthly update for export log markets.
Log export markets - This week we've got our monthly update from the Champion Freight team.
The chart shows total log export values to China year-on-year to the end of October were up 4 percent, but overall log exports decreased by 1 percent across all markets. Logs to India, our second largest log market, grew 5 percent in October y-o-y.
To the end of October, China shipments month-on-month were down 30 percent and overall log exports down 28 percent. Logs to India increased 22 percent month-on-month in October.
Expansion plans for NZFFPNZ Future Forest Products Ltd (NZFFP) has announced it will fast-track a new sawmill and manufacturing capacity at Ruakaka following the completion of its strategic transaction with North Sawn Lumber Ltd (NSL).
The Managing Director of NZFFP, David Henry, said the expansion will create 30 new full-time equivalent jobs in Ruakaka, providing new high-quality and long-term employment opportunities in the Northland region.
The expansion will allow for additional premium wood products to be containerised and shipped from Northport. It will generate an additional $40 million in annual export receipts for New Zealand, mainly from NSL’s existing markets in South East Asia and also to new customers in Europe. This export growth strategy is in addition to continuing to service all of NSL’s existing domestic customers to the same high levels.
The expansion, previously scheduled not to start until late 2020, will now commence in Q1 2020 with commissioning due to occur in Q4 2020.
As previously indicated, NSL’s Garth Mortensen and Grant Syminton have now joined the NZFFP board as Director of Operations and Non-Executive Director respectively.
The acquisition of the Claymark group, which employs 600 people across six manufacturing sites in the Upper North Island, remains on track.
Mr Henry said NZFFP was strongly in growth mode. A further announcement on changes to NZFFP’s capital structure, including a widening of its shareholder base, will be made in due course.
Export update: A mixed bagMonthly exports rise in October 2019 – Goods exports from New Zealand rose $206 million (4.3 percent) in October 2019 to $5.0 billion. The leading contributor to the rise was exports of milk powder, butter, and cheese (our largest export commodity group), up $242 million (20 percent) to $1.5 billion.
> Milk powder rose $194 million (32 percent) in value, and 18 percent in quantity. The average unit value rose 12 percent.
> Cheese rose $32 million (21 percent) in value, and 17 percent in quantity. The average unit value rose 2.9 percent.
Meat and edible offal rose $132 million (29 percent) to $580 million.
> Lamb rose $67 million (27 percent) in value, and 20 percent in quantity. The average unit value rose 5.8 percent.
> Beef rose $59 million (39 percent) in value, and 27 percent in quantity. The average unit value rose 9.6 percent.
Preparations of milk, cereals, flour, and starch rose $21 million (11 percent) to $215 million. This commodity group includes infant formula.
These rises were partly offset by falls in other commodities.
> Forestry products (logs, wood and wood articles commodity group) fell $91 million (19 percent) to $393 million.
> Untreated logs fell $93 million (28 percent) in value, and 19 percent in quantity. Unit values fell 11 percent.
Fruit fell $47 million (23 percent) to $156 million, led by kiwifruit, down $43 million.
> Green kiwifruit fell $47 million (38 percent) in value, and 50 percent in quantity. The average unit value rose 25 percent. In contrast, exports of gold kiwifruit in the 2019 export season to date were 11 percent higher in value and 8.4 percent higher in quantity than in the 2018 season.
Our upcoming events for 2020If you are the planning type, now could be a good time to get out your new 2020 work diary and mark the dates for our fresh new series of 2020 conferences by FIEA and Innovatek – starting with ForestTECHX in Vancouver in March (network with your logging and forestry mates in BC and do some skiing); then MobileTECHAg in April …
Ponsse celebrate 15k machines builtThe 15,000th Ponsse machine was completed at Ponsse’s factory in Vieremä and delivered to Lespromindustria from Russia. The machine delivery also represented a step towards Ponsse’s 50th anniversary to be celebrated next year. Fifty years of logging will be celebrated by a global roadshow together with Ponsse’s customers and other forest industry professionals.
The 15,000th machine is a Ponsse Buffalo and will operate as a partner for a new Ponsse Ergo. Lespromindustria is a significant seller of sawn goods in its region, and it has 12 Ponsse machines. Next year, Ponsse will open a new service centre in Tomsk, and also build a new service centre in Joensuu.
The 15,000th Ponsse was manufactured at the new factory opened a year ago. It was the most significant investment in the company’s history at nearly EUR 40 million. The amount of testing and quality control has increased considerably. For example, the factory features an optical 3D scanning unit, representing the latest technology, to inspect all forest machine structures at extreme precision and ensure that all structures meet their quality requirements.
At the same time, the factory has been modernised in terms of eco-friendliness and ergonomics. Flexible working methods enable the broadest product range in the markets and reactions to changing market needs. Soon, the 1,000th Ponsse Scorpion, the flagship of the model range, will exit the production line.
The Vieremä factory has grown to cover an area of nearly four hectares. It is still based around a 300 square metre hall from where it all started 50 years ago. The oldest still-operational forest machine factory in Finland forms the core of Ponsse’s production. The Ponsse Cobra harvester and Ponsse Bison, new products launched last year, are in full serial production alongside the new Active Crane.
Originating from forest machine entrepreneur Einari Vidgrén’s dream to build the best forest machine in the world, Ponsse will celebrate its 50th anniversary next year. They will celebrate together with their customers at logging sites! The 50th anniversary roadshow will travel round the world, stopping at different logging sites and at more than 100 different events in 28 countries.
Their European roadshow will start from Finland on 23 January and end at the FinnMETKO 2020 exhibition. They will also visit various logging sites in South and North America, Russia, Asia and Australia. During their roadshow, they will collect feedback from their customers and demonstrate new products and services.
Forestry debate: Government losing controlThe Government is losing the forestry debate in rural New Zealand and needs to front up on the land change implications of zero carbon and emissions trading - The response of Government ministers to rural concerns about forestry policy is polarising the debate. Describing rural perspectives as ‘fiction’, and upset rural protesters as ‘rednecks’, is counter-productive.
The combination of the Zero Carbon Act and forthcoming Emission Trading Scheme legislation will transform the New Zealand landscape. The Government has done a poor job of educating New Zealanders as to what it will mean. The Government is now on the defensive.
In this article, the focus is on multi-rotation production forestry. The associated story of permanent forests must wait for another article.
The starting point is that New Zealand has a policy goal of zero net carbon emissions by 2050. That means, among other things, that either New Zealand has to find new energy sources to replace fossil fuels, or else it has to offset those emission in other ways. The offsetting has to start right now.
There are only two ways to offset emissions. One way is to sequester carbon in trees here in New Zealand. The second is to buy emission rights from overseas people who grow the trees overseas. This second way is an avoidance strategy, whereby New Zealanders pay others to carry the burden. It only works in a world where there are lots of wealthy people in one part of the world and lots of poor people elsewhere.
Both New Zealand and Australia have played this game in the past. Unfortunately, New Zealand did it with cheap and largely fraudulent emission units from the Ukraine. Both New Zealand and Australia plan to play the overseas purchasing strategy again, although this time hopefully with more integrity. However, there is not much virtue signalling or salving of consciences by these actions. It cannot be the main game.
To cut to the chase, the new zero-carbon legislation means that New Zealanders will need to totally change their lifestyles, together with planting a huge number of trees in New Zealand over the next thirty years. To put things into perspective, the current wall of wood coming up for harvest in the next ten years is about 650,000 hectares. This will all need to be replanted, but these replanted forests will not earn carbon credits. It is only new forests on lands not recently in forests that earn carbon credits.
New Zealand’s short to medium term forest policy is encapsulated in Government messaging within the Billion Trees Program. Assuming a planting rate of 1000 trees per hectare, which is typical, then replanted forests will take up most of the Billion Trees Program. It bears repeating that these replanted forests will not earn carbon credits.
Extending the thinking out to 2050, by then almost all of the 1.73 million hectares of existing plantation forest will have been harvested. That too will need replacement with another rotation of trees on the same land just to avoid new carbon liabilities.
The proposed new emission-trading scheme, with its focus on new multi-rotation forestry converted from farmland, will provide forest owners with first-rotation credits based on the average sequestered carbon over multiple rotations. For new forestry based on radiata pine and 28-year rotations, forest- owners will claim credits for the first 17 years of the first rotation.
To state that as explicitly as I can: the carbon benefits relate to long-term accumulated environmental benefits over many rotations, but the total cash benefits are paid out in the first 17 years of the first rotation.
These credits are expected to total about 340 tonnes per hectare of carbon-dioxide equivalent. At current prices of around $25 per tonne, these will be worth around $8500 over 17 years. However, the smart-money people can see potential for this carbon price, really a carbon-dioxide price, to rise to at least $75 per tonne but perhaps $100 or even $200. Given a price of $100 per tonne, then a hectare of farmland converted to forestry would earn $34,000 over the next 17 years from carbon trading.
Source: Scoop News
Carbon Match market updateNZUs have settled back a little, last trading at $24.65 but only for small volume. Buyers we have talked to seem to have little urge to add much to inventory at this point in time, with the broad expectation that the FPO of $25 will be relied upon until at least the end of May 2020.
So, Carbon Match currently has had good demand at the $24.50/55 level, but such levels admittedly haven't tempted sellers and the bid has climbed again.
Natural sellers in particular appear to be more focused on proposed changes to ETS Forestry Regulations, which are causing ructions as forest owners and land owners generally struggle to understand the intricacies and some of the rationales given for recent proposals.
One gripe, in particular, is the failure of the Government to offer the option of "averaging" to existing post- 89 forests (or at least those planted before the beginning of 2019.)
Averaging accounting was intended to encourage participation - it means a forest owner does not need to surrender emissions units upon harvesting as per the current carbon stock accounting approach.
Instead units are received as a forest grows, up to an agreed average level of long term carbon storage. On harvest no liabilities accrue, provided the forest is replanted.
Perhaps even more importantly, those operating under averaging will also have the option of relocating a forest - perhaps to less productive land areas. This is important, helping to ensure that over time the ETS is more consistent with "right tree, right place", and thereby alleviating concerns about forestry encroaching on other competing land-use options.
Why then, has Cabinet decided not to extend these options to existing post-89 forests planted before 2019?
Ostensibly, there was concern that allowing existing forests to opt into averaging would adversely impact the price of NZUs, with Minister Jones noting the need to manage "the volume of carbon units entering the market to maintain a stable price to drive emissions reductions."
To this keen observer of the carbon market, this doesn't make alot of sense, given that the Government continues to offer the fixed price option of $25 and will do for some time yet.
The additional supply that could come to market slowly over time (were existing foresters to be able to opt in to averaging) pales in comparison to the very considerable and much more immediate weight of the Government itself sitting "on the offer"at $25 with a potential 40 million tonnes of demand for this year alone.
The argument that a relatively small amount of additional forestry supply over time could junk prices seems even more curious when you think that we have already had chance to observe a very significant supply influx just a few months ago.
In fact, this year's surrender data showed that over half the gross liability for compliance - almost 17 million tonnes of emissions - were met using the FPO. And while it's true that prices settled back a little, from above $25 in April to the mid $23s post surrender, it did not take long for prices to regain ground, with significant volume trading recently at $25 once more.
Is it really valid then to withhold averaging from existing foresters on these grounds?
It's our view that the market is not oversupplied. It is the nature of environmental markets to have some length in them - reflecting that industry and business need time to respond to the challenges posed by them. Many businesses do not want to live hand to mouth for NZUs and prefer instead to hold some inventory for future years. A stockpile does not necessarily equate to being oversupplied.
The concern should rather be focused on where abatement is going to come from going forward, with a Paris target that simply cannot be met with solely domestic action, and in turn a plan for domestic action that so far appears to rest almost solely on forest sequestration. With that in mind, and some 70 million of the 130 million on issue in forestry hands as at June, this is not the time to be witholding optionality from landowners or making it harder to participate.
NZUs - bid $24.65, offered $24.70.
Carbon Match - every weekday from 1-5pm.
Download your own 2020 FIEA events update
Click here to download an A4 summary of our full schedule of FIEA and Innovatek industry technology events.
If you just want to enter the dates in your diary, here's the list:
ForestTECHX: 17-18 March 2020, Vancouver, Canada
MobileTECHAg: 7-8 April, Rotorua, NZ
Forest Industry Safety & Technology: 20-21 May 2020, Rotorua, NZ; 27-28 May 2020, Melbourne, Australia
ProteinTECH: 4-5 August 2020, Sydney, Australia
WoodTECH: 19-20 August 2020, Rotorua, NZ; 25-26 August 2020, Melbourne, Australia
HarvestTECH: 16-17 September 2020, Melbourne, Australia; 22-23 September 2020, Rotorua, NZ
WoodWorks Conference: 20-21 October 2020, Auckland, NZ
ForestTECH: 11-12 November 2020, Rotorua, NZ; 18-19 November 2020, Melbourne, Australia
Wearable wood fibres?Using wood in electrodes for more durable, sustainable wearables
Wood fibres have been used by researchers in Sweden to create a new class of stronger and lower-cost electrodes for even lighter and long-lasting flexible electronics and wearables.
A team from KTH Royal Institute of Technology reports that it created the new composite material by combining wood cellulose nano fibrils (CNF) – or extremely small filaments known as nanorods—with MXene, a two-dimensional nanoscale conductive material. The wood fibrils provide mechanical strength otherwise lacking in MXenes, and they allow the electrodes to become flexible.
"Our results will eventually help with realizing the development of flexible multifunctional energy storage devices, that is, supercapacitors and batteries, at a lower cost and with higher device-base performance," says Max Hamedi, a researcher in wood cellulose at KTH who in recent years also developed a soft battery made of aerogel foam from wood pulp.
Hamedi says the electrodes can be used in any energy storage device but the most valuable application would be in flexible batteries and supercapacitors for wearable sensor devices.The research was reported recently in the journal, Advanced Materials.
"The electrode will provide both the strength and capacitive charge storage properties, which will enable them to last much longer in electrochemical devices," Hamedi says. "We hope these properties will help to make sustainable multifunctional batteries and supercapacitors."
Hamedi says the composite strength of the material is a result of an advantageous blend of geometry and chemistry. The cellulose nano fibrils bind to the MXene flakes, but they also interlock in the MXenes in their own random networks. "If we for example have the wrong geometrical match between the size of the flakes and the length of the CNF rods, then flakes would not be locked into the random network and we would have a much weaker composite."
5G could transform business in NZHow 5G could unleash a productivity quantum leap - Torrents of super-fast data with edge computing could unlock a much-needed productivity surge for New Zealand’s businesses and governments, Bernard Hickey explains.
It’s the great conundrum of New Zealand’s business and economic life: why is our productivity growth so slow and how can we improve it?
It’s the crucial task for any business or government service provider. Producing more and better goods and services with each hour worked is the only way to improve wages, profits, wealth and wellbeing. The record in recent years has been awful. New Zealand’s productivity has effectively stagnated since 2010. We’ve grown our economy by importing more people and working those people for longer each day, rather than using technology and capital to grow output per hour worked.
The reasons are not obvious, but they do give an inkling as to how the biggest laggards — small businesses and local and central government — can kickstart the performance of the wider economy.
The Productivity Commission has identified what improves output per hour worked: business investment; intense competition; widespread and fast technology adoption; and exposure to international markets and businesses.
This is where the rollout of 5G networks, starting with Vodafone’s in December this year, can work as a catalyst for those less connected, less internationally exposed and less capital intensive businesses and government service providers to transform how they produce goods and services.
Some will choose to use the blindingly fast and all-enveloping computing power enabled by 5G to pivot and grow their businesses. Others will be either over-whelmed by much larger and more powerful international and local businesses that do understand 5G, or will have to find another thing to do that does use that power.
How technology-driven productivity changes everything - To understand just how quickly and deeply the suite of new technologies and business models gathered around 5G could transform businesses and government services, it’s worth stepping back to look at previous technology ‘shocks’ that destroyed industries and companies, and built new ones that made many investors and consumers much better off.
Firstly, some relatively ancient history: the invention of steam engines, industrialised steel-making and the telegraph. These technologies, which were themselves evolutions of metallurgy and insights into the properties of electricity, combined to create the industrial revolution from the early 1800s. Suddenly, factories powered by steam engines could pump out countless garments, widgets and machines.
Almost as quickly, these new products and their masters could be transported to and around new markets via train and ship. Output per hour worked exploded. Prices often fell and some people made astonishing fortunes. The wages of others whose skills were replaced by machines fell. Often, with the help of governments and unions, they and their children retrained and got better jobs with better wages. Some businesses and workers never recovered. Most eventually thrived.
All this activity and the social revolutions that rose up because of it was coordinated, documented and often transacted by the telegraph. The telegraph lines often ran alongside the railways and along the seabeds under the steam ships. These lines eventually morphed into the telecommunications networks we know today. This catharsis of development powered by steam engines, steel-making and telegraphy was much greater than the sum of the three technologies.
These changes through the early and mid-1800s unleashed spectacular productivity and wealth growth, but not for everyone and not everywhere. They drove new social movements, political transformations, revolutions and the first major wave of globalisation. But it didn’t all happen at once or in a straight line. The full industrialisation of most of the world took 100 years and the progress wasn’t always clear or seen as good. But no one would say now that we’d be better off with horses, buggies, pigeons with little canisters for notes around their legs. Or that these technologies wouldn’t change much and were just more efficient versions of horses and pigeons.
Deforestation less impact than thoughtCutting down trees inevitably leads to more carbon in the environment, but deforestation's contributions to climate change are vastly overestimated, according to a new study.
Deforestation for timber and farmland is responsible for about 92 billion tons of carbon emissions into the environment since 1900, found a study led by researchers at The Ohio State University and Yale University.
"Our estimate is about a fifth of what was found in previous work showing that deforestation has contributed 484 billion tons of carbon -- a third of all humanmade emissions -- since 1900," said Brent Sohngen, a professor of environmental and resource economics at Ohio State.
He said that widely accepted estimate didn't take into account the planting of new trees and other forest management techniques that lessen the environmental burden. The model used in this study did take those factors into account, which made a significant difference considering the intensive forest management happening in many parts of the world and the less-intensive, but not inconsequential, management that is happening elsewhere.
The study appeared today in the 4 November edition of the Journal of Forest Economics.
"There was a significant shift toward treating forests as a renewable, rather than nonrenewable, resource in the last century, and we estimate that those reforestation and forest management efforts have led to a far smaller carbon burden on the environment," Sohngen said, adding that the previous estimate was based on trees natural regrowth without any human intervention.
"Humanmade land use and land use change has had a relatively small effect on carbon emissions compared to the almost 1,300 billion tons of industrial carbon emissions during the same time period."
Previous estimates argued that about 27 percent of humanmade net carbon emissions were from deforestation whereas the new research estimates that the correct number is just 7 percent.
"Previous estimates overestimated net emissions because they did not take account of the planting and management of global forests over the last 70 years that was undertaken to build a renewable timber forest," said study co-author Robert Mendelsohn of Yale.
"This forest renewal was a market response to the expectation that old-growth timber was going to run out by the 1990s. Companies started planting and managing forests in the 1950s to fill this gap, and the timber industry quietly switched from being a nonrenewable mining industry to a renewable forest- crop industry."
The new study results suggest that efforts to decrease carbon emissions should focus largely on industry. Trends over the last 10 to 15 years toward less harvesting of mature forests and tree removal for agriculture are likely to continue into the future, Sohngen said. But that doesn't mean that environmental protection work should ignore forests, he said. On the contrary, trees may have quite a large role in protecting against climate change if governments worldwide provide incentives that lead to more careful forest management worldwide, Sohngen said.
Forest management includes planting trees, selecting varieties, adjusting the stocking rates to optimize growth, thinning trees, careful fertilization practices, irrigation and drainage management and other approaches that enhance forest growth.
"Forestry and land use are blamed for being an enormous source of climate change, but they're not an enormous source. The energy sector is an enormous source, and that's where we should focus our attention -- that and looking for ways to maximize our forests' role in protecting the environment," Sohngen said.
Mendelsohn said that the forest could be critical in efforts to solve climate change.
"It is possible to manage the world's forests to store more carbon than they currently do. Some of this can be stored in near-permanent tropical forests that are simply not cut at all and some can be stored in managed forests," he said.
"In the long run, forests could also be tapped as a source of bioenergy. If they are burned along with carbon capture and storage, forests can effectively suck carbon out of the atmosphere and help the world reach lower long run temperature targets."
Source: Science Daily
Douglas fir felled early for wilding effectQueenstown Lakes District Council (QLDC) announced a contract for the harvest of Coronet Forest has been awarded to Mike Hurring Logging Ltd last week beginning immediately.
Established over several years between 1984 and 1996, Coronet Forest consists of 172.5 ha of Douglas fir and is a significant seed source contributing to the wilding pine problem on neighbouring indigenous tussock grassland.
QLDC manager Thunes Cloete is pleased to have a contract in place for the harvest, saying the work was an important step towards supporting ongoing wilding control works and safeguarding enduring landscapes in the district.
“The harvest will eliminate the substantial impact Coronet Forest’s seeds have on the surrounding land, and then we’ll see the return of a large area of our local landscape to native planting,” he said. “We acknowledge the harvest is taking place five years before maturity of the oldest trees. However, this operation will allow us to protect our local natural environment for generations to come.”
...and finally ... Life's too short for the wrong job
But before that some one-liners for you:
It's a five-minute walk from my house to the pub. It's a thirty-five minutes from the pub to my house. The difference is staggering.
I don't want to end the year on a bad note. So apologize to me.
I just got a job at the Guillotine Factory. I'll be heading there shortly.
That's all for this week's wood news.
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