WoodWeek – 4 March 2020

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Greetings for another week - perhaps a sunny one for the weather, but clearly dark clouds for business. The good news this week is from Tainui Group Holdings and Port of Tauranga. They have just announced a joint venture to bring the Ruakura Inland Port in Hamilton to fruition within two years. The plan is to establish the inland port and start port operations at Ruakura following the opening of the nearby Hamilton section of the Waikato Expressway, currently scheduled for the end of 2021.

STOP PRESS: Forest Safety Conference in May 2020: Early Bird Rates have been extended! We have extended the deadline for earlybird registration rates to 27 March in recognition of the difficult business conditions due to the fires in Australia and the effects of virus-related travel restrictions and log shipment delays everywhere. With our biennial forest safety conferences coming to Rotorua and Melbourne in May, we have a fresh new agenda for our loyal audiences.

Fatigue and tools to manage it: Looking to our event content, this year we have a strong focus on the rules and tools for managers to deal with people and their potential to suffer from fatigue. We have a number of speakers with strong experience in this area. We are sure you will find them practical and valuable for your work.

Transport safety is now included in both New Zealand and Australia events. Many of the latest technology developments for worker fatigue monitoring have applications across a range of workplaces, not just for truck drivers. The technologies are now very well connected. They provide tools for effective ways to use results gathered to change driver and operator behaviour in affirmative and reassuring ways by managers.

Moving from plans to current issues, foresters and ports are preparing for further deterioration in log exports. Signs show that Chinese wharves may be close to capacity as coronavirus keeps large parts of the world’s second-largest economy shut. In just a week, the new information on the effects of the global virus continues to be a dark cloud on log exports in particular. The delays in China have had the effect of prolonging the usual New Year holiday production halt and the uplift of logs from Chinese ports.

To the market, where Stats NZ has done some preliminary numbers. The cumulative total value of exports to China in the period was $1.1 billion, down around $93 million or 8 percent compared to the same four-week period a year earlier, they said. However, “if exports to China had followed typical patterns, projections suggest the cumulative total value of exports in the past four weeks, to February 23, 2020, would have been about $1.4 billion,” the Stats NZ spokesperson said.

By weight, forestry exports to China – mainly logs – have fallen to about 1.2 million tonnes in the past four weeks, compared with 1.3 million tonnes in 2019. By value, around $180 million of forestry products were exported in the four weeks, down from almost $250 million in the same period last year.

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Tainui Group teams up with Tauranga Port

Tainui Group Holdings and Port of Tauranga last week announced they plan to develop a 50:50 joint venture to bring the Ruakura Inland Port at Hamilton to fruition within two years.

The new joint venture will take an initial 50-year ground lease to establish the inland port, and plans to start port operations at Ruakura following the opening of the nearby Hamilton section of the Waikato Expressway, currently scheduled for the end of 2021.

Parekawhia McLean, Chair of Te Whakakitenga o Waikato, the Waikato-Tainui parliament (and parent organisation of Tainui Group Holdings) said the iwi is pleased to team up with New Zealand’s largest international hub port to bring Ruakura Inland Port to life.

“It’s exciting to confirm a concrete path forward for this project of national significance which will unlock economic, social and environmental benefits for New Zealand, our region and our iwi,” Ms McLean said.

Port of Tauranga Chief Executive, Mark Cairns, says there is a strong logic to team up with Tainui Group Holdings to unlock efficiencies for importers and exporters by utilising Ruakura Inland Port.

“This new partnership adds to our strong and growing capacity to serve the Auckland, Waikato and Bay of Plenty regions. It combines our own expertise in developing and operating ports, the deep regional connections of Tainui Group Holdings and the scale and efficiencies offered by Ruakura and its road and rail connections,” Mr Cairns said.

“By enhancing the MetroPort Auckland to Tauranga rail service with calls at Ruakura, we can unlock significant environmental and economic benefits for freight customers,” he said.

Local communities will also benefit, with TGH modelling showing a potential 60,000 truck movements per year removed from the region’s roads when Ruakura is fully developed.

Chris Joblin, Chief Executive of Tainui Group Holdings, said the shared strategic interest with Port of Tauranga had become increasingly obvious as the market landscape evolved.

“This agreement brings clarity and certainty to the development of Ruakura Inland Port and signals we are open for business. As the largest port in New Zealand, Port of Tauranga will bring world class expertise in developing and running ports,” said Mr Joblin.

“We are excited to enter this partnership based on strongly aligned values and interests. And for our iwi, it means we can make the inland port a reality in a way that retains the underlying whenua, which will never be sold.”

“With 192 hectares earmarked for logistics and industrial uses, we expect a number of other customer conversations in progress to bear fruit in the coming months as distribution and logistics companies and manufacturers seek out a preferential location at Ruakura.”

Port of Tauranga and Tainui Group Holdings have been in talks since initially signing a rail services agreement in mid-August last year to enable Port of Tauranga's cargo trains running between MetroPort Auckland and Tauranga to service Ruakura Inland Port.

The “golden triangle” of Auckland, Hamilton and Tauranga already accounts for around half of all freight volumes in New Zealand and container volumes are forecast to grow 60% in container volumes by 2042.

KiwiRail operates up to 86 trains per week for Port of Tauranga between MetroPort Auckland and Tauranga, carrying up to9,000 TEUs (twenty-foot equivalent units). The route currently has unused capacity and the additional service stop will improve utilisation and reduce the number of trucks on roads.

Source: Port of Tauranga and Tainui Group Holdings





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Foresters watching port impacts closely

Foresters, ports watching for March virus impact - Foresters and ports are preparing for further deterioration in log exports on signs Chinese wharves may be close to capacity as coronavirus keeps large parts of the world’s second-largest economy shut.

Port of Tauranga today trimmed its full-year profit forecast on risks that trade disruption will continue, noting that logs had been hit hardest to date and that ship cancellations and delays were likely to continue into March.

Eastland Group, which operates Gisborne’s port, is moving only about 20 percent of its usual log volume and is preparing for worse.

Andrew Gaddum, the firm’s chief operating officer for regional infrastructure, said the port would usually expect seven log ships in the coming month. It has only a couple of weeks’ visibility on vessel arrivals but he expects only three or four in March.

The New Zealand Forest Owners’ Association earlier this week warned that Chinese wharves were running out of space. Gaddum said they could soon be at capacity if they are not already, given recent log shipments.

“There’s something like a million tonnes on the water heading over there now,” he told BusinessDesk. “I’m nervous about what March will bring.”

China is the biggest market for New Zealand logs, buying about $2.7 billion worth in 2019, according to NZFOA data. That was more than six-times that of South Korea, the next largest buyer. India is the third-largest market.

The log trade to China had already slowed last year and prices softened due to an influx of European logs from forests damaged by insect infestations. Stockpiles in China then grew further as officials extended the January new year holiday in response to the coronavirus outbreak.

Logs ships expected at Tauranga, Gisborne and Napier in coming weeks are mostly destined for ports in China and South Korea, according to the ports’ websites.

Yesterday, officials in Korea reported that the number of virus cases there jumped by 505, the biggest spike to date, taking the total to 1,766. Japan is considering shutting all the country’s schools for March to help contain the outbreak there.

Port of Tauranga is the New Zealand's biggest port and shipper of logs. It handled 7.06 million tonnes of export logs in the June 2019 year, 12 percent more than a year earlier.

In August, it said had been expecting volumes this year to decline to about 6 million tonnes on the back of weaker prices. Today it said volumes for the six months through December were down 8.4 percent at 3.4 million tonnes.

Eastland is the country’s second-largest log shipper. It moved 2.94 million tonnes of logs in the March 2019 year, 80 percent of which went to China. Logs account for 99 percent of the port’s volume.

Log deliveries to the port were halted earlier this year but had since resumed. Gaddum said stockpiles at the port had been drawn down and the firm was now making plans in case the current downturn continues.

The company doesn’t have plans to lay off staff but is looking at ways to move people into other areas of the business, he said. “This current situation could be with us for a few months, so we have to adjust our business to suit that.”

Unlike other major forestry regions, such as the central North Island, Hawke’s Bay and Northland, the East Coast doesn’t have a lot of local wood processing.

“It’s going to have a significant impact on our region and our people.”

Gaddum said he hoped the government would be considering that when thinking about other industries exposed to the coronavirus. Earlier this month, the government committed $11 million to assist the tourism sector as a result of the global travel slowdown.

Source: BusinessDesk



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Will Labour deliver on WoodFirst policy

Less than 2 weeks out from the 2017 election, in early September, this is what Jacinda Ardern said about plans for their “Wood First” policy - Labour says too many raw logs are currently being exported and New Zealand is missing out on value- added processing and manufacturing jobs are being lost.

A Labour Government would also establish a $20m prefabricated housing plant in Gisborne, she said.

Labour leader Jacinda Ardern told media she would bring back the New Zealand Forest Service in Rotorua, which would plant forests on Crown land. It would require the sale of logging rights over 50 hectares to go through the Overseas Investment Office.

"It's not only beneficial to us in terms of regional growth and development and good, well-paid jobs, it also helps us achieve some of our other commitments, particularly when it comes to issues of climate and climate change," Ms Ardern said.

"Our goal is to see fewer logs being shipped offshore when they can be processed here in New Zealand and be used to build New Zealand homes and New Zealand products."

All new government building projects - including Kiwibuild, classrooms and ministries - would be required to use New Zealand wood or present a "compelling" business case as to why they might need to use a different material.

More >>

Source: Newshub



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Wood exports to China: Value vs volume

Exports to China take hit from covid-19 - Cumulative exports to China from Jan. 27 to Feb. 23 may be around $300 million, or 19 percent, lower than they would have been without covid-19, according to provisional data from Stats NZ. The government statistics agency emphasised today’s data is provisional and is “an early, indicative estimate.” It was quick to say the numbers are not a forecast but a “helpful guidepost.”

The cumulative total value of exports to China in the period was $1.1 billion, down around $93 million or 8 percent compared to the same four-week period a year earlier, it said. However, “if exports to China had followed typical patterns, projections suggest the cumulative total value of exports in the past four weeks, to February 23, 2020, would have been about $1.4 billion,” it said.

The cumulative value of exports to all other countries – excluding China – in the four weeks was about $3.6 billion, down around 2 percent from a year earlier. It said dairy export values to China in the past four weeks were comparable to 2019 as higher prices had compensated for lower volumes.

By weight, forestry exports to China – mainly logs – have fallen to about 1.2 million tonnes in the past four weeks, compared with 1.3 million tonnes in 2019. By value, around $180 million of forestry products were exported in the four weeks, down from almost $250 million in the same period last year.

The quantity of meat sent to China had fallen by about half to about 20,000 tonnes in the past four weeks, it said. Meat exports to China were worth about $170 million in the past four weeks, down from about $280 million in the same period last year.

Seafood exports to China in the past five weeks were worth about $30 million, down from $70 million in the same period last year. The data includes an extra week in order to capture a better view given the nature of the exports, Stats NZ said.

When questioned about the reliability of the data, Stats NZ said it provided “fairly reliable signals.” However, it noted the February data points were “intentions to export” and said it can take some time for deleted entries to come through.

The official February trade data is due to be published on March 25.
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FOA: More local wood use would help

More wood use in New Zealand would help environment and reduce market pressure in China - The Forest Owners Association (FOA) says the government should be looking at more wood use in New Zealand, which would have environment and trade benefits.

The Association President, Peter Weir says it’s time the government turned the negative log market situation in China into a positive outcome in New Zealand.

Lack of space in Chinese ports, due to cheap insect damaged logs flooding in from Europe and the coronavirus induced construction downturn, is looking to bring a virtual halt to New Zealand log exports to China.

But Peter Weir says that creates opportunities here.

“All the government needs to do is introduce the wood preference policy that the Labour Party promised in the last election and at the same time it should target the worst fossil fuel users in New Zealand to encourage a transition to renewable biofuels.”

The Labour Party manifesto in 2017 stated a Labour government would ‘Support wood manufacturing and processing by favouring wood for new government building projects …’

Peter Weir says the government has had plenty of time to introduce this policy.

“It’s been promised for nearly three years now. All it requires is for wood to be considered first in all government contracts. Such a policy has worked well for Rotorua Lakes District Council in particular and it should be rolled out nationally. It would increase the consumption of New Zealand grown wood and would lead to less steel and concrete use.”

Peter Weir says that despite improvements in cement production worldwide, making a tonne of cement still emits almost a tonne of carbon dioxide into the atmosphere and he says steel production is even worse.

“On the other hand, a tree sequesters carbon from the atmosphere and that carbon stays in the timber when it’s made into a building for the life of the building.”

Peter Weir says the other measure the government could take is to put a tax on coal consumption.

“Coal is the worst fuel for emitting carbon dioxide. The government could put a carbon tax on coal of say $200 per tonne, and use the income to assist industries, schools and hospitals convert to biofuels, including wood chips.”

“That would reduce New Zealand fossil fuel emissions and at the same time soak up some of the lower grade timber being produced at the moment that can’t find a home in China,” Peter Weir says.

Photo: Rotorua's Eat Streat, built using Rotorua District Council's Wood First concept


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Invercargill's investment forests for sale

Invercargill City Council-owned forests hit the market - Forests in Southland, Otago and Nelson/Marlborough are being sold. Invercargill City Council-owned forests have hit the market after it was decided to sell them off last year.

The 14 forests in Southland, Otago and Nelson/Marlborough have a combined area of 3599ha and a total productive area of 3,058ha, predominantly stocked with radiata pine. The estate is being sold by Invercargill City Forests Limited – a subsidiary of Invercargill City Council's holding company, Invercargill City Holdings Limited.

The decision to divest was made after a review of the holding company's investments in relation to the strategic objectives agreed with council. In April 2019 Holdco resolved that Invercargill City Forests Limited was not a good investment fit and would be sold.

At the time, Holdco chairman Brian Wood said "this decision was not taken lightly but took into account the company's debt position, the forecasted reduction in harvesting revenue and the risks associated with owning forestry."

For the 2019 year, Invercargill City Forests Limited recorded a loss of $2.6m compared to a profit of $733,000 the year before.

Colliers International's specialist forestry sales team has been appointed to market the estate for sale by way of a two-stage expressions of interest campaign.

Forestry director Warwick Searle said the age profile of the estate was bimodal, with substantial areas planted between 1994 and 2000, plus a significant portion of the estate established from 2012 to 2019.

The estate can be purchased in entirety or separately by region.


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New Forests to acquire Bunbury plantation

New Forests to Acquire Forestry Assets of Bunbury Fibre Plantations – Australia-based forestry investor New Forests has just announced that investment funds managed by the firm have agreed to purchase the hardwood plantation assets of Bunbury Fibre Plantations from Mitsui Bussan Woodchip Oceania (“MWO”).

The Bunbury Fibre Plantations asset includes around 12,000 hectares of certified plantation hardwood, located around Bunbury, Western Australia. The Bunbury Fibre Plantation assets will continue to be managed for long-term supply of certified woodchips, 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 MWO. Through the partnership, fibre from the plantations will continue to be processed through MWO’s port facilities in Bunbury.

The investment is the first made by New Forests’ third-round Australia New Zealand Forest Fund (“ANZFF3”) in Western Australia and brings the fund to greater than 70% deployment. New Forests’ Managing Director for Australia-New Zealand, Mark Rogers, noted, “With this acquisition, New Forests is proud to continue its proven track record of long-term investment in the future of the forest industry in Australia. We look forward to making further investments and partnerships in regional Australia.”

The ANZFF3 portfolio now includes diversified exposure to core forestry markets across Australia, as the new acquisition complements an existing Tasmanian softwood estate. The fund also has investments high-quality softwood estates in both the North and South Islands of New Zealand.

“As a locally based investor, and one of the largest in Australia, New Forests will continue investing in the long-term, sustainable management of Australia’s plantations and rural land sector,” said Rogers.


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John Deere: New felling head for steep slopes

With the continued growth of the steep slope machine felling, John Deere has announced its new large-class directional felling head, the FL100. The new model provides customers with a larger, more durable directional felling head solution.

“Our customers are continuing to tackle more challenging terrain, and we want to provide reliable, durable equipment that is designed to meet their unique needs. As they seek purpose-built equipment for their operations, the FL100 will allow them to efficiently and safely fell in both unique steep slopes and traditional felling applications,” said Jim O’Halloran from John Deere.

The robust, durable design of the new FL100 makes it ideal for steep slope, shovelling, and traditional felling applications. Featuring increased grip strength, grapple capacity and shovelling performance, the FL100’s grapple arm effectively handles both small and extra-large timber.

The increased durability of the FL100 reduces potential downtime in tough conditions, while allowing excellent access to maintenance and service points. Factory installed on the new John Deere 959ML machine, the FL100 offers the ideal solution for felling and manoeuvring timber in steep slope applications.

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Timbeter expanding to Asia, South America

Estonian company Timbeter, whose solutions help the forestry sector adopt digital technology to bring transparency and efficiency to forestry management, has closed a successful seed round - It was led by TMT Investments, the venture investing company listed on the London Stock Exchange famous for its early bets in Bolt and Pipedrive, as well as the pan-Baltic seed fund Change Ventures. Also joining this round was EigenKapital, run by well-known tech entrepreneurs Ahti and Alari Aho, the founders of successful time-tracking platform Toggl. Contriber Ventures and Wiser also participated in the round.

Timbeter has built the world’s largest database of photometric measurements of roundwood, which allows live online tracking of timber assets down to individual shipments and piles throughout the forestry value chain. Compared to traditional methods, Timbeter’s algorithms cut measurement and documentation times by 10 and increase accuracy by 5 times.

Timbeter is using artificial intelligence to help companies in their digital transformation by speeding up forestry operations, increasing employee safety and saving resources. Timbeter makes processes more objective and transparent, enables better control and data-driven planning of logistics and production, and thus contributing to sustainable forest management.

The company has demonstrated its success on the local and global markets, its clients include some of the largest companies in the sector such as CMPC (Chile), International Paper (Brazil), Faber-Castell (Brazil), Siam Forestry Group (Thailand), Mekong Timber Plantations (Laos), Port Blakely (USA), SEQH (Australia) and many others.

Anna-Greta Tsahkna, CEO of Timbeter, explained that the new financing round will help Timbeter expand its sales activities in the target markets, and also to develop the bridge between companies and governmental organisations, by reducing the sectors administrative burden in insurance, tax and regulatory reporting. “By facilitating smooth digital data exchange between the government and companies, it is easier to ensure sustainable forest management and fight illegal logging”, the CEO of Timbeter said.

Precision forestry, forest governance and legal trade have played a key role in the sector and are foundational elements to sustainability. Nevertheless, illegal activities continue to be a key problem for the forestry industry, and undermine markets for responsible wood fiber products, harm the environment and people in many parts of the world. Timbeter solution helps to create conditions for a more secure trade and prevent illegal logging.

“We are very excited about this investment, because we see Timbeter’s precision forestry platform bringing similar dramatic increases in profitability, transparency and efficiency to the timber sector that precision agriculture platforms have delivered in farming,” said Yrjo Ojasaar, founder and partner of Change Ventures.

More >>

Source: timbeter.com


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Tyres and forests - Who knew?

Who needs sustainable forestry? People who drive with these! Rayon cord, made from trees, is one of the most commonly-used reinforcing materials used to make tires.




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Jobs



Buy and Sell



... and finally ... time for well-earned laugh

If you're a climate change sceptic, perhaps this new angle will help bring you round. By accepting that climate change exists, even if just as a robust and growing industry and economic force, then the next logic part of the process is exploiting the humour related to it. Here goes!

Heathrow Airport carbon neutral? - These days businesses must address the size of their carbon footprints — it's the right thing to do and it's good PR. One of the biggest offenders — the aviation industry — has been struggling to fall into line, but Heathrow Airport trumpeted that it had become carbon neutral in emissions, though only from the parts of the airport it ran and not including flights.

Understandably, people on social media were a little sceptical because that's not how carbon neutrality works. One Twitter user said: "I am teetotaller, but only on weekdays and not including wine."

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A woman's husband dies. He had left $50,000 to be used for an elaborate funeral.

After everything is done at the funeral home and cemetery, she tells her closest friend that "there is absolutely nothing left from the $50,000."

The friend asks, "How can that be?"

The widow says, "Well, the funeral cost was $6,500. And of course I made a donation to the church -- that was $500, and I spent another $500 for the wake, food and drinks -- you know; and the rest went for the memorial stone."

The friend says, "$42,500 for the memorial stone? My God, how big is it?"

The widow says, "Four and a half carats."

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A grandmother was pushing her little grandchild around Woolworths in a pram. Each time she put something in the basket she would say, "And here's something for you, Diploma." or "This will make a cute little outfit for you, Diploma." and so on.

Eventually a bewildered shopper who'd heard all this finally asked, "Why do you keep calling your grandchild Diploma?"

The grandmother replied, "I sent my daughter to University and this is what she came home with!"



That's all for this week's wood news.

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John Stulen
Editor
Innovatek Limited
PO Box 1230
Rotorua, New Zealand
Mob: +64 27 275 8011
Web: www.woodweek.com

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