WoodWeek – 17 February 2021

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Greetings from your WoodWeek news team. While here in New Zealand we're busy selling logs to China, across the Tasman a much bigger forest asset is up for sale. It's Global Forest Partners LP’s softwood business, Green Triangle Forest Products (GTFP). While it’s the smallest of the major green triangle forest growers, there is strong interest from some key players. Suggestions are that consolidation is on the cards with this particular sale. AFR Boutique Resolute Advisory is handling the auction and it appears to be developing into a keen process between GTFP’s neighbours.

Moving to our most challenging logging region, the Marlborough Sounds, a forestry company's $3m bill for failed harvest was wiped after bad advice from council. Long-time industry player Zindia has been vindicated with a $2.89 million debt set aside by the High Court after failing to harvest on deadline for a contract written on bad advice from the Marlborough District Council. It’s a long and sorry tale. If you got closer to the goings-on, it would probably transpire that there are no real winners in the case. However, it is required reading for other local government managers as the sums involved are not small.

Staying with logging, now is the time to register your people for our HarvestTECH and Forest Safety Conferences coming in mid- April. We are making calls now and there is plenty of interest. For companies outside of New Zealand, we are offering virtual registrations for HarvestTECH only.

While export log prices are firm, moving to carbon markets, prices are hot and getting hotter. So is interest in our Carbon Forestry Conference coming in June. Given the current debate, bolstered by proposals to Government in the Climate Change Commission’s draft report, we expect a large local and international audience in June in Rotorua. We are working closely with all of the key agencies and industry professionals to bring you a world class conference. Both MPI and the Climate Change Commission are excellent partners and of course we have Dr Rod Carr as our keynote speaker. Click here to register nowdon't miss out, interest is running high already.

Russia’s proposed log export ban in 2022 will have a far-reaching impact on global forest product markets – Russia exported 15 million m3 of logs in 2020, which accounted for almost 12% of globally traded roundwood. Much of this trade may come to a halt next year when a new law proposed by Russia’s president will ban the exportation of softwood logs and high-value hardwood logs as of January 1, 2022.

The Russian government is also considering new regulations aimed at reducing the exportation of green softwood lumber. This regulation is loosely planned to also commence in 2022 and is intended to incentivize investments in dry-kilns to produced dried lumber for exports. Reducing log and green lumber exports will likely stimulate further value-added processing within Russia and better control illegal logging.

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Green Triangle sale likely to bring consolidation

The neighbours are all peeping over their fences in Australia’s rich “green triangle” forestry zone, keen to get their hands on a rival’s softwood assets. Up for grabs is forestry investment giant Global Forest Partners LP’s softwood business, Green Triangle Forest Products (GTFP), which is the smallest of the major green triangle forest growers and understood to make about $30 million a year.

There’s consolidation on the cards in Australia’s “green triangle”, which straddles the Victorian and South Australian borders. AFR Boutique Resolute Advisory is handling the auction and it is understood it has developed into a keen process between a couple of GTFP’s neighbours.

In the red corner is OneFortyOne Plantations, an integrated timber company that is majority owned by Australian funds including the Future Fund. OneFortyOne Plantations is one of the biggest growers in the rich green triangle region, which straddles Victoria and South Australia, with 83,000 hectares of productive area. It also owns the Jubilee Highway Sawmill in Mount Gambier, which is supplied by the up for sale GTFP under a long-term agreement.

In the blue corner is New Forests, which is an Australian headquartered forestry investment manager with operations in Australia, New Zealand, the United States and Singapore.

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Source: Australian Financial Review

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$3m bill for failed harvest wiped after bad advice

Forestry company's $3m bill for failed harvest wiped after bad advice from council - A forestry company has had a $2.89 million debt set aside by the High Court after failing to harvest on deadline for a contract written on bad advice from the Marlborough District Council.

Zindia Limited signed the contract in 2016, to harvest pine trees on Arapaoa Island, previously known as Arapawa Island, between Tory Channel/Kura Te Au and Cook Strait in the Marlborough Sounds.

The trees were owned by Arapawa Island Forestry Partnership, which leased the steep, difficult property and planted the trees in 1986. The lease expired on August 31, 2020.

The trees matured by 2009, but one harvester backed out of the difficult job so before contracting Zindia, the partnership gained consents to get the forest “harvest-ready” when log prices improved in 2016. That did not include resource consent to harvest, the High Court decision issued last week said.

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Source: Stuff

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Russia log ban potential implications

Russia’s proposed log export ban in 2022 will have a far-reaching impact on global forest product markets – Russia exported 15 million m3 of logs in 2020, which accounted for almost 12% of globally traded roundwood. Much of this trade may come to a halt next year when a new law proposed by Russia’s president will ban the exportation of softwood logs and high-value hardwood logs as of January 1, 2022.

The Russian government is also considering new regulations aimed at reducing the exportation of green softwood lumber. This regulation is loosely planned to also commence in 2022 and is intended to incentivize investments in dry-kilns to produced dried lumber for exports. Reducing log and green lumber exports will likely stimulate further value-added processing within Russia and better control illegal logging.

While the proposed ban is not yet law, it is widely expected to be implemented and passed into law in the second quarter of this year. If enacted, the law will most significantly impact Eastern Russia, where an estimated 10% of the timber harvest is exported in log form. In the short-term, the Chinese lumber industry will be most directly impacted, as exports of softwood logs mainly from Russia Far East are likely to be prohibited.

According to a just- released study, Russian Log Export Ban in 2022 - Implications for the Global Forest Industry (LINK), China will probably look to source more sawlogs from other regions of the world, such as Oceania, Europe, and the US. The increased competition for logs in those markets will likely put upward pressure on sawlog prices. Mid-term, the study expects that China will evolve from importation of roundwood to importation of lumber.

Source: Wood Resources International

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Dig deeper: Updated China trade agreement

How will the New Zealand-China FTA Upgrade benefit New Zealand? - In late January, New Zealand’s Minister for Trade and Export Growth and China’s Minister of Commerce signed the New Zealand- China Free Trade Agreement Upgrade (FTA Upgrade). The New Zealand-China Free Trade Agreement has been a success story. Since the FTA came into force in 2008, two-way trade (exports and imports of goods and services) has quadrupled from $8 billion to over $32 billion, and the agreement has been a platform for closer trade and economic cooperation.

The FTA upgrade includes new areas like e-commerce and a greater focus on the environment and sustainable economic growth. China’s recent trade deals with other FTA partners also offered more favourable terms in areas like services and both countries wanted to update our pioneering FTA to take on board these developments.

The FTA Upgrade will modernise our bilateral FTA with China to ensure it remains high quality, fit for purpose and reflects modern trade realities as well as reinvigorating our FTA network and delivering on one of the pillars of New Zealand’s Covid-19 Trade Recovery Strategy.

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Source: MFAT

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Loggers conference double-header set to run

The SOLD sign has just gone up for the last available exhibition spaces for this year’s HarvestTECH & Forest Safety Conference 2021. The combined events run in Rotorua on 13- 14 April 2021. Full details can be found on the event website HarvestTECH 2021.

That’s a full house, 33 in-door and 15 outdoor spaces with all manner of new equipment and technology best suited to the felling and cartage of logs as well as forest safety around the region. So, it’s going to be another huge turnout. With the two recent additions to the already impressive line-up, exhibitors include;

McFall Fuel, Cookes, Eagle Technology, BOA, Duxson Donaldson, Randalls Equipment, AGrowQuip/John Deere, Tracplus Global, WorkSafe NZ, Porter Equipment, Southstar Equipment, Lubricants NZ, Ensign, Komatsu Forest, West-Trak Equipment, Finance NZ

DC Equipment, Remsoft, FISC, TDDA, TerraCat, Bene Footwear, NZ EMS, Husqvarna, Rearsense Warning Systems, Trimble Forestry, Waratah, Toi Ohomai Institute of Technology, Seeing Machines (Autosense), C3, Hydraulink, Beattys, Transdiesel, Shaws, Chainsaw & Outdoor Power, OSHTrak

As well as a venue jam-packed with equipment, extras for those attending the events this year include;

1. As an added bonus, the very popular forestry safety event run by the Forest Industry Engineering Association, Forest Safety & Technology 2021, is also being held at the same venue on the first day, Tuesday 13 April. Details can be found on the event website, www.forestsafety.events. This is going to enable delegates from both events to network during the breaks and to capitalise on the large number of trade exhibitions that will be present in Rotorua.

2. For the first time, live links from the New Zealand event will be set up for those unable to travel into Rotorua. It can be viewed in real time or for those working out in the bush, it can be seen later as a recorded event.

3. Two key themes this year. As well as mechanised harvesting on steeper slopes, the integration of automation & robotics into wood harvesting operations and best practices around ensuring environmental sustainability (roading, stream crossings and harvest residues management) in felling and in extracting wood from the forest, log scaling and measurement technologies and wood transport innovations have been built into the two-day programme.

4. A pre-conference workshop on developing road and harvest planning has been set up for the afternoon before the event, on 12 April. Details can be found here

Note: Space, like 2019 is expected to be limited. If keen on registering, the discounted early-bird registrations finish in just two weeks’ time on Friday 26 February.

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Climate change: Have your say

Have your say on the Climate Change Response (Auction Price) Amendment Bill - This bill would enable a confidential reserve price to be set for auctions in the New Zealand Emissions Trading Scheme to ensure units sold at auction cannot be sold significantly below the prevailing secondary market price.

The Climate Change Response (Auction Price) Amendment Bill would amend the Climate Change Response Act 2002, and the Climate Change (Auctions, Limits, and Price Controls for Units) Regulations 2020. The bill would:

· enable the Minister for Climate Change to set a methodology for calculating a confidential reserve price · require the methodology and the calculated price be kept confidential · prevent the sale of units at auction if the clearing price does not match or exceed the confidential reserve price.

Tell the Environment Committee what you think

Make a submission on the bill by midnight on 21 February 2021.

For more details about the bill:
· Read the full content of the bill
· Get more details about the bill
· What’s been said in Parliament about the bill?
· Follow the committee’s Facebook page for updates

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OIO consents: Singapore forest investor approved

LINZ Case 202000470 details: Te Au (No 2) Limited for acquisition of approximately 317 hectares of land at 57 Tangoio Road, Hawkes Bay.

The Applicant was granted consent under the special test relating to forestry activities set out in section 16A (4) of the Act to acquire the Land. The Land to be acquired is currently used as a sheep and beef farm.

The Applicant plans to subdivide and sell off the dwelling that is not required for forestry activities. The Applicant will convert most of the Land to forestry by establishing and maintaining a plantation forest over approximately 245 hectares (predominantly radiata pine, but also some eucalyptus and redwood).

The remainder of the Land will be unplanted land associated with forestry areas, including roads and tracks (7 hectares) and native bush to be retained (11 hectares). Planting will commence on the Land from the 2021 winter planting season and the radiata pine will be harvested in 25 to 30 years.

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Carbon Match update - Reserve trigger price

It's Not Hard - NZUs rose into the mid $39s last week - No doubt the recommendations in the recent draft advice from the Climate Change Commission played a strong part in this. Among a vast array of other issues, the Commission expressed concern that the current trigger price for the auction's cost containment reserve - currently set at $50 - is too low.

That trigger is the minimum price that would have to achieved at auction before the Government is allowed to release (limited!) additional volume into auction, with the aim, in theory, of easing prices. A safety valve. But NOT a backstop. But current spot prices, at $39 - $39.50 over the last week, are almost 80% of the way there. And the Commission says that maintaining current settings will lead to failure to meet emissions budgets.

So, their recommendation, which was noted as time critical, was that the cost containment reserve trigger price be increased to $70 as soon as practical and then every year by at least 10% plus inflation. To maintain continuity with recent prices, they also recommended a higher reserve price floor to the auction, up from the current $20 to a recommended $30 as soon as practical, followed by annual increases of 5% plus inflation per year.

In fact that latter aspect of the debate will probably move on. As Carbon News already reported last week, a new Bill has been introduced by Climate Minister James Shaw. Once passed, it will enable a confidential reserve price to be applied to the upcoming Government auctions of NZUs.

The intention is to prevent the Government selling NZUs significantly below the secondary market. Although the methodology and inputs will remain confidential, it's fair to say that given the current market around $39, the confidential reserve price is likely to be at some higher level than the existing "hard" auction price floor of $20.

Moreover, the Bill as put to Parliament today provides for the entire volume of an auction to be rolled forward to the next auction (as long as it is still within the same calendar year), should the auction "clear" at a price lower than the Confidential Reserve Price.

This means that there are scenarios where even the top bidder - someone willing to bid well above the CRP - will not get the volume they want at auction. We have said it before and we will say it again. Come, listen, live, the secondary market, where we can help and things are not complex. You will find sellers, with actual asking prices. You can haggle online. Or just pay them. Deal done. Sun Light. Price disclosed. Last Ten Trades Visible.

So, buyers, don't hide your light under a bushel. Put up a bid or pay the asking price. It's not getting easier, and if you haven't done so already you should get onto Carbon Match, get set up properly and begin trading carbon online, rather than phoning around hoping for miracles.

Carbon Match from 10am - 5pm every weekday.

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OneFortyOne celebrates women and girls in science

OneFortyOne joins in the global celebration of the International Day of Women and Girls in Science on 11 February 2021.

It’s a great opportunity to acknowledge the leading professionals who are contributing their expertise to the success of the forestry and timber industries. OneFortyOne hopes that by sharing the stories of remarkable women in the industry, girls and young women are inspired to pursue one or more of the varied and satisfying careers on offer.

OneFortyOne wants to be part of the movement that promotes full and equal access to, and participation in, science for women and girls. The day is a reminder that women and girls play a critical role in science and technology communities and that their participation should be strengthened.

OneFortyOne is celebrating leading science professionals who are contributing their expertise to the industry. By exploring innovative and creative solutions our professionals are developing solutions for industry, ensuring that this climate friendly resource continues to produce everyday products for society.

Marion Hughes (pictured), Manager – Resource Planning and Analytics for OneFortyOne New Zealand is one such woman.

“There are no barriers any more for women wanting to get into any of the fields available in forestry,” says Hughes. “Often the only thing that gets in the way is perception.”

Hughes still recalls a career advisor at school telling her that forestry wasn’t for women, which made her all the more committed to following her passion, combining her love of the outdoors and data, and studying forestry at university.

The ability to start working during her final year of studies was a boost. “I got to visit small forest owners, measure their trees and tell them how much they were worth and advise them on the best time to harvest them.”

Hughes says that the forestry industry and OneFortyOne really value the perspective that new graduates can offer. “People who are new to the industry give us the most insight. They question why we are doing things. The rest of us just think it’s normal because it’s been done like that in the past.”

After obtaining a Bachelor of Forestry Science, Marion spent several years as a forestry consultant, working on projects in countries within Asia setting up GPS and GIS systems for forest measurement, providing information on wood availability to set up new pulp mills. She then worked as part of a forestry resources team in the Central North Island before joining OneFortyOne 19 years ago.

She now supports the OneFortyOne business in Australia and New Zealand to accurately measure and value its forest estate, ensuring the forests are harvested sustainably and that the company knows the volume of wood by quality class it has available for its customers.

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Source: Scoop News / OneFortyOne Plantations

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Buy and Sell

... and finally ... it's 119 and not out

Wellington’s iconic Cable Car is turning 119 this month, and everyone’s welcome to join the celebrations of its many ups and downs since it first opened in 1902.

Construction began in 1899 as demand for transport in the area grew with the growing population, and through two world wars, plagues and pestilence, facelifts and an assortment of challenges, it has stood the test of time – and will clock up many more trips in the future. The Cable Car has served many purposes over the years, and has, and always will be a popular drawcard to the city.

“The Cable Car has been a trusty, sustainable and reliable transport option for over a century, moving millions of commuters, students and tourists from the city to Kelburn and back again.", says Mayor Andy Foster, “Nearly every Wellingtonian will have fond memories of their experiences on this iconic ride, and it’s always top of the list for visitors to the city.”

Cable Car Chief Executive Cesar Piotto says it has survived wars, depressions, earthquakes and now we can add pandemic and lockdown to the list – and the dedicated team continues to look after it so it can survive another 100 years.

“For generations, the Cable Car has been a must-do attraction when friends and family visit. Not only do locals share this Wellington taonga with whānau, but it’s ideal to explore the intermittent stations or head directly to Kelburn for the best views of the city and harbour.”

From 20-22 Feb, family pass holders can buy a model of the iconic Cable Car for $10 – usually $29.90. The Cable Car provides sustainable, reliable and affordable access to the Cable Car Museum, Space Place, Zealandia and the Wellington Botanic Garden.

Cable Car facts and figures:

~ It is a funicular railway rising 120 metres over a length of 609 metres. The line rises at a constant grade of 1 in 5 (18%), through three tunnels and over three bridges.
~ The designer of the system was James Fulton, a Dunedin-born engineer who had earlier helped build and operate the privately-owned Wellington-Manawatu railway.
~ The original steam-powered winding gear was replaced by an electric motor in 1933.
~There are three equally-spaced stations - Clifton, Talavera and Salamanca (also referred to as University), all named after the nearby streets.
~ It has two cars, which start from opposite ends of the line and pass in the middle. They are attached to each other by a 30 mm diameter cable, guided by 120 rollers, which runs round a pulley at the top of the hill.
~ Normal operating speed is 14.5 kmh, with a maximum load of about 75 passengers. Each car weighs about 13 tonnes when empty and 20 tonnes when full. Pre-Covid it was used by about 1.1 million people each year.
~ The original Cable Car railway was built and operated by the Kelburne & Karori Tramway Company. The line opened to the public on 22 February 1902.
~ The hilltop location of Victoria University’s main campus was influenced by the company’s offer of a donation of £1000 if the university were located in Kelburn, so students would patronise the car when travelling between the city and the university.
~ In the 1940s it had increased competition: City Council buses ran to Karori and other western suburbs, bypassing it. The company believed that it was wrong for the City Council to compete with a private company, and a legal dispute broke out. The argument ended when the City Council agreed to purchase the company in 1947.
~ The safety of the original Cable Car system, including its antique carriages, became a major issue in the 1970s. At that time the Ministry of Works concluded that aspects of the Cable Car were unsafe, particularly the use of unbraked trailers, and called for the system to be scrapped. Luckily for us, instead the Cable Car was replaced in 1979 with the design that we have today.
~ Since the replacement, each car has completed over 993K trips, which is a total distance of over 605,000 km. That is 15 times around the earth, or 290 trips from Bluff to Cape Reinga.


You're humming the song in your head now aren't you?!

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

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

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