Friday Offcuts – 20 November 2009

This week we have for you:

• ForestTECH 2009 series in NZ and Australia draws crowd
• Australian agriculture excluded from ETS
• Structures from plantation hardwood rounds
• 2009 Australian Timber Design Award winner announced
• ArborGen Australasia's GM moves on
• ECO2 Forests increase Kiri tree stocks
• Updated softwood lumber market outlook for the US
• AU$50 million Boyer project completed
• Fibre supply to Canadian pulp mills changing
• Innovative use of plywood panels wins trophy
• Spider webs hold the key to stronger bioadhesives
• Timber Queensland elects new Chair and Deputy
• 2.1 million tons of North American paper capacity lost
• New report out on pooling risk for forestry insurance
• Mill sale linked to Bunnings decision
• Jobs
• Used Eqt
• Buy and Sell
• ...and one to end the week on...letter of recommendation

ForestTECH 2009 series in NZ and Australia draws crowd

The New Zealand and Australian forestry industry has just completed the independent two-yearly update of forest data collection, inventory and forest management planning tools out in the market place. ForestTECH 2009 wrapped up for Australian forestry managers, owners and technical staff in Albury earlier this week.

Over the last two weeks around 200 forestry staff have been involved in an extensive series of presentations, managed exhibitions, demonstrations and field visits with technonolgy providers and leading practitioners involved from throughout Australasia and North America. Further details of the series will follow in future issues of Friday Offcuts. ForestTECH 2010 will be planned for a similar time next year and will cover the latest technologies in site preparation, forest establishment and maintenance and plantation silviculture.

For those who missed the latest technology updates, limited copies of the event proceedings can still be obtained from FIEA offices. For ordering of these references, please click on the order form.

Australian agriculture excluded from ETS

The talk is that the Australia may well have an ETS locked down this week before Parliament winds up for the year with the Government meeting the key coalition demand to permanently exclude the farming sector from the scheme. Excluding agriculture from the scheme "indefinitely" has been a key sticking point in negotiations with the opposition to date.

In a further concession, the Government is also going to be examining giving farmers the opportunity to earn cash by selling carbon offsetting credits on the open market - including Opposition Leader Malcolm Turnbull's favoured "biochar" method of storing carbon in the soil.

Structures from plantation hardwood rounds

An extensive new timber resource from very economical, small diameter plantation hardwood rounds will be available for commercial use in the near future from Australian hardwood forests. Opportunities to utilise this resource in a number of value added applications including small and medium scale structures such as park shelters, shade structures, noise barriers and light industrial buildings are being investigated including applications using steam bending technology.

A preliminary investigation by the University of Queensland, School of Architecture and Queensland Primary Industries & Fisheries has developed design concepts for a range of these applications.

As potential suppliers of this resource, designers, specifiers or purchasers of these and similar structures, those involved with the FWPA funded preliminary research are seeking your input on the potential to take these opportunities further towards reality via more detailed R&D and commercial development.

By reviewing the concepts and completing a very short on-line survey by Wednesday 25 November, you assist the project and be in the running to win a $200 timber incentive pack.

2009 Australian Timber Design Award winner announced

The 2009 Australian Timber Design Awards grand prize has been awarded to Brian Hooper Architect & m3architecture (architects in association) for the Tree of Knowledge Memorial in Barcaldine, Queensland. The structure memorialises the tree under which, so legend has it, the Australian Labor Party was founded in 1891.

It is made up of over 4913 individual timber members all of which are Forest Stewardship Certified (guaranteed sustainable, renewable or recycled). The memorial consists of a dead, preserved ghost gum tree at the heart of a square frame. Logs hang from the ceiling of the frame in imitation of the canopy of a tree; and charcoaled external timbers create a "veil" around the dead tree.

To view images from all category winners and runners-up, see the:
2009 Awards Winners Gallery

ArborGen Australasia's GM moves on

Dr Barbara Wells, President and CEO of ArborGen has announced the resignation of Rob van Rossen as General Manager for ArborGen Australasia. "Rob's decision is one that is based on his family and personal goals. Rob's leadership will be greatly missed by ArborGen and we would like to acknowledge the strong contribution he has made to our global business" said Barbara Wells. ArborGen will immediately begin to look for a new General Manager.

ECO2 Forests increase Kiri tree stocks

ECO2 Forests Inc, a forestry company focused on reforestation and carbon sequestration projects, has announced a five-year contract with Empress Trees to supply Kiri tree (Paulownia) nursery stock for planting over the next five years.

The contract will see an immediate supply of nursery stock for the recently acquired ECO2 Forests Research and Development Centre (RDC) in Jimboomba, Queensland. Empress Trees will also closely collaborate with the RDC in further development and linear selection of the species and in the refinement of nursery-stock matrices and mass propagation techniques.

"This contract with Empress Trees positions ECO2 Forests well for the coming planting season in the Asia Pacific Region and in Australia. We are currently finalizing the evaluation of a number of projects, which will provide the opportunity for us to begin planting in this growing season from November through to March," Chief Operating Officer Ray Smith said.

Empress Trees will propagate and supply 150,000 nursery stock seedlings for the RDC alone, where ECO2 Forests will grow a small scale Kiri tree forest for R&D purposes as well as develop its own nursery stock generation capability to back up its other planting projects. Nursery stock supply is expected to reach 3 million in years two and three of the contract.

The Kiri tree is a deciduous hardwood tree developed by ECO2 Forests consultants over the last 20 years. The Kiri tree grows remarkably quickly, typically growing 30-35 feet (10-12 meters) in the first growing season. After the first growth season, the leaves on a tree can grow up to a meter wide, absorbing up to ten times as much carbon dioxide (CO2) from the atmosphere as other trees.

This huge level of carbon sequestration will allow a single Kiri Tree, at full maturity, to have sequestered more than two tons of CO2. The carbon sequestration generates carbon credits which ECO2 Forests intends to sell through carbon markets to help governments and organizations to meet their carbon emission reduction targets.

After 3-5 years, the Kiri reaches up to 65 feet (20 meters) on average. The trunk then thickens to yield up to 2.5 cubic meters of timber after 7-8 years. For more information please visit www.eco2forests.com

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Updated softwood lumber market outlook for the US

The worst is almost over for the North American softwood lumber market as improving demand in 2010 is expected to breathe some life back into a beaten up industry. While the coming winter will likely be a tough one, rising housing starts, lean distribution channel inventories and some lingering government stimulus programs should kick-start lumber demand and even prices.

After facing declining markets and prices since 2006, the 2010 outlook predicts that there will be enough building blocks in place to allow for some much needed market improvement. But it is in 2011 - and especially in 2012 and 2013 - that a real housing recovery is forecast to take hold, creating higher prices with significant price volatility occurring as sudden demand surges catch the lumber market by surprise.

Some of the highlights from a recent study produced by International WOOD MARKETS Group include:

- Rising housing starts in the U.S. are expected to occur in 2010 following the Obama government housing stimulus legislation of 2009 and the development of more normalized housing inventories. These two factors are key in allowing for a rebound in new residential housing starts and increasing lumber demand that is forecast to continue through 2013

- Total U.S. lumber consumption is forecast to increase from 32.8 billion bf in 2009 to over 50 billion bf in 2013 - a 50+% increase from 2009

- From a peak of 28.6 billion bf of lumber consumed in new U.S. residential housing construction in 2005, lumber demand plummeted to about 6.9 billion bf in 2009. By 2013, and, in using what appears to be a conservative housing forecast, lumber consumption in new housing is expected to rebound to over 19 billion bf in 2013 - a huge gain but still well below the peak of 2005

- All regions in the U.S. and Canada are expected to rebound with an average annual increase of about 10% expected from 2009 to 2014 as sawmill operating rates improve from dismal levels averaging just 50% in 2009 to near 90% levels by 2013

- Total North American lumber production peaked at 75 billion bf in 2005 and will bottom out dramatically lower at near 43 billion bf in 2009. Steady rises are forecast in output, to well over 60 billion bf in 2013 allowing most remaining mills to resume production at more normal historic levels.

Source: International WOOD Markets Group, www.woodmarkets.com

AU$50 million Boyer project completed

The Minister for Economic Development, Michael Aird has congratulated Norske Skog and BIS Industrial Logistics on the successful completion of the AU$50m Softwood Conversion Project and Integrated Woodchip Plant in Tasmania this week. The company has achieved the $50 million upgrade cutting capital costs by using some of the same machinery and locating it in the same building.

The Tasmanian Government recognising the importance of the project to the State had provided a AU$10m loan to Norske Skog. The Softwood Conversion Project converts the Boyer site away from using eucalypt based cold caustic soda (CCS) processing lines to a new plantation softwood based thermo-mechanical pulp plant (TMP). The company says closing the eucalypt pulping operation is good environmentally, reducing effluent colour and flow and greenhouse gas emissions.

The project involved investment of AU$27.6m by Norske Skog and a separate investment of AU$22.5m in an Integrated Woodchip Plant which will be owned and operated by BIS Industrial Logistics. The wood chipping facility will supply the entire feedstock requirement of Norske Skog's new processes.

Fibre supply to Canadian pulp mills changing

Wood fibre supply to Canadian pulp mills has shifted from lower-cost residual chips from local sawmills to higher-cost wood chips manufactured from round-wood. The low operating rates for many sawmills has decreased the availability of relatively inexpensive residual chips, which has forced many pulp mills to either reduce production or to furnish their mills with high-cost fibre.

Lumber production in Canada has been substantially lower in 2009 as compared to earlier years. However, production levels in both western and eastern Canada are probably close to the bottom, and with the US lumber market predicted to improve in the latter half of 2010, Canadian sawmills are likely to be running at higher operating rates a year from now.

Because lumber production has declined by about 50% over the past three years but pulp production has only fallen by 25%, many pulp mills throughout the country have increasingly had to rely on more expensive chips manufactured from round-wood. Residual chip prices, in Canadian dollars, have stayed practically unchanged the past three quarters through all provinces of Canada, according to the North American Wood Fibre Review.

Many Canadian paper companies sell their products into the US market and are therefore competing with the US domestic pulp and paper manufacturers. Pulp mills in Eastern Canada have been at a big disadvantage the past few years, partly because of having substantially higher wood fibre costs. In the 3Q/09, pulp mills in Eastern Canada had approximately 70 percent higher conifer fibre costs than the low-cost region of North America, the US South.

As a result, many pulp and paper mills in Ontario, Quebec and the Maritime Provinces have been forced to reduce production more than other regions of North America the past 12 months.

Source: Wood Resources International LLC, www.woodprices.com

Innovative use of plywood panels wins trophy

The magnificent application of laminated plantation hoop pine panels at the Melbourne Recital Centre has won the coveted Geoffrey Sanderson Trophy for Best Use of Plywood in the 2009 Australian Timber Design Awards.

The announcement of the trophy winner by EWPAA general manager Simon Dorries was made this week at the association's annual conference and industry dinner at Surfers Paradise on 16 November.

The awards class - that encompasses plywood, LVL and wood panels - and trophy were sponsored by the Engineered Wood Products Association of Australasia to raise awareness of innovations in the design, use and application of certified engineered products among architects, specifiers and builders.

The award winner was Vos Construction and Joinery, Hobart. Joinery manger Tim Rumney said laminated plywood was the "ideal wood product" for panelling in the auditorium of the $75 million Melbourne Recital Centre. "The design challenge was both aesthetic and technical; the plywood panels were routed to create the grain, like wooden ivy over the walls, which in turn made the architectural character of the space."

Spider webs hold the key to stronger bioadhesives

Spiders are remarkable animals: with over 40,000 classified species, they are among the most diverse known to man and can adapt to the most radical climatic conditions. The silky substance they produce to spin webs has been extensively studied and is known to rival steel in strength.

A less-known fact, however, is that the "glue" that holds it all together is just as remarkable, and could soon become the key to producing stronger bioadhesives to replace petroleum-based products.

Supported by the National Science Foundation, a team led by Omer Choresh from the University of Wyoming has in fact recently reported on an extensive study involving the DNA sequencing of the orb-weaving spiders Nephila clavipes and Araneus gemmoides. The group identified two sophisticated proteins that have evolved over millions of years and are believed to be responsible for the glue's strength.

The team extracted m-RNA - a type of RNA cell containing the chemical blueprint for a protein - from the glue-secreting glans of the spiders, and created a complementary DNA sequence to identify what genes were responsible for the creation of the glue.

By doing so, the researchers were able to isolate two distinct but functionally related genes that were encoded on the spider's genome in an unusual way, using both strands of an identical DNA sequence. Each of these genes is responsible for the formation of a protein, and these two proteins are in turn the building blocks of the sticky glycoprotein that binds the web's threads together.

The next step will be to clone the two genes and employ them in bacterial cell cultures to obtain large-scale production of the glycoprotein. This will allow us the researchers to develop a new biobased glue for a variety of purposes, including stronger surgical adhesives. A report on the study was published the October issue of the monthly journal ACS Biomacromolecules. Source: Gizmag

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Timber Queensland elects new Chair and Deputy

Timber Queensland, representing the State's AU$2.4 billion per annum forest and timber industry, elected a new Chair and Deputy Chair at its Annual General Meeting (AGM) held last week. The Board of Directors elected John McNamara, Managing Director of the States' largest timber processor - Hyne Timber as Chair, and Sean Gribble, General Manager of the States' largest Cypress Sawmiller - NK Collins Industries, as Deputy Chair.

Other Directors elected at the AGM included: Robert Ryder - Divisional Manager, Frames and Trusses Dale and Meyers Operations, Warwick Temby - Executive Director, Housing Industry Association, Doug Simms - Managing Director Ravenshoe Timbers, Director Simms Veneer and Sawmills, Director Gordonvale Sawmills, Craig Neale - Facility Manager, Carter Holt Harvey Woodproducts, Caboolture, Robert Tapiolas - Director Parkside Building Supplies, Director Tropical Homes, Mike O'Shea - General Manager Business Development (Forestry), Forest Enterprises Australia and Skene Finlayson - Director Finlayson Timber and Hardware, Director Yarraman Pine.

2.1 million tons of North American paper capacity lost

International Paper have announced plans to close its paper mill and associated operations in Franklin, Va., and its containerboard mills in Pineville, La., and Albany, Ore. The company also announced it would permanently shut down the previously idled No. 3 machine at its Valliant, Okla., containerboard mill. These permanent shutdowns will reduce the company's North American paper and board capacity by 2.1 million tons.

New report out on pooling risk for forestry insurance

In New Zealand, the Climate Change Response Act 2002 and subsequent amendments established a regime that rewards sequestration of carbon through the Government allocating New Zealand Units (NZUs) to participating owners of eligible forests. These forest owners may generate pre-harvest income by selling the NZUs they have been allocated.

The NZU regime penalises a reduction of sequestered carbon by requiring surrender of NZUs to the Government. Such a reduction may occur from harvesting or from adverse events such as disease, fire or wind throw. A new report has just been completed on this issue and can be found under the heading "Forestry in a New Zealand Emissions Trading Scheme" on the MAF Website.

There are two main risks associated with carbon sequestration under the NZU regime. Firstly there is the risk of adverse events (referred to as "technical risk" in the report) unexpectedly reducing sequestered carbon and creating a NZU liability. Secondly there is the risk (referred to as "market risk" in the report) that NZUs may have been sold to generate pre-harvest revenue and at harvest time the forest owner may need to buy NZUs to surrender to the Government. However at harvest time the market price of NZUs may be higher than when NZUs were sold.

Pooling of risk is a possible way that both these risks may be mitigated. The report examines the economic and legal issues related to pooling and managing risk.

Mill sale linked to Bunnings decision

The media this week reported on talks involving selling part of Tas Paper's Burnie site for a Bunnings store. It is unclear though whether they are linked to the "definitely interested" Asian company potentially buying the mill and guaranteeing its survival. Industry sources say the potential buyer of the Burnie mill wants planning issues relating to the possible Bunnings store resolved before considering finalising any mill purchase.

It is understood a Bunnings consortium is doing due diligence work and has been inquiring about site planning issues in recent "weeks". It's been reported that the potential Asian buyer of the Burnie mill in Tasmania is likely to be Thailand-based Advance Agro or an Indonesian pulp and paper company.

The Advocate said that they thought a potential new purchaser is still "definitely interested" in purchasing a majority of the assets at the Burnie mill, particularly the number 10 machine but there was less clarity about the future of the Wesley Vale mill, which, if closed, might be converted into an industrial park.

Jobs

Used Equipment

Buy and Sell

...and one to end the week on...letter of recommendation

Trevor Adams, my assistant programmer, can always be found
hard at work in his cubicle. Trevor works independently, without
wasting company time talking to colleagues. Trevor never
thinks twice about assisting fellow employees, and he always
finishes given assignments on time. Often he takes extended
measures to complete his work, sometimes skipping coffee
breaks. Trevor is a dedicated individual who has absolutely no
vanity in spite of his high accomplishments and profound
knowledge in his field.. I firmly believe that Trevor can be
classed as a high-calibre employee, the type that cannot be
dispensed with. Consequently, I truly recommend that Trevor be
promoted to executive management, and a proposal will be
executed as soon as possible.


Addendum...
The idiot was standing over my shoulder while I wrote this report.
Kindly re-read only the odd numbered lines.

And on that note, have a great weekend. Cheers.

Brent Apthorp
Innovatek
PO Box 904
Level Two, 2 Dowling Street
Dunedin, New Zealand
Ph: +64 3 470 1902
Fax: +64 3 470 1904
Web page: www.innovatek.co.nz


This week's extended issue, along with back issues, can be viewed at www.fridayoffcuts.com