With Copenhagen happening in less than three weeks and Government's on both sides of the Tasman about to adjourn for the year, Emissions Trading Schemes have been front page news - all week. The NZ ETS with support from the Maori Party was passed on Wednesday. A brokered deal was reached to set up a working ETS from 2010. Other Government parties, business leaders and the forestry industry have of course been vocal in their condemnation of the scheme.
Why? Simply put, it's unjust. Only a very small majority of forest owners (see stories below)have been given free access to Government land for planting and the full ownership rights of the carbon and wood produced. All other Maori land owners along with all owners of pre-1990 forests get landed with the massive liabilities of being part of the ETS and still can't earn carbon credits.
The other big issue is the undue haste in which the legislation was pushed through. Why? New Zealand will be able to trumpet those meeting in Copenhagen that it now has a "workable" piece of ETS legislation. The only problem is that the remainder of the world will still be working on their own initiatives, many of the largest polluters aren't even likely to front and from 1 July next year, NZ businesses trading internationally are going to be burdened by the additional costs that come with the new ETS. In Australia the discussions on their ETS are still in full flight. Already there has been blood on the floor with a wave of Liberal resignations over the scheme this week. The final vote is expected this evening and we'll be covering more on this story in next week's issue.
The other news in Australia this week was the emergence of Gunns Ltd as the front runner to further increase their ownership and management of Australian forests. They appear to be now the clear favourite (see story below) to take over the running of Great Southern's MIS hardwood plantations, one of Australia's largest hardwood plantation estates. As reported though, the transfer to Gunns is still being opposed by two other Western Australia bidders: Black Tree and Pulpwood Plantations.
Finally, a number of comments were made by readers from a story last week on Paulownia - check out E-Letters.
The NZ Government passed it's ETS on Wednesday night. It did a deal with the Maori Party over the emissions trading scheme earlier in the week. The agreement, announced by Climate Change Issues Minister Nick Smith on Monday, gave the Government the votes it needed to get its amended emissions trading scheme through Parliament. Under the deal, the Government says it will support a Maori Party bill to have the Treaty of Waitangi included in the scheme requiring the Crown to consult Maori on issues including:
- Pre-1990 forest land allocation. - Fisheries sector allocation. - Allocation to agriculture. - The point of obligation for agriculture. - Setting of targets under the Act. - Reviews of the New Zealand Emissions Trading Scheme.
Five iwi - Ngai Tahu, Waikato-Tainui, Te Uri o Hau, Ngati Awa and Ngati Tuwharetoa - will join forces in a new commercial entity that will be given access to 35,000ha of State conservation land for 70 years, and will receive all NZUs (Kyoto carbon credits) from the land during that time.
After 70 years, the rights will revert to the Crown. The Government has also agreed to look at allowing Maori forestry projects on other areas of conservation land, and to continue the Permanent Forest Sink Initiative. The response by Forest Owners to Monday's announcement can be seen in another story covered in this issue.
ETS is a lost opportunity lost say NZ forest owners
New Zealand forest owners say pre-1990 forests are likely to be worth next to nothing because of the ETS. Owners have been landed with the massive liabilities of being part of the scheme, but can't earn carbon credits.
"Compensating iwi by giving them access to DoC land to plant forests for carbon and wood recognises this fact, but iwi are the only ones getting this special compensation. It's unjust, as well as being an opportunity lost," says Peter Berg, president of the Forest Owners Association.
"The compensation will cost taxpayers hundreds of millions of dollars in real and opportunity costs. It will cost far more than the package the industry has been asking for: the right to offset these forests; to plant them somewhere else after harvest." More >>
The future of Australia's carbon trade scheme was thrown into confusion yesterday after several opposition lawmakers resigned their party positions and promised to ignore a deal to support the government's planned laws. The Senate had been due to adjourn for the year on Thursday, but agreed to extend its sittings into next week if needed to secure a final vote on the stalled package of carbon trade bills.
The government is expecting parliament's upper house Senate to have a final vote on the ETS by late today, with opposition leader Malcolm Turnbull confident enough of his lawmakers will support the package of 11 bills. The resignation of six opposition frontbenchers yesterday severely undermines Turnbull's leadership, a day after he survived a leadership challenge, and allows those senators to vote against the carbon-trade legislation.
Great Southern creditors vote to wind up companies
The Great Southern group of companies has been largely liquidated, but the fate of the company schemes in which 52,000 investors invested billions of dollars is now in the hands of receivers McGrath Nicoll. A creditors' meeting in Melbourne last week voted to liquidate 27 of Great Southern's 35 companies that were in administration.
The future of the remaining eight companies will be dealt with at a round of meetings in Perth on 3 December. Three groups are vying to acquire Great Southern's various forestry schemes: Pulpwood Plantations, headed by West Australian business leader Gordon Martin and backed by US hedge fund Och-Ziff Capital Management Group; Black Tree Group, headed by prominent Perth businessman John Poynton, forester Tony Jack and the Bunnings family; and timber giant Gunns.
In an announcement to the Australian Securities Exchange on Friday last week, Gunns said that they are involved in final negotiations and were expected to enter into an agreement involving Gunns Plantations Limited being proposed to growers as the replacement Responsible Entity of all or a majority of the Schemes.
New Zealand Log Prices - November 2009
Earlier rumours of an inventory build in China contributing to price falls have proved fruitless and demand from this region remains strong for soft wood. This has contributed to a rise in prices in this market. A KS log has lifted US$4/JASm3 to US$113/JASm3 while a KI log has jumped US$5/JASm3 to US$108/JASm3.
Strong demand is also being experienced in Korea while demand from Japan is improving as industrial output gradually returns to normal levels. In India, a small increase in demand for pulp logs, as a low grade saw log, has helped this flat market, which was suffering from a recent increase in stock levels. At this stage, demand and supply appear to be in balance with future demand slightly ahead helped also by increases in domestic requirements.
Some overdue relief in both sea freight rates and foreign exchange volatility was experienced in the past month. Sea freight rates have remained stable at US$39/JASm3, meanwhile foreign exchange also stabilised, though a small lift in the past week has seen an average rise of 0.8% across the currencies of New Zealand's major forestry trading partners.
The Baltic Dry Index has continued its climb with a jump in the past month to 4111, which is 34% ahead of this time last month and a climb of almost 500% since the low of 841 in November 2008. However, this is somewhat behind the highs of over 12,000 experienced in mid 2008.
The NZX Agrifax Combined Log Price Index, which measures returns from the whole forest, has lifted almost two points to NZ$76/T. Increases, particularly in export prices fuelled by strong demand out of Asia, have mostly contributed to this rise while domestic prices have remained firm for the month.
Log price changes: North Island:
Domestic:
Pruned prices are stable to up $3/T. Unpruned prices are mostly stable, though A grade has lifted in the North.
Export: Grades are up $2-$5/T. Pulp log prices are mostly stable.
South Island:
Domestic:
Pruned prices are steady to up $2/T. Unpruned prices are stable to up $5/T.
Export: Prices are steady to up $4/T. Pulp log prices are stable.
Gunns planning to manage Great Southern Plantations
In a media release to the Australian Securities Exchange (for a copy of the full release click here) on Friday last week, Gunns Ltd said they have signed an Implementation Agreement with Great Southern Limited (GSL) and Great Southern Managers Australia Limited (GSMAL) in relation to a proposal to replace GSMAL as responsible entity of the 1998-2006 forestry managed investment schemes (Pulpwood Schemes). The proposal is subject to various conditions, including approval of resolutions by growers and appropriate court directions.
Under the proposal, Gunns would receive a percentage of the 1998 - 2006 Pulpwood Schemes' Net Harvest Proceeds when the timber is harvested. The percentage varies by Scheme and ranges between a total of 4.5% and 55.0% of Net Harvest Proceeds. In addition, Gunns has substantially agreed, but not yet finalised or signed, an asset sale agreement with GSL, GSMAL and the Receivers, McGrathNicol, to acquire certain forestry assets of the Great Southern group for approximately AU$8.7 million.
Gunns will make offers of employment to the forestry management personnel of the Pulpwood Schemes (other than those located in the Northern Territory). All sales contracts between the current responsible entity and the Great Southern group will be terminated. Growers meetings to vote on resolutions relating to the proposal are proposed to be held on 23 December 2009. The proposal is not conditional upon any regulatory approvals.
James Hardie posts huge loss
It has been reported this week that Australian building materials giant James Hardie Industries has reported a half-year loss of more than AU$100 million. James Hardie said its loss for the six months to the end of September was mostly driven by the ongoing weakness in the United States housing market. The substantial loss compares to a profit of AU$169.2 million at the same time last year.
Media should take some blame for forestry misrepresentation
On Line Opinion has recently featured a piece by Mark Poynter, a professional forester in Australia with 30 years experience. In it he talks about groups like the Wilderness Society and how they continue to misrepresent Australian timber harvesting as deforestation , how blatant exaggerations and misrepresentations are impacting on the Australian forestry sector on the international stage and why the media should be shouldering some of the blame for these ongoing blatant misrepresentations of Australian forestry.
The latest example Mark uses of the disturbing determination of Australian activists to misrepresent environmental management in their own country can be seen in a short television report recently aired on the Middle-East-based Al Jazeera network entitled "Tasmania's Shrinking Forests: Deforestation fight in Tasmania".
On the Al Jazeera Web site, the text accompanying the video archive of the report exclaims that, "Severe deforestation is taking place in Australia, as well as countries like Brazil and Indonesia;" and, "in Tasmania, forests have been shrinking steadily over the past 50 years due to the state's billion-dollar timber industry."
In a release this week Gunns have outlined small changes to the Gunns-ITC deal announced on 31 August 2009. Gunns and Elders had announced agreement on terms for the sale of the ITC Timber business by Elders to Gunns. The sale was conditional though on ACCC approval.
The ACCC this week announced its intention to oppose the transaction, highlighting in particular its concerns about the impact of the acquisition by Gunns of ITC Timber's 50 per cent stake in the SmartFibre wood chip joint venture between Elders and Forest Enterprises Australia, operating out of Bell Bay in Tasmania. It has an attributed acquisition value in the proposed transaction of approximately AU$9.3 million (representing approximately 10% of the total transaction enterprise value).
In light of this decision, it's the intention of Gunns and Elders to exclude the 50% stake in SmartFibre from the proposed transaction and to proceed with the balance of the original transaction. Gunns and Elders are seeking early confirmation (within a week) that the ACCC has no objection to the revised transaction.
New CEO for Institute of Australian Foresters
The IFA's Chief Executive Officer, Adrian O'Loughlin, is retiring from employment with effect from Friday 27 November. Adrian has been in that position since 2002. Cassandra Spencer will take over as Chief Executive Officer. Anne Katalinic has been recruited to look after Member Services. In announcing the new staffing arrangements for the National Office, the President Dr Peter Volker paid tribute and acknowledged the energy and experience that Adrian brought to the Institute's administration.
Water use in forestry plantations studied
A FWPA funded study of blue gum and radiata pine plantations in Southwest Victoria, has found that water use by plantations is significantly affected by access to groundwater and also changes over their lifetime. Research found that during the "closed canopy" stage of a plantation (aged four to 13 years), trees will invariably use all the rainwater made available to them unless an impeding or hard pan layer exists. In such circumstances there may be some deep recharge.
The study also demonstrated that plantations will use groundwater if it is available to them during the closed canopy stage whereas during the earlier stages of the plantation (0 to four years), trees are unlikely to use all rainfall in an average season, thus resulting in some recharge or run off. These younger trees are unlikely to access ground water until the closed canopy stage. It also found that geology, topography and hydrogeology all have an indirect affect on water use of plantations, primarily by influencing groundwater access.
The aim of the research was to measure and predict plantation water use in catchment area with a mean annual rainfall of less than 750mm. Its findings will help the forestry industry improve the accuracy of its predictions in the future and better enable it to engage in water policy debates. The full report can be seen here. Source: Leading Edge
Amcor Gets $850 Million in U.S. Private Bond Sale
Amcor Ltd, Australias biggest packaging company, raised $850 million from a private bond sale in the U.S. Reportedly the deal to sell seven-, nine- and 12-year bonds is the biggest U.S. private placement by an Australian company.
Newspaper ad expenditure to drop by 25%
ZenithOptimedia downgraded its predictions for 2009 and 2010, now saying global advertising spending will drop nearly 10% this year, to about US$445 billion, down from the 8.5% drop predicted in July.
The new projections for 2009 followed lower than expected figures for the first half of the year, the agency said, adding that the market should hit bottom by the end of 2009. The internet is the only medium expected to grow in 2009, up 9.2%. Television, cinema and outdoor will return to growth in 2010, followed by radio in 2011.
Newspaper and magazine ad expenditure will continue to decline: by 2011, newspaper advertising spending will be 25% below its 2007 peak, while magazine ad spend will be 28% below its peak.
A young monk arrives at the monastery. He is assigned to helping the other monks in copying the old canons and laws of the church by hand.
He notices, however, that all of the monks are copying from copies, not from the original manuscript. So, the new monk goes to the head abbot to question this, pointing out that if someone made even a small error in the first copy, it would never be picked up! In fact, that error would be continued in all of the subsequent copies
The head monk, says, 'We have been copying from the copies for centuries, but you make a good point, my son.'
He goes down into the dark caves underneath the monastery where the original manuscripts are held as archives in a locked vault that hasn't been opened for hundreds of years. Hours go by and nobody sees the old abbot.
So, the young monk gets worried and goes down to look for him. He sees him banging his head against the wall and wailing. 'We missed out the R ! We missed out the R ! We missed out the R !'
His forehead is all bloody and bruised and he is crying uncontrollably. The young monk asks the old abbot, 'What's wrong, father?'
With a choking voice, the old abbot replies,
'The word was...
CELEB R ATE !!!
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
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