Climate change - Copenhagen didn't deliver what many were hoping or anticipating. Whilst World leaders were preparing to meet at the UN Climate Change just before Xmas, an on-line survey of the NZ public showed about half of those surveyed weren't convinced global warming was real. What's more, around 20% thought it all a bit of a con. This result backed up some overseas polls, including one carried out for the CNN in the US shortly before the Copenhagen summit ran. This clearly showed that belief in global warming had slipped. One of the stories we cover this week says that attempts to create markets for tradeable CO2 can be labelled as "the white collar crime of the future" and "a fraudster's dream come true."
Like the concept of sustainable harvesting of our native forest estate, climate science has always been difficult to communicate. The issue, like harvesting and replanting or managing regeneration of our native forests, is complex. Uncertainty leads to confusion. The scientists and the media, although having in most instances the very best of intentions, can also often take some of the blame for this uncertainty. A poll in this week's issue mirrors the recent NZ poll and looks for your opinions on the issue of global warming.
In a similar vein, demonstrating the uphill battle the industry has in getting in the minds and hearts of the public, an article came out last week in a European newspaper. It reported the Swedish financial group, Nordea Bank AB, hadn't yet decided on whether it's going to invest in Gunns planned pulp mill in Bell Bay, Tasmania. Opposition groups that gained coverage through most of the articles seen on this particular story were quoted as saying that "Gunns was notorious for its "destructive practices",and that the company clears woodland for plantations by using napalm to burn huge areas". The company of course has refuted the claims and has even bought to the attention of the paper's many readers that rather than deforestation it's in fact Australia's largest planter of trees.
It doesn't take a rocket scientist though to work out what stays in the mind of the reader from this latest media coverage. Like the science behind climate change, forestry practices and the management of some of our forest estate will continue to be a difficult concept to convey.
BRIC insight into forestry for Australian financiers
BRIC countries and their impact on the future of the Australian forestry sector are one of the hottest topics on the agenda at the upcoming Future Forestry Finance Conference being held in Sydney and Auckland this March.
For the international forestry and finance sectors BRIC refers to the key global trading giants of interest to international wood marketers - Brazil, Russia, India and China. Brazil is a threat as it can grow fast-maturing hardwood tree species; Russia is a major player in log exports, but has recently hiked tariffs on its own unprocessed timber exports. India has long been a promised growth market for wood producers and for other forest products. Finally China is the King Kong of wood markets with most wood-based exporting countries benefiting from China's buoyant markets for wood products.
Many wood exporting countries have been favoured with steady growth in wood products demand from China during 2009 while other industries struggled to emerge from recession. Finance leaders targeting the forestry sector for forestry have been actively registering their interest for this very topical pan-forestry conference in early March. The conference of interest is about financing forestry companies and contractors for future growth.
NOTE: EARLY BIRD DEADLINE HAS BEEN EXTENDED UNTIL TODAY, FRIDAY, 22nd JANUARY.
Global warming scepticism grows
A recent on-line survey by the NZ Herald has found that although UN experts have steadily grown more confident about climate change, the public is less so. Almost half of the New Zealanders in the survey between 10-17 December, are not convinced that global warming is real. Almost one in five of the 2296 respondents said the concept was a giant con, and a further 28% said global warming had not been conclusively proved. For those in the forestry industry who perhaps like many of the public were frustrated with the lack of any concerted action following Copenhagen, have your say in this week's on-line poll.
NZ roundwood removals jump 10.2%
The New Zealand forestry production and trade Sept 2009 quarter release is now available on the web. Key points - compared with the same quarter of the previous year (September 2008) include:
- Total harvest volume from New Zealand forests was 5.8 million cubic metres in the September 2009 quarter. This is the largest September quarter volume harvested in six years. - Increased sawn timber and log export volumes have been driven by high demand in new construction and remodelling from China. - Total export log volume was 2.6 million cubic metres, the largest export volume recorded since this series began in 2004.
Total round-wood removals increased 10.2 percent (539 000 cubic metres) in the September quarter to an estimated 5.8 million cubic metres. The September 2009 quarter represents the largest September quarter volume harvested from New Zealand forests since the September 2002 quarter.
Total log export volume increased 44.6 percent to 2.6 million cubic metres this quarter. This is the largest export volume recorded since this series began in 2004. China's demand for softwood logs has been growing steadily since the December 2006 quarter, displacing Korea in the December 2008 quarter to become New Zealand's largest log export market. For full details on the production and trade details, see the attached pdf.
New Zealand forestry identities pass away
Unfortunately, two well known identities within the NZ forest products industry passed away this week. Bill Gimblett, who was 81, had been involved in the forestry industry for over 60 years, joined the NZIF in 1962 and was a long serving member of the Southland sub-committee of the Otago Southland Section of the Institute. Bill worked for both the NZ Forest Service and Hawkes Bay Forests and in recent years, was working as a private forestry consultant in both Southland and Hawkes Bay, operating out of his home at Winton. Bill's funeral was held on Wednesday and messages can be sent to PO Box 78, Winton 9741.
Ken Miers, also a former employee of the NZ Forest Service (Director of the Environmental Forestry Division in Head office) and former NZIF Member who was 85 also passed away this week. Ken's funeral is to be held today (Friday 22nd January at 1:30pm at the Whenua Tapu Crematorium Chapel, Airlie Road, Pukerua Bay). Messages can be sent to PO Box 6216 Marion Square, Wellington 6141. We convey our condolences to both families and to the many friends of these two long serving members of the NZ forestry industry.
CHH announces major investment at Myrtleford
Carter Holt Harvey (CHH) Woodproducts Australia has announced a significant plywood mill upgrade at their Myrtleford (VIC) integrated plant, to create a world class plywood mill utilising state of the art manufacturing equipment.
The Myrtleford facility commenced sawmilling and pulping operations in 1975 as Australian Forest Industries. Plywood manufacture began at the site in 1981. CHH purchased the facility in 1995. Under CHH ownership the site has operated as a sawmill, plymill, treatment plant and pulpmill. The pulpmill was decommissioned in 1999.
Construction of the new plymill is scheduled to begin in May 2010 with commissioning in May 2011. CHH has advised that both the existing sawmill and plymill will continue to operate during construction and some of the existing buildings and associated plant will be incorporated into the new plymill facility. CHH has invited feedback from interested parties regarding the proposed upgrade by visiting the www.chhwoodproducts.com.au or contacting John Browne(Mill Manager) on john.browne@chhwoodproducts.com.au.
Source: A3P Canopy
Deadline for Queensland forests extended
It was reported this week that the deadline for initial bids for Forestry Plantations Queensland - the first asset to be sold as part of the government's AU$15 billion privatisation program, has been extended. The initial bids in the 99-year licence to manage 210,000 hectares of hardwood and softwood plantations were due this month. The deadline has been extended by the Government until February 19 due to wider than anticipated interest. Final bids are due in April with the sales process expected to be completed by June.
Dumping injures Australian manufacturing
The Australian Plantation Products & Paper Industry Council (A3P) is disappointed with last Tuesday's announcement by the Attorney-General the Hon Robert McClelland MP that dumping duties on imported toilet paper from China and Indonesia have been removed. The decision is to be retrospective and will impact on Australian manufacturers, their employees, and dependant businesses and communities said A3P.
A review by the Australian Customs Service (ACS) found that specific imported products from China and Indonesia were dumped and domestic industry suffered injury as a result. However, the injury was defined as not material on technical grounds. "The outcome of the review is yet another confirmation of the major challenges facing Australian pulp and paper manufacturing and making it more and more difficult for domestic manufacturers to remain viable", said Richard Stanton, CEO of A3P.
"Australian pulp and paper manufacturers are competing against international producers who receive a range of subsidies and benefits including free or cheap finance, generous renewable energy and fuel subsidies, and lower regulatory standards for environmental protection and employment conditions. The ACS review shows some international producers have demonstrably dumped imported products into Australia with predatory pricing putting pressure on domestic producers and creating an uneven playing field."
Phaunos Timber Fund investing again
In last week's issue we reported on the sale of Matariki Forests just before Xmas of New Zealand's third-largest forest owner with six forest estates and 132,000 hectares of productive plantation forests to Phaunos Timber Fund Ltd. Since its inception in late 2006, Phaunos has raised around US$560 million to invest in plantation forests and timber-related assets. Phaunos was also reported to have allocated US$200 million to China Green Forestry Company, a joint venture investing in poplar plantations in China; and $US150m to Eucateca SA, a joint venture partnership investing in teak and eucalyptus plantations in Brazil.
This week Phaunos Timber Fund is again in the news. It announced that it's investing US$2.475 million into its Aurora Forestal Biomass Energy Project in Uruguay making an investment so far in this project of US$7.425 million. Phaunos first announced its US$9.9 million investment in the Biomass Energy Project on 19 December 2008.
Carter Holt in huge dairy conversion sell-off
Carter Holt Harvey Ltd is placing 29 dairy farms on converted Waikato forestry land on the market, asking $224.5 million in the largest single offering of farming land ever seen in New Zealand, according to Bayleys Real Estate, which is marketing the properties.
Ranging in size from 218 hectares to 726 hectares, the farms were converted with substantial investment in modern machinery, roading and residences ahead of Kyoto Protocol rules that came into force in 2008 requiring that cleared plantation forests be replanted rather than converted to another use. More >>
US$150 million forest carbon market in the balance
The global market for carbon offsets from planting trees and preserving forests, worth nearly $150 million to date, could stall without a U.S. climate bill or a successor pact to the Kyoto Protocol, a report said last week. At the end of 2009, the market for forest carbon stands in an uncertain position on the verge of potentially enormous growth, the State of the Forest Carbon Markets 2009 report said. "Amidst this scene of opportunity and risk, investors are still eyeing forest carbon, though many are waiting on more definite regulatory signals before taking a financial leap."
Although climate talks in Copenhagen in December failed to agree a new legally-binding global climate pact to cut greenhouse gas emissions, the U.S. pledged at the summit US$1 billion towards a scheme to reduce emissions from deforestation and degradation (REDD).
Many countries have committed politically to the US$3.5 billion scheme, of which Australia, France, Japan, Norway and Britain are also contributors. A domestic U.S. bill to cut emissions has also stalled in Congress, with market players calling its passage this year vital for investment.
Regardless of this uncertainty, the forest carbon market grew nearly fivefold since 2006. The market was worth US$37.1 million in 2008, after rising to US$40.5 million a year before and from US$7.6 million in 2006, according to Ecosystem Marketplace, the report's authors. The report said the forest carbon market was worth US$21 million in the first half of 2009.
The volume-weighted average price was $7.88 per tonne of carbon dioxide, with compliance markets like the New Zealand Emissions Trading Scheme commanding the highest average price for forest offsets ($10.24). The over-the-counter (OTC) market for voluntary carbon offsets, typically unregulated and somewhat opaque, had average prices of $8.44 a tonne, while forest offsets trading on the Chicago Climate Exchange, the only exchange for voluntary carbon offsets, saw prices of around $3.03.
To the end of June 2009, the market traded the equivalent of 20.8 million tonnes in offsets, representing 2.1 million hectares of forests worth some US$149.2 million, the report said. Of this, North America was home to 39 percent worth US$32 million, Latin America had 22 percent worth $35.5 million, Australia had 16 percent worth $37.8 million and Africa had 11 percent worth US$20.9 million, the report said.
Funding available to industry through PAP programmes
Adding to the story in last week's issue on funding that has now been extended to the timber industry through the Promoting Australian Produce and Promoting Australian Produce (Major Events) programmes, attention should be drawn to the two separate web pages that have been set up for the programmes and the different closing dates for the schemes.
Applications for funding under Round 2 of Promoting Australian Produce (PAP) are now open. Under the programme, matched-funding grants of between AU$50 000 and AU$750 000 are available to help food; agriculture and seafood industry organisations build their capacity to better market and promote their produce.
The scope of the programme has recently been extended in Round 2 to include non-food agricultural industries, such as live animals, forestry, wool and cotton.
Programme guidelines and application documentation can be viewed at: www.daff.gov.au/ausproduce. Applications for Round 2 of Promoting Australian Produce close on 15 February 2010.
Applications are also invited for Promoting Australian produce (Major Events), which provides grants to support major collaborative events that bring together agricultural industry participants to encourage information exchange across the supply chain.
Programme guidelines and application documentation can be viewed at: www.daff.gov.au/ausproduceevents. Applications for Round 2 of Promoting Australian Produce (Major Events) are now open and will be assessed continuously until 28 February 2011 or until otherwise advised.
North American wood residue prices increase
There has been a rapid expansion in wood pellet capacity in North America the past five years, from just over one million tons in 2004 to over six million tons in 2009, according to a recent report from the USDA Forest Service. British Columbia was the first region to take advantage of inexpensive sawmill residues and to produce wood pellets for the fast growing European market.
Capacity in the western province of Canada has not grown much the past few years, so in 2009, it is likely that the US South will take over as the leading pellet-producing region in North America, according to the North American Wood Fibre Review. Much of the investment in pellet capacity in the US South has been driven by the export market in Europe. On the other hand, the second largest producing region in North America, the Western US, has so far only sold pellets into the domestic market.
In 2004, the pellet industry was practically non-existent in the US South and this sector has now grown and will reach a capacity of almost two million tons in 2009. These capacity numbers may sound impressive, the actual operating rates have been surprisingly low in both the US and Canada. In 2008, production was about 66% of capacity in the US and 81% of capacity in Canada, estimates USDA-FS.
Major reasons for the low rates include start-up problems for newly built plants, financial difficulties for some companies and a lack of affordable wood fibre supply. With increased demand for wood fibre, pellet manufacturers have increasingly had to accept higher-cost wood fibre sources than the commonly used sawdust from local sawmills. More pellet companies are now using wood chips that traditionally have been used by the pulp industry.
Partly as a result of the expansion of the biomass sector, wood chip prices, sawdust prices and woody biomass prices have moved up in the US in the last quarter. In the US Northwest, sawdust prices have gone up substantially the past five years. In 2004, average sawdust prices were US$28/odmt as reported by the North American Wood Fibre Review. These prices reached a peak of US$74/odmt in late 2008 and have since fallen, averaging US$64/odmt in the 3Q/09. The price increases that have occurred in Western US are likely to be seen in other regions experiencing rapid expansion of their pellet industries.
Attempts to create markets for tradeable CO2 are shaping up to be the next Oil-for-Food-sized fraud. Deloitte Forensic calls it "the white collar crime of the future." Kroll, a business risk subsidiary of Marsh & McLennan, the global professional services firm, calls it "a fraudster's dream come true."
These two global financial services firms are referring to carbon trading markets, a business that is estimated to explode from $132-billion in 2009, mostly in the European Union, to $3-trillion by 2020 as jurisdictions around the world join in carbon trading, part of the "cap and trade" system that governments are embracing. More >>
The New Zealand Ministry of Agriculture and Forestry is reminding owners of pre-1990 forest land that the deadline for notifying deforestation is coming up. If deforestation of more than 2 hectares of pre-1990 forest land occurred between 1 January 2008 and 31 December 2009 the person responsible is legally required to notify MAF by 31 January 2010.
Deforestation after 31 December 2009 of more than 2 hectares of pre-1990 forest land must be notified to MAF within 20 working days of starting the deforestation by the person responsible (usually the landowner). Notification must be made using the notification form available at: www.maf.govt.nz
...and one to end the week on...ruining a good photo
And off to the right - this image has been labelled - "And there's always one that will ruin a good photo".
One more to finish on this week....why men don't write advice columns.
Dear Ted,
I hope you can help me here. The other day I set off for work leaving my husband in the house watching the TV as usual. I hadn't gone more than a mile down the road when my engine conked out and the car shuddered to a halt. I walked back home to get my husband's help. When I got home I couldn't believe my eyes. I found my husband in a compromising position with the neighbour!
When I confronted him, he tried to make out that he went into the back yard and heard a lady scream, had come to her rescue but found her unconscious. He'd carried the woman back to our house and began CPR. When she awoke she immediately began thanking him and kissing him and he was attempting to break free when I came back. But when I asked him why neither of them had any clothes on, he broke down and admitted that he'd been having an affair for the past six months.
I told him to stop or I would leave him. He was let go from his job six months ago and he says he has been feeling increasingly depressed and worthless. I love him very much, but ever since I gave him the ultimatum he has become increasingly distant. I don't feel I can get through to him anymore. Can you please help?
Sincerely, Susie
Dear Susie,
A car stalling after being driven a short distance can be caused by a variety of faults. Start by checking that there is no debris in the fuel line. If it is clear, check the clips holding the vacuum lines onto the inlet manifold for air leaks. If none of these approaches solves the problem, it could be that the fuel pump itself is faulty, causing low delivery pressure to the carburettor float chamber. I hope this helps.
Ted
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
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page, please contact us.
And off to the right - this image has been labelled - "And there's always one that will ruin a good photo".