Friday Offcuts – 10 February 2012

growing info milling transportation forest products

Click to Subscribe - It's FREE!

It’s been a while but finally some really positive news this week for the Australian forestry sector. On Wednesday Gunns announced that New Zealand-born, Singapore-based billionaire Richard Chandler is going to be taking a cornerstone stake in Gunns. This is part of the ASX-listed forest plantation owner’s capital raising. His investment vehicle, the Richard Chandler Corporation (RCC) reportedly has a pretty good track record of turning around struggling companies across a wide range of different industries. Last year for example he purchased a major shareholding in the Chinese-based, Canadian-listed Sino-Forest, which holds plantations in China and of course, has been in the news of late.

With this week’s deal, it’s been agreed that RCC will take at least a 39 percent share in Gunns investing AU$150 million in conjunction with a rights issue to existing shareholders. The recapitalisation aims to raise up to AU$280 million. On the back of the announcement, the share price jumped immediately 60 percent to 20 Australian cents when the ASX opened, a premium of 67 percent over the rights issue price but had dropped back to 16.5 cents yesterday. As well as a boost in the arm for the Australian forestry company and its long suffering shareholders, the recapitalisation, combined with the asset sales process is likely to leave the company effectively debt free. This is expected to provide extra stability for the finalisation of the financing structure for the proposed AU$2.3 billion Bell Bay Pulp Mill.

Earlier in the week the AU$156 million sale of Taswood Growers softwood plantations to New Forests on behalf of the Australian New Zealand Forest Fund was also completed, two months after the agreement was first announced. Taswood Growers, of which Forestry Tasmania is a 50 per cent shareholder, sold the forestry rights to its 46,000 hectare plantation estate to the Sydney based firm New Forests. As reported, the agreement is also going to enable Forestry Tasmania to significantly reduce its debt.

Finally, building on the debate being generated on the need of improving our communications game, we’ve had more debate and input this week. One of our readers rightly points out that in addition to justifying our position with science that we tend to be fixated with photographs of the “forestry abattoir”. The value to a forestry company – and a large chunk of the employment within the industry comes of course when we harvest. So what do we do? We like to provide photos to the media, include them on our company brochures and on the front of our annual reports - photos of some pretty expensive pieces of equipment that work well at knocking trees down. The message here is do we really understand how the community perceives our promotions – and are we really pushing the right buttons. We'd welcome your thoughts.

Subscribe a friend | Unsubscribe | Advertise Here
Share |

This week we have for you:

Recent Comments

Kiwi to the rescue at Gunns

Earlier in the week the news broke that a New Zealand-born billionaire was in negotiations with Gunns to buy a substantial part of the Tasmanian-based timber company. Gunns shares went into a trading halt on Tuesday and on Wednesday morning the company announced (media release can be viewed here)that they have agreed on commercial terms for the introduction of a AU$150 million investment from the Richard Chandler Corporation (RCC). In conjunction with a rights issue to existing shareholders, the recapitalisation aims to raise up to AU$280 million.

The recapitalisation, combined with the ongoing asset sale process, will leave Gunns effectively debt free, providing stability for the finalisation of the financing structure for the Bell Bay Pulp Mill. Under the proposed recapitalisation, RCC will invest $AU150 million in Gunns through a share placement and bond issue.

A further AU$130 million is proposed to be raised in a pro-rata renounceable rights issue to existing shareholders, offering 1.3 new shares for every one share at $0.12 per share. Gunns will seek shareholder approval at an Extraordinary General Meeting for the transaction, which will see RCC hold approximately 39 per cent of Gunns shares following the recapitalisation, if all shareholders take up their entitlement. The EGM is expected to be held in mid-April, with the transactions, if approved, completed in May 2012.

Gunns Managing Director Greg L’Estrange said the new capital would provide certainty and stability for the company to finalise the financing structure for the construction and operation of the Bell Bay Pulp Mill. “In combination with the asset sales program, the proposed recapitalisation will facilitate a further significant reduction in company debt,” Mr L’Estrange said.

“This will provide the platform for us to proceed with our core strategy, based on the softwood sawmilling business and the utilisation of our extensive Tasmanian hardwood plantation estate within the proposed Bell Bay Pulp Mill.”

Comment on this story    

Quake resistant timber and green chemicals showcased

Promising innovations, such as cross laminated timber, green chemicals and more will be showcased at the upcoming Future Forestry Finance 2012 conference series.

“Innovations like cross laminated timber and green chemicals are the way forward for forestry. These products will enable the forest industry to make the most money out of our forest resources,” says John Stulen, Event Director for the Future Forestry Finance 2012 conference series.

Following the Canterbury earthquakes there is an urgent need for structurally-capable building solutions. Wood-based building designers can use cross laminated timber (CLT) to maximum effect for new structures in this region.

Robin Jack, a successful pioneer of wood manufacturing excellence, will speak about his leading role in bringing CLT to into new commercial building market in Australasia. This product is paving the way for high-rise timber buildings to be made in high density downtown sites, with quick build times and short on-site construction times.

In the field of green chemicals from timber, Vertichem was awarded an exclusive US-based patent for its gentle, integrated processing of plant biomass. The patent applies to three related but distinct processing stages at the core of Vertichem’s business, including: the extraction of high quality lignin from woody plant material; the production of Xylose from the hemicelluloses; and the efficient hydrolysis of cellulose present in plant material to form glucose, which is then fermented to produce ethanol.

Taupo-based spokesperson for Vertichem Kevin Snowdon says, “Our company’s target is to produce ‘green’ chemicals from forest-based resources replacing chemicals currently being supplied from non-renewable resources.

Mr Snowdon adds, “There’s huge potential about to be realized. The Canadian forest industry is well advanced in recognising the need to pursue higher returns from new markets. Australasian companies need to keep apace of these developments – and our technical leadership in this area is key to doing that.”

“These new bio-based products will take wood into new markets, which is good for all investors in the forest products supply chain,” says Mr Stulen. Further updates on developments in other new-age forest products including airline fuels, bio-energy and bio-char will be presented by leading product developers in these areas.

Future Forestry Finance is happening in Sydney on 13-14 March at the Novotel Brighton Beach, and in Auckland on the 7-8 March.

For more information see the conference website

Comment on this story    

Miscanthus for NZ energy production

Rotorua based sustainable energy company Miscanthus New Zealand Limited is pleased to announce that in its first full year of activity, it now has over 150,000 plants growing on land belonging to various customers at nine sites from Waikato to Otago. These include two areas that represent the two largest plantings of Miscanthus for energy production in New Zealand.

Miscanthus is a naturally occurring sterile perennial hybrid grass, related to sugar cane, which grows 3.5 – 4 metres tall each year, is harvested annually before regrowing in spring and is extremely versatile in use. Internationally it is used as a feedstock for co-firing with coal or for use in biomass power and heat generation but it also has a wide range of other uses including paper-making.

MNZ is already having commercial discussions with companies that are interested in establishing larger areas in spring of 2012, with interest coming from Maori Trusts, agricultural contractors, big energy users, pellet manufacturers, research institutions and a university.

“There is no other plant in New Zealand that can be used for energy production that comes close to competing with Miscanthus for the amount of useable energy able to be produced annually per hectare planted.” Peter Brown, Managing Director of MNZ said. More >>

Comment on this story    

URS strategic review confirms Tasmanian challenges

The Tasmanian Premier, Lara Giddings, released the market analysis prepared as part of the first stage of the URS Strategic Review of Forestry Tasmania, which details the significant challenges confronting the forestry industry. Ms Giddings said the report presented an independent and comprehensive picture of market forces and the effect they have had on the state-owned forestry company and the industry.

The report found factors contributing to the current challenges include:

- Significant contraction of traditional Japanese woodchip markets and stronger preference for plantation resource;

- Reduced prices in Chinese woodchip markets in comparison to Japan;

- The high Australian dollar weakening export competiveness;

- Cheaper competition from plantations in Thailand, Vietnam and South America;

- The exit of Gunns Limited from native forests.

“While there are still markets for Tasmanian woodchips, and we need to continue to sell residues to keep sawmills viable, the fact is our competiveness is being eroded by factors such as the high Australian dollar which is not likely to abate in the foreseeable future. While some of the factors affecting the industry may only be temporary, with the prospect that prices and demand from China will increase over the next five years, the industry still needs to respond to see out these challenging times" says Ms Giddings.

Comment on this story    

Carbon Forestry 2012 planned for Australasia

What a year it’s been for those involved in carbon markets. A raft of new legislation, a jump followed by a dramatic drop-off in carbon pricing and then a slow-down in trading. The roller coaster ride has caused plenty of angst for those foresters, emitters and investors with an interest in carbon forestry. Carbon markets, both in Australasia and internationally, have changed dramatically in just 12 months (see story below on NZ looking at banning international carbon credits).

Last year over 250 forestry and finance business leaders came together for Carbon Forestry 2011. This was the first event of its type focussing on carbon forestry and carbon trading opportunities. Planning is already underway by the Forest Industry Engineering Association (FIEA) to design the Carbon Forestry 2012 event for Australasian foresters, financiers, investors, carbon traders and brokers and those involved in carbon offsetting. It’s planned to run again in Auckland on 22-23 August 2012.

At this early stage we would be interested in hearing from those companies or individuals that would like the opportunity to present – or be involved in displaying at the August programme. If keen on being involved in this year’s Carbon Forestry 2012 event, please email BEFORE Friday 17 February.

Comment on this story    

$156m plantation sale completed

The $156 million sale of Taswood Growers softwood plantations to New Forests on behalf of the Australian New Zealand Forest Fund has been completed. The settlement for the plantation half owned by Forestry Tasmania and GMO Renewable Resources comes two months after the agreement was announced.

The 46,000ha estate will continue to be managed by forest management company Timberlands on Tasmanian Government-owned land under a long-term Forestry Right, which gives New Forests the authority to establish, maintain and harvest the timber plantations until 2069.

New Forests currently manages approximately 325,000 hectares of timberland properties across Australia on behalf of its institutional investment clients. New Forests managing director David Brand said the group was pleased to acquire the asset, which produces some 550,000 cubic metres of softwood timber a year.

Comment on this story    

NZ may block overseas carbon credits

The number of international carbon credits coming into New Zealand could be cut. Collapsing European carbon prices have forced the price of New Zealand Units down to single digits, as local emitters meet their obligations under the Emissions Trading Scheme with cheap international credits.

But in briefing papers released last week, the Ministry for the Environment has raised concern about the impact that the purchase of international credits is having on the New Zealand carbon market and the economy.

“Because overseas abatement can be achieved at a lower cost than abatement in New Zealand, high levels of purchasing of international units are expected under the ETS to 2020,” the briefing says. This is expected to lead to “significant" offshore cash flows between 2015 and 2020.

“It is likely to be desirable to reduce levels of international purchasing under the ETS in the short term,” the briefing says. “Any mechanism to do so should be flexible enough to ensure that New Zealand could quickly and efficiently adjust settings to deliver future international obligations, which may require use of international markets.

"This could be achieved by auctioning additional New Zealand Units to a cap set at an appropriate level of ambition. This would ensure that carbon prices in the ETS continue to be set by the market, but would significantly reduce offshore cash flows.”

The ministry says that the Government might also consider switching the alignment of the ETS away from the international Kyoto agreement to regional or bilateral agreements, especially with trading partners. Source: Carbon News 2012

Comment on this story    

50 top forest photos from around the world

Check out these amazing images. Click here. Source: Tree Frog Daily Forestry News

Comment on this story    

NZ Energy Outlook 2011 released

The NZ Ministry of Economic Development has released its latest instalment of the New Zealand Energy Outlook. New Zealand’s Energy Outlook 2011 presents long-term forecasts of energy supply, demand, prices and energy sector greenhouse gas emissions.

The latest Outlook provides an updated ‘Reference Scenario’ that models future energy use if business as usual continues in terms of broad economic drivers, current energy policy, and technology and fuel choices. There is also an updated ‘Sensitivity Analysis’ that explores the sensitivity of the ‘Reference Scenario’ to changes in economic growth, oil price, carbon price and exchange rates.

It is available online, free of charge, via the Ministry’s website here. This includes supporting information, data tables (in Excel), and supporting technical documents. More >>

Comment on this story    

South American wood chip exports reach record high

Wood chip exports from Latin America are on track to reach a record high of almost eight million tons in 2011, reports the Wood Resource Quarterly. This would be an increase of seven percent from last year and of almost 60 percent higher than in 2006. Chile is by far the biggest exporter, accounting for two-thirds of the total shipments from the continent, while Brazil and Uruguay both account for about 16 percent each.

In 2011, Chile was the world’s second largest supplier of hardwood chips after Vietnam. Latin America’s hardwood chip export volumes accounted for approximately 50 percent of globally traded wood chips, a share that has grown from 34 percent five years ago.

Historically, between 80-90 percent of the exported wood chips from Latin America have been destined for Japanese pulp mills, but there has been a diversification of consumers over the past few years. Although shipments to Japan have gone up by over 30 percent from 2006, the share of total exports has declined and is currently around 70 percent.

The biggest change from five years ago is that pulp mills in Europe have been buying much more Eucalyptus chip, particularly from Chile and Uruguay. In 2011, total shipments to Europe reached almost 1.7 million tons, which was slightly lower than 2010 but more than a doubling from 2009, according to the WRQ. The three major importing countries in Europe are Spain, Portugal and Norway. In addition, there have also been a few shipments to Finnish and Swedish pulp mills the past few years.

New destinations for Eucalyptus chips from Latin America the past five years include Morocco, Turkey and China. There are expectations that Chile will increase its shipments to China in the coming years because of higher demand from new pulp mills in the country.

Source: Wood Resources International LLC,

Comment on this story    

Space scientist to speak at AUSTimber conference

An internationally renowned, award winning space scientist will be speaking at the AUSTimber 2012 Forestworks’ conference in Mount Gambier 30 March 2012.

Space science and forestry may seem to be worlds apart but it is the use of space science that assists in forestry management and will play more of a role into the future. Mr Dragos Bratasanu will speak at the Conference on the topic of "Satellite Missions support Strategic Forestry Investments: How Forestry Resources Can Be Managed from Space.” Conference delegates will hear about the current and future space technologies that benefit forestry industry, including satellites planned for imminent launch that will support forest management and operations.

Dragos Bratasanu is an internationally renowned award winning space scientist, speaker, and consultant. He is currently the Head of Remote Sensing & GIS Division in Asia Pacific with Poyry Management New Zealand and spoke at the recent ForestTECH 2011 programme in New Zealand at the end of last year. Dragos in 2011 became the engineer of the First Romanian Simulation Mission for Planet Mars and his work has been featured in National Geographic. In 2012 he will take part in NASA's Space Studies Program with a grant from the European Space Agency and the Romanian Space Agency.

For his research and scientific achievements he received several international awards from entities like the European Space Agency ESA, European Union Satellite Center EUSC, DigitalGlobe Inc. USA, IEEE Geoscience and Remote Sensing Society in Canada, International Society of Photogrammetry and Remote Sensing in Australia.

For more information on the conference visit

Comment on this story    

New guidebook for biomass transport

As part of a decision support system developed by the Canadian research organisation, FPInnovations, a new guidebook available on-line as a PDF provides field planners with a practical tool to determine which biomass truck configurations could travel successfully on new or existing resource road networks. It provides examples of existing biomass truck configurations and their suitability to different road conditions, based on truck configuration, road grade, width, and surface material; horizontal curve radius, and vertical alignment.

Although this report is Canadian based, it provides a useful reference to biomass operations within the Australasian forest products industry. For more information click here

Comment on this story    

Leonardo's formula for trees still holds true

The graceful taper of a tree trunk into branches, boughs, and twigs is so familiar that few people notice what Leonardo da Vinci observed: A tree almost always grows so that the total thickness of the branches at a particular height is equal to the thickness of the trunk. Until now, no one has been able to explain why trees obey this rule. But a new study may have the answer.

Leonardo's rule holds true for almost all species of trees, and graphic artists routinely use it to create realistic computer-generated trees. The rule says that when a tree's trunk splits into two branches, the total cross section of those secondary branches will equal the cross section of the trunk. If those two branches in turn each split into two branches, the area of the cross sections of the four additional branches together will equal the area of the cross section of the trunk. And so on.

For all you readers with a scientific bent, read on Source: Tree Frog Daily Forestry News

Comment on this story    

Strong Nano Tech Wood nears production

Nano technology will soon enter the wood products lexicon, as CelluForce starts up its first plant. Super wood products spun from NanoCrystallin Cellulose (NCC), could include jumbo jets, bridges as well as fabrics and electronics.

CelluForce was formed as a joint venture by forestry and paper firm Domtar Corp. and FPInnovations. For the last few months, CelluForce has been progressively starting up the equipment for the first ever large-scale production of NCC. Nanomaterials consist of particles or fibers smaller in dimension than the width of a human hair, which combine to form extremely strong yet lightweight materials.

The first CelluForce products, which go under the brand names of CelluForce Impact and CelluForce Allure, will be produced in state-of-the-art facilities located at Domtar's pulp and paper plant in Windsor, Quebec. Construction extended over a fourteen-month period. It required a total investment of $36M including the financial participation of both the Federal and Québec governments.

Montreal-based CelluForce has a workforce of 30 employees operating the first manufacturing plant for NanoCrystalline Cellulose in the world. The 25 involved in production and development since June 2011 went through intensive training sessions, says Rene Goguen, VP manufacturing, "to ensure they were ready to start up the specialized equipment, most of which was custom-built."

Recyclable and renewable, the cellulose derived nano materials improve strength, durability and toughness, and can reduce damage caused by wear, abrasion and light. It can be incorporated into systems to make structures that are light reflective (tunable from ultraviolet to infrared), impermeable to gas and stable over time. Moreau says the advanced material derived from wood fiber will lead to commercial applications largely exceeding those of traditional wood fibre products.


Comment on this story    


Buy and Sell

...and one to end the week on...if my body was a car

If my body was a car, this is the time I would be thinking about trading it in for a newer model.

I've got bumps and dents and scratches in my finish and my paint job is getting a little dull ...

But that's not the worst of it.

My headlights are out of focus and it's especially hard to see things up close.

My traction is not as graceful as it once was.

I slip and slide and skid and bump into things even in the best of weather.

My whitewalls are stained with varicose veins.

It takes me hours to reach my maximum speed.

My fuel rate burns inefficiently.

But here's the worst of it --

Almost every time I sneeze, cough or sputter, either my radiator leaks or my exhaust backfires!

If we're into corny jokes, here's one more for you.

2 blokes walk into a bar and sit down in a quiet corner for a beer. As they are settling in and enjoying their beverages suddenly a small voice is heard by both gentleman “ Geez your looking good today”.

The guys look at each other, give a look of wonderment and then go back to drinking, then they hear again “You guys are great, hope you’ve had an excellent day”!!

One of the guys looks bewildered and slightly bemused asks the barman where the voices were coming from?

Barman says “It’s the peanuts. They're complimentary”!!!

And on that note and a bit of a groan, have a great weekend. Cheers.

Brent Apthorp
Editor, Friday Offcuts
PO Box 904
Level Two, 2 Dowling Street
Dunedin, New Zealand
Ph: +64 3 470 1902
Fax: +64 3 470 1904
Web page:

This week's extended issue, along with back issues, can be viewed at

Share |

We welcome comments and contributions on Friday Offcuts. For details on advertising for positions within the forest products industry or for products and services, either within the weekly newsletter or on this web page, please contact us.

Subscribe! It's Free!
Advertise Here
Copyright 2004-2018 © Innovatek Ltd. All rights reserved
Bookmark and Share