Friday Offcuts – 25 May 2012

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Wood Preservation 2012, the three yearly technology update for Wood Treatment companies finished in Melbourne yesterday. Close to 200 from throughout Australasia attended the latest FIEA technology series. One of the more significant trends being seen out in the market at the moment is the growing presence of alternate wood treatments – and products.

Wood Plastic Composites (thermoplastics combined with wood fillers and reinforcing fibre) or modified wood products are now a commercial reality. The change since the last event ran in 2009 has been significant. Economic considerations three years ago meant that these products had to command a high price in the market to attract investment. Technological advances, regulatory changes, green building practices, environmental concerns and in some cases, new science, have meant that market price points for composite or modified wood products, are at a level where investors - and now consumers - are backing these new technologies.

A number of companies have recently been formed and are now producing, remanufacturing and selling increasing quantities of these new wood products in this part of the world. Presentations from local producers over the last couple of weeks, Advanced Plastic Recycling and Tunnicliffe Timber along with distributors of these new products were quite clear on their message to local wood treaters. There's a real opportunity to diversify their manufacturing operations, product mix and markets.

In this week’s issue we run a story on the world's largest manufacturer of wood-alternative decking and railing products. Where building and remodelling activity has been pretty subdued over the last year or two, Trex Company, has just announced that their net sales for the first quarter of this year compared to the corresponding period last year jumped by a staggering 39% and they’re projecting a second quarter increase of 15%.

Other stories covered this week with a technology focus include new research on manufacturing carbon fibre from lignin extracted during wood pulping, out of New Zealand, we profile some eye catching prototypes for guitars manufactured from new 3D printers and from the US, the “ground breaking” walking harvester which got some limited trial work a few years back is now been put on display at the John Deere pavilion in the US to celebrate the company’s 175th Anniversary.


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US Carbon Markets – an opportunity for Australia?

Dr. James Bulinski, of CO2 Australia, spent the early part of last year in the US working out if there were any opportunities for Australia in emerging US carbon markets.

Dr Bulinski, travelling on a Gottstein Fellowship, found the US carbon market very dynamic. “Rather than having a national scheme implemented, individual US states or groups of states have been setting up their own trading schemes to reduce greenhouse emissions, some of which have now been running for a number of years”, he said.

While a federal scheme has so far failed to pass through the US political system, much of the background work in developing a national carbon trading system has occurred and California is now introducing a wide ranging state-based program that is set to become one of the world’s largest carbon markets. “The value of US carbon markets is significant, with California’s program alone expected to exceed $4 billion USD between 2015 -2020”, he said.

Avoided deforestation, improved forest management and reforestation projects are all potentially eligible under various US programs. International carbon offsets will likely be limited to projects in developing countries. “Unfortunately, this means Australian-based projects are not likely to be eligible under mandatory-compliance schemes, but it does not preclude Australian managers undertaking projects in developing countries and in the US itself. Australian operators also have the option of trading verified carbon credits into the voluntary market-place”, he added.

“A key consideration in any carbon forest project is the sale-price that can be realised for verified carbon abatement and the demand for that abatement. At this stage, this remains something of an unknown for the Californian market-place, while prices and demand in the voluntary market-place is often too low to make carbon forest projects viable at any real scale”.

James used the Gottstein Fellowship to fund travel across the US, which allowed him to directly interview over 28 organisations in order to understand the carbon investment landscape. “At this stage, I think the time is right for Australian managers and investors to start taking a closer look at opportunities within the US, particularly around the emerging Californian market”, he said.

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Willmott Forests assets sale completed

Global Timber Investors 9 (“GTI9”, an international timber investment fund managed and advised by Global Forest Partners LP, “GFP”), has completed the acquisition of the majority of the ex Willmott Forests plantation estate. A new company named Snowy Mountains Forests Pty Limited (“SMF”) has been created to hold and manage the assets.

The SMF assets comprise of:
- Approximately 10,000 net planted hectares of freehold land and Radiata pine plantations in the Bombala region, predominantly established from 2000 to 2008;

- Approximately 10,700 net planted hectares of freehold land and Radiata pine plantations in the Murray Valley (Tumut/Tumbarumba) region, predominantly established from 2005 to 2009;

- Approximately 9000 hectares of freehold land on the north coast of NSW and south east QLD.

The Murray Valley and Bombala estates will be managed by SMF as an ongoing forestry enterprise. The North Coast assets (comprising 22 properties within a 70km radius of Casino and three outlying properties at Port Macquarie and Gympie, QLD) will be offered for sale in individual parcels.

Jacob Lazarus has been appointed General Manager of SMF in addition to his current responsibilities as General Manager of Hume Forests Limited and Murray River Forests Pty Ltd.

Note: GFP, a US based timber investment management organization manages forests on behalf of investor clients with a value in excess of AU$3.0 billion in Australia, Brazil, Chile, Guatemala, New Zealand, United States and Uruguay. The website, www.gfplp.com provides further details on GFP.


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Checking out innovative wood structures in Europe

Campaign Manager for Planet Ark’s ‘Make It Wood‘ campaign, Chris Philpot, has embarked on a field trip of some of the UK’s most innovative and interesting timber projects. The tour, organised by WoodSolutions, provides an opportunity to discover the latest in timber design, engineering and construction.

The tour's aim is to discover how we in Australia can follow Europe's examples and build with wood. The tour group will hear from the architects and builders themselves who have used innovative wood construction techniques to build.

Chris is recording his trip through this blog by providing case studies, photos and interviews of key architects and homebuilders about why they have chosen to use wood in their construction. To read his first few entries, visit: blog.makeitwood.org/.


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New Zealand Log Prices - May 2012

In market prices for logs have this month regained some of the losses seen over the past couple of months, and are expected to gain a little more before the end of May. However, going into June there could be some settling of prices as the ‘hot’ season arrives in China and demand eases.

Inventory levels in China now are estimated to be around 2.6 million cubic metres, or 60 days’ supply at current off-take levels. This is well down from the 3 million cubic metre level that’s seen as a tipping point for prices to dip. This inventory level is keeping the market in China stable for now. Demand from India is firm now and as a result is attracting additional supply, but this will soon tapper off with the expected arrival of the monsoon in June.

The Agrifax Log Price Indicator was up slightly in May, mostly coming from a lift in some export grade log prices. The spread between North and South Island prices is slowly narrowing. With the lower value of the New Zealand dollar combined with lower inventories in China there is real potential for a steady few months ahead in export log markets. There is also some news of an improved market for domestic logs and lumber, but still no real demand coming from a rebuild in Christchurch.

North Island
  • Domestic: Grades are down $1/t to NZ$5/t.
  • Export: Grades are down NZ$3/t to NZ$5/t.
South Island
  • Domestic: Grades are down $1/t to NZ$5/t.
  • Export: Grades are down NZ$1/t to NZ$5/t.
For more detailed reports contact NZX Agrifax at www.nzxagri.com/agrifax

The Agrifax log price data is a weighted average of prices collected each month from a range of New Zealand log buyers and sellers. Log prices shown in the table will vary regionally and by supplier and should only be used to provide a broad trend of log price movements.
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Extracting lignin from kraft pulp for carbon fibre

Promising research findings with carbon fibre from lignin are presented in a new doctoral thesis by Ida Norberg. On 20 April, Ida Norberg defended her doctoral thesis "Carbon fibres from kraft lignin" at Innventia in Stockholm.

Her thesis shows that lignin, a substance that is found in wood but is removed during kraft pulp production, has great potential for use as a raw material for manufacturing carbon fibre. Carbon fibre is strong and light, with many applications. Today, demand is mainly limited by the high cost of production, with the petroleum-based raw material and fibre spinning accounting for around 50 percent of the cost.

Thanks to LignoBoost technology, the pulp mill can extract extremely pure lignin which could be used for carbon fibre, thus increasing access to a raw material for carbon fibre. According to studies reported on in Ida's thesis, the cost of production could also be lowered by using lignin.

LignoBoost has been developed in partnership between Innventia and Chalmers University of Technology. The process has been successfully demonstrated at Innventia's demonstration facility in Bäckhammar. The LignoBoost process, including patent rights, has been owned by Metso since 2008.


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AU$110m for Forestry Tasmania

More than AU$110 million has been set aside to help Forestry Tasmania as the state decides what to do with its government business enterprise. In a move that could flag considerable change to the business, Treasury has set aside AU$35 million in 2012-13 and AU$75 million split over the following three years so Forestry Tasmania can "continue to operate, meet its contractual obligations and perform its non-commercial functions in the event that market conditions do not improve".

Treasury is waiting on the final findings of an independent review into FT's operations, but says there are clear signs that the existing business model is unsustainable. Forestry Tasmania spokesman Ken Jeffreys said it was important to understand that the company was not receiving a large cheque in the mail, but that it was "a provision only to be used in the event that we require it" the Examiner reported. Source: The Examiner


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Australia fails carbon test

Australia has been ranked 16th out of 19 countries in being ready to deal with a low-carbon world. Australia’s economy is less equipped to deal with a low carbon emissions world than it was nearly two decades ago, an international study has found. The study, backed by think tank the Climate Institute and multinational GE, found that since 1995, Australia's dependence on polluting activities had grown relative to almost every other major economy.

The study ranked Australia 16th out of 19 countries in being ready to deal with a low-carbon world — ahead of just India, Indonesia and Saudi Arabia. The rankings are based on 19 measures, including emissions growth, energy generation, export industries, transport and investment in clean technology.

A retrospective analysis found Australia ranked 12th in 1995 on a "low-carbon competitiveness index", but had since been overtaken by Turkey, Mexico, Russia and South Africa. The list was headed by France, Japan, Britain, South Korea and Germany. Climate Institute deputy chief executive Erwin Jackson said relative to other countries Australia's economy had become more dependent on pollution, not less.

"Among other things our energy sector is dominated by coal, our use of oil is inefficient, we have high rates of deforestation and our export industries are based on low-value-added resources and not high-value-add technologies," he said. The study, using an index created by British consultants Vivid Economics, does not factor in Australia's carbon price scheme and associated clean energy funding as the laws do not take effect until 1 July.

The report comes as business groups are lobbying for the starting Australian carbon price to be cut from $23 to $10 a tonne of emissions, pointing to mounting economic pressures and the collapse in the international carbon price. The Climate Institute/GE report says Australia's price is not excessive compared to those applied to fossil fuel industries in several countries, including Norway ($53), Britain ($24-$30) and Switzerland ($30-$60). For big emitting export industries, it says the compensation effectively reduces the starting carbon price to between $1 and $8 a tonne.

While there is a growing expectation that the Australian price could fall back to the government-imposed minimum of $15 a tonne when international trading of carbon permits starts in 2015, Mr Jackson said it was unclear what impact the start of emissions trading schemes in China, South Korea and California would have.


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Keen on being involved in transport & logistics?

The very popular independent ForestTECH technology series has been run annually for forest managers and technical foresters since 2007. After the inaugural events were run in New Zealand and Australia, the ForestTECH programme was split into two complementary components. The very latest field data capture tools, forest sampling and inventory systems, remote sensing technologies and forest management & estate planning provided the focus for the first year. The other looked at advancements and improved practices in genetics and tree breeding, nursery technologies, land preparation and plantation silviculture.

Together, around 200 forest resource and inventory foresters attended ForestTECH 2011. The event ran in both countries with the focus on remote sensing for improving forest inventory and management planning. Feedback from both the 2010 and 2011 events suggested we combine the two streams back into a larger ForestTECH event looking at the full spectrum of innovative tools and technologies that have been developed to improve forest management operations. This combined technology event is scheduled to run in late 2013.

ForestTECH 2012 will instead focus on improving transport and logistics in the forestry sector. It will build on the excellent wood supply chain technology events that were designed by the Forest Industry Engineering Association along with forestry companies and logistics specialists. The last independent wood supply chain event for forest products companies ran in May 2010.

So, what is ForestTECH 2012?

Like the Wood Supply Chain Optimisation technology series, ForestTECH 2012 – Improving Wood Transport & Logistics, technology programme will target key decision makers from forestry and wood products companies. It will provide long overdue and practical updates on innovations, strategies and technologies that are being used by forest products companies to improve planning, logistics and operations within the wood supply chain. It will run in Australia on 28-29 November and again for the NZ forest products companies on 4-5 December 2012. Further details can be found on www.foresttechevents.com

At this stage we are seeking EOI from interested companies, organisations and individuals who are this year keen to be involved – in presenting, in exhibiting or who have comments or suggestions on the programme design, to make contact with FIEA Director, Brent Apthorp at brent.apthorp@fiea.org.nz BEFORE the end of next week.


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Stunning 3D-printed guitars - from NZ

We’ve seen some incredible 3D-printed designs on the market, but these printed Spider and Scarab electric guitars have officially blown us away. Olaf Diegel — a professor of mechatronics at Massey University’s School of Engineering & Advanced Technology in New Zealand — has developed a series of intricate and beautifully crafted 3D-printed guitar models that are completely playable. The prototypes are still in the works and can be completely customized.

Diegel has posted the prototypes to his website called ODD, which features the tagline, “strange stuff you just want.” With the help of a EOS Formiga P100 selective laser sintering system, Diegel was able to print sturdy and complex parts for the Spider and Scarab electric guitars, from the little insects inside the body to the structure that holds it up. The bodies are made of Polyamide 2200 or Alumide, according to the site.

Also on the site is a red printed guitar called the Atom 3D. This Les Paul-style guitar features a wooden core — with a choice of Mahogany, Alder or Mable — and the body can be printed in a variety of colours (he’s working on a blue one now). Although the site doesn’t display the prices, it’s been reported the instruments will likely run from $3000 to $5000, according to Gizmag. Source: mashable.com


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Large scale carbon forestry planting underway

Planting of more than 10,000 hectares of mallee eucalypt trees is now underway as part of one of the largest carbon forestry projects in Australia.

A leading developer of carbon forestry projects, Carbon Conscious, a major developer of carbon forestry projects says it has received a substantial increase in new client enquiries from organisations now facing major carbon liabilities under the Clean Energy Act 2011, as well as from New Zealand companies with liabilities under the New Zealand Emissions Trading Scheme (ETS).

"At the completion of the 2012 planting program, Carbon Conscious will have approximately 19,000 hectares of plantings under management across Australia and New Zealand” says company's chief executive officer, Peter Balsarini. "Ongoing contract revenue associated with existing projects will exceed AU$43 million over the next 15 years.”
Source: Stock Journal


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Success for Nelson Pine Industries in energy awards

Nelson Pine Industries Limited was ‘Highly Commended’ twice over at this year’s EECA Awards, at a ceremony at the Langham Hotel in Auckland on Wednesday. The awards citation stated that NPIL’s energy saving programme had outstripped the targets set in improving energy use across the operation.

“It was an ambitious project that sought to win to hearts and minds – on the shop floor and in management – which was crucial, as downtime is expensive and product quality can suffer easily" said the judges. "For a capital outlay of $750,000 the company is now saving $1.3 million a year in energy costs, well surpassing its targets.” More >>


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Forestry Plantations Queensland’s gets FSC certification

Forestry Plantations Queensland (FPQ) has been certified to the Forest Stewardship Council standard by Scientific Certification Systems (SCS), one of the world’s leading FSC certifiers. FPQ’s certification encompasses 211,332 hectares of plantation production land in Queensland as well as 130,917 hectares of custodial land comprising native forest buffer areas and infrastructure including, roads and forest offices.

FPQ CEO Brian Farmer said the FSC certification demonstrates that FPQ is focused on sustainable forest management of its plantations. Products included in the certification are logs and chips from slash pine, Caribbean pine and their hybrids, the plantation grown indigenous rainforest softwood Araucaria cunninghamii and a range of native hardwood plantation species. FPQ is now one of few plantation owners to achieve certification to both the FSC standard and the Australian Forestry Standard.


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Trex Company’s sales climb 39%

Trex Company, the world's largest manufacturer of wood-alternative decking and railing products, has announced financial results for the first quarter ended 31 March 2012. Net sales for the first quarter of 2012 totalled US$96.1 million compared to net sales of US$69.0 million for the 2011 first quarter, an increase of 39%.

Chairman, President and CEO Ronald W. Kaplan commented, "We continue to see a strong shift in the market towards ultra-low-maintenance wood alternative products. With our expanding ultra-low-maintenance product offering, utilizing Transcend technology, we are off to a great start for the year. Based on the market demand we are currently seeing, we expect net sales of approximately US$90 million for the second quarter of 2012, an increase of 15% from last year's period."



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Australian housing market remains soft

James Hardie Chief Executive Louis Gries has presented a gloomy outlook for the Australian building industry, warning that weakness will last through this year and create challenges similar to those faced during the worst years of the housing downturn in the US.

"If the market is as soft as most people think in Australia, it is going to be a big challenge," the chief executive said while delivering the company's full-year results in Sydney this week. Despite the Reserve Bank of Australia's recent interest rate cuts, market forecasters expect residential construction activity to continue to contract in the next 12 months, he said.

This same outlook for building starts was outlined at this week’s Wood Preservation 2012 event in Melbourne where Andrew Harvey, HIA Senior Economist Housing said that housing starts are expected to improve slightly in 2012, before a more robust recovery in 2013. On the bright side, renovations activity is expected to remain healthy with modest growth expected in upcoming years.

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World's first prototype for walking forest machine

The Walking Harvester, the world's first prototype for a walking forest machine, is now on display at the John Deere Pavilion. Only one of two in existence, the walking harvester was designed by John Deere's research and development unit in Finland in the 1990s but was ahead of its time and never reached the production phase.

Manufactured in 1994, the walking harvester machine on display at the Pavilion was the first to be equipped with a harvesting head and accumulated approximately 2,000 working hours during testing. Sensors in the machine's legs reacted automatically to soft, sloping, or uneven terrain, while a computer control system distributed weight and support equally to all six legs. The machine simply walked over obstacles that crossed its path, and the machine operator was able to adjust the ground clearance and height of every step.

The walking harvester prototypes helped pave the way for future developments in productive and environmentally friendly machines. For example, the automation and stability system technology used in developing the concept underwent further development and is now applied in all of John Deere's forest equipment.

The new display at the Pavilion was opened on February 15 to celebrate John Deere's 175th Anniversary and also the Pavilion's own 15th Anniversary.


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Jobs


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...and one to end the week on...scary looking tubeless tyres

Remember that, when they were first proposed, there was strong opinion that tubeless tyres couldn't be made to work? For all you petrol heads out there, enjoy.




And on that note, 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: www.fridayoffcuts.com


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

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