Friday Offcuts – 17 August 2012

growing trees cutting and milling timber forest products
Within the industry, for whatever reason, we rarely celebrate success. Like our work with the media, we tend to keep our heads down, work hard and just “go about our business”. Each year training organisations do an exemplary job of applauding the efforts and achievements of our trainees. However, research, science and innovation, commercialising these breakthroughs, taking the technology to market and then letting others know what it is we've achieved – largely goes unnoticed.

In New Zealand this week, hats off to Future Forests Research. Last year they established an FFR Awards programme to recognise the vital role that science and innovation play in the forestry sector (see story below). The achievements by researchers and industry end users - rather than through peer reviewed journals - are able to be recognised on the wider stage.

In addition to the outstanding efforts of a number of scientists, it’s fitting to see that this year's innovation award went to an engineering company who together with a local logging company have developed a new harvesting machine - now commercially available – for steep slope harvesting. The innovation came from a need to improve safety and productivity on the ground. Using modern automation technology, kiwi ingenuity, a lot of design work, trials and rebuilding, the innovation has come from those working in the bush. This type of success needs to be "sung from the rooftops".

In wood processing or manufacturing, local forest products companies have in the past been pretty successful in developing and fine-tuning manufacturing processes. Innovation is still strong. New equipment, tools and systems have been adopted by local companies to improve their productivity and operating efficiencies. In most instances though, rather than a breakthrough, it’s been a step change.

Like the innovations being developed in harvesting at the moment, local companies increasingly are recognising that to remain competitive they need to think “outside the square”. Squeezing efficiencies out of current manufacturing operations is only a short term fix to remain internationally competitive. To stay in the game, new product innovations that can be adopted to diversify their current manufacturing, their product mix and markets need to be evaluated”.

With this in mind – check out Wood Innovations 2012. It’s an Australian first and is going to provide a long overdue look into some of the innovations in solid wood and panel products from around the globe. These are technologies that can readily be adopted by New Zealand and Australian operations. It runs in mid-October 2012. Finally, we look forward to meeting a large number of you in Auckland next week for this regions annual update on carbon markets and trading, Carbon Forestry 2012. Not surprisngly, it looks like its going to be a large gathering.


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ETS loophole to halve cost for NZ's carbon emitters

As reported last week, New Zealand's acceptance of carbon credits banned from the European Union's emissions trading scheme means major industrial greenhouse gas emitters face half the cost of carbon faced by emitters in Europe and other countries implementing carbon-pricing schemes.

ETS broker and commentator Lizzie Chambers said in her weekly Carbon Match newsletter that three types of carbon credit - known by the acronyms CER, ERU, and RMU - face restrictions in the EU ETS, but remain "good tender" in the New Zealand ETS.

The value of such credits has sunk on global carbon markets to around half the value of EU-compliant credits. These credits can "only be used in small proportions by emitters in the EU ETS," says Chambers. "The logical thing from an emitter's perspective is now to … switch into (such) units wherever possible."

Electricity generators, oil companies, and non-exporting energy-intensive industries are on the hook for the cost of negating one in every two tonnes of carbon emitted each year, with an upper limit price of $25 per tonne.

However, over-supply and dysfunction in the EU ETS have sent carbon prices available to New Zealand emitters plunging to around $8 a tonne late last year and as little as $5 a tonne late last week.

"The idea that we face a European carbon price here in New Zealand is not correct," says Chambers. "This year, it should be possible for emitters to achieve below half those levels. Know the rules, and work with what you've got," says Chambers who is critical of New Zealand's "lack of ambition" on actual climate change action.

Where other countries were creating opportunities to spend ETS funds on carbon-reducing projects, New Zealand was relying on foreign-derived carbon credits traded in the ETS.

Ollie Belton, of Christchurch-based Permanent Forests International, noted foreign carbon was already the "credit of choice" last year, as shown by the release of surrender information for the first calendar year of the scheme's operation.

"Worryingly, the cheapest international units were used in abundance. ERUs and RMUs trade at a discount to CERs and accounted for over 44% of all units retired."

Some 3.17million RMUs were surrendered under the ETS in 2011, around one-fifth of the total of 16.34 million units surrendered. RMUs, or Removal Units, are derived from a little-known carbon offset involving Russian and Hungarian forests called RMUs (Removal Units). That compared with no RMUs surrendered in 2010, when the scheme had only run for six months.

"The NZ ETS is the only trading scheme in the world to accept RMUs," said Belton. "So far only 3.9 million RMUs have been issued by Hungary and New Zealand looks to be the home for most of them."

Even greater was the contribution of 4.27 million ERUs (Emissions Reductions Units), from zero in 2010, which relate to offsets allowed in developed countries to underpin schemes that cut carbon emissions.
While New Zealand has followed the EU and banned CERs containing such gases from next April, it has not done the same with ERUs derived from the same banned gases.

These and other issues relating to options for carbon trading – and forestry’s future in New Zealand’s ETS will be at the forefront of discussions between finance and forestry industry leaders at next week’s Carbon Forestry 2012 event that runs in Auckland. For those still yet to register, full details on this region’s annual meeting can be found at www.carbonforestryevents.com

Source: Scoop


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No final peace deal yet in Tasmania

Tasmanian forest peace deal negotiators have again failed to reach a final agreement on Monday, but say they are making significant progress. Environment and forest industry groups say they need another four to six weeks to decide how much of Tasmania's forests to protect from logging.

They say they have a loose agreement on how much forest to protect from logging, which will be modelled by Forestry Tasmania to determine the wood supply available under the potential deal. The groups will not release estimates of the forest in contention but they have agreed to move towards a greater use of plantation wood.


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An adjustment model for terrestrial laser scans

Terrestrial laser scanning (TLS) technologies are now being used to provide detailed forest inventory information at the tree or plot scale.

A major problem to overcome when using TLS is occlusion by surrounding trees, lower branches and under-storey. An occlusion adjustment model was evaluated in 24 stands in Oregon, USA and Australia.

The model can be used to predict stand-level tree count densities with minimal errors, especially if an appropriate plot radius is selected. The optimal plot radius may be dependent on the stand-type in which the TLS is being undertaken. Other approaches are likely to be more appropriate if accurate stem counts are required at the individual plot level.

Source: R&D Works Newsletter




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Forestry harvesting machine wins national innovation award

A non-scientist has won a major forestry research award for his key role in developing a new harvesting machine designed to be safer and more productive on steep slopes. Kerry Hill, Managing Director of Trinder Engineering Ltd, of Nelson, is one of five winners of the second annual Future Forests Research Awards, presented at a function in Rotorua on Tuesday 14 August.

Mr Hill was one of four nominees for the award for innovation that adds value to the forestry sector. The three judges cited Trinder Engineering’s joint development with Kelly Logging Ltd over the past three years of a winch-assisted steep slope feller-buncher machine. Innovations include a front mounted winch, rear mounted blade and integrated hydraulic control systems.

They said: “Kerry has also led the development of an advanced hauler vision system and initiated construction of a grapple camera system in July 2010 which is now commercially available. He has also collaborated with a Rotorua firm to fit the camera system to a new South African designed grapple carriage system and this is currently undergoing productivity trials.”

The development is part of a new harvest optimisation session designed specifically for harvesting contractors, forestry managers and transport operators in the upcoming ForestTECH 2012 – Improving Wood Transport & Logistics programme that will run in Rotorua on 4-5 December. Harvesting contractors through the Forest Industry Contractors Association (FICA) will also be linking into this New Zealand forestry event on the day. Further details can be found on www.foresttechevents.com.

The FFR award for communication and sector engagement was won by Graham West, of Scion Crown Research Institute, Rotorua. The FFR award for science of international quality was also won by a Scion researcher, Mark Riddell, for the development of a new method of assessing spiral grain in trees. Spiral, rather than straight, grain can affect the strength and uniformity of wood products.

The fourth award, for research participation and uptake by a member of FFR, went to Mark Self, of Timberlands, Rotorua. Long-time Scion researcher Charlie Low was awarded the prize for contribution to a science team. He is the Task Leader for Cypress breeding and for genetic resources at Scion, and over more than 40 years has developed an outstanding level of knowledge on a range of exotic forestry species.

FFR established the Future Forest Research Awards in 2011 to recognise the vital role that science and innovation play in the forestry sector and to acknowledge outstanding achievements by researchers and industry end users, FFR Chief Executive Russell Dale said.

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Australian home lending on the rise?

ABS Housing Finance figures released last week show that new home lending rose convincingly in June 2012, said the Housing Industry Association, the voice of Australia’s residential building industry.

“Following relatively weak data in May, the number of loans for the construction or purchase of new homes rose by 6.3 per cent in the month of June,” said HIA’s Senior Economist, Andrew Harvey.

The outcome at the national level was driven by solid lending figures in New South Wales and Victoria, which grew by 7.3 per cent and 11.3 per cent respectively. This most likely reflects a response to policy changes in these two states.

“Looking over the three months to June 2012, a modest lift is evident for new home lending and reflects increases in all states and territories. The outcome is encouraging, but the reality is that new home loans have been grinding higher over the past six months rather than mounting a sustained and significant recovery,” said Andrew Harvey.

“Unfortunately we needed to see a much stronger recovery in new home lending coming through in the first half of 2012 to signal a significant turnaround in residential construction. It remains evident that new home starts will bottom at GFC-equivalent levels this year, which is a poor outcome for Australian businesses, households, and the wider economy.”

“Across loans for new and established property there has been a modest increase for both first time buyers and trade-up buyers over the last year, although its from a relatively low base,” added Mr Harvey.

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Biosecurity SA restricts pine timber from W.A.

Biosecurity SA has alerted South Australian pest control exterminators to be on the lookout for any signs of destructive European House Borers (EHB) when inspecting dwellings. The warning follows the introduction of new regulations restricting movement of pine timber products from Western Australia. Currently, WA is the only Australian state to have EHB but it is found overseas in Europe, South Africa, South America, the United States and China.

EHB can infest susceptible pine wood roof timbers, wall frames, flooring and door frames and may go undetected for years, eating timbers from within and weakening structures until they collapse.

Biosecurity SA’s Manager of Plant and Food Standards, Geoff Raven, said that while property owners should not be alarmed by any heightened threat of the destructive borer, there was a need for vigilance and including EHB as part of the regime when checking for pests like termites.

“Biosecurity SA has supplemented its border controls to include European House Borer now it’s been recognised nationally that the pest cannot be eradicated,” Mr Raven said. “Pine wood timber entering South Australia from WA now may only do so if it’s been certified as either being previously heat treated, fumigated with methyl bromide or a preservative treatment, or certified as sourced from an EHB pest-free area in WA."

“If the timber has been heat treated, each pine wood product must permanently bear a treatment symbol approved by the Chief Inspector, marked in a visible location and containing the treatment date. Treatment must have occurred within 21 days before arrival in South Australia. Similar verifications are required for both fumigation and preservation treatments.”

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China imports 15 percent less sawlogs

The slowing economy in China has reduced the importation of logs from New Zealand, Russia and the US by about 15 percent during the first six months of 2012. Prices for imported and domestic softwood logs in China have fallen this year by 14 percent and 10 percent, respectively as reported in the Wood Resource Quarterly.

China’s phenomenal GDP growth of between 9 and 14 percent annually over the past decade slowed down last year and is forecasted by International Monetary Fund (IMF) to be “only” 8.25 percent in 2012. Reduced investments in public projects and a cooling residential property market have resulted in a decline in the importation of sawlogs during the first six months of 2012.

Softwood log imports in the first and second quarter this year were 6.2 million m3 and 6.6 million m3, respectively, down from all-time high of 8.6 million m3 seen in the 3Q/11, reports the Wood Resource Quarterly. The total imports for the first half of 2012 were 15 percent lower than during the same period last year, with the biggest declines occurring in shipments from Russia, the US and Australia.

Western Canada is the only major supplier that has increased shipments so far this year; annual shipments may reach over 2.5 million m3, which would be a record high.

The reduced demand for logs in China has not only impacted import volumes, but also prices for domestic and imported logs. The average price for imported softwood logs was down 14 percent from 2Q/11 to 2Q/12. Prices for New Zealand Radiata pine logs dropped the most, while red pine logs from Russia showed the smallest price drops as compared to other species of imported softwood logs.

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

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Temporary threat for Australian sawn timber producers

The Australian sawn timber industry is experiencing a temporary threat from imports as a result of a strong dollar and a global surplus of timber following the Global Financial Crisis, according to independent economic forecaster and industry analyst, BIS Shrapnel. In the two years to 2011, imports have increased by 30 per cent.

However, imports are not a significant long term threat, as they are still well below the historical levels of 20 years ago. According to BIS Shrapnel’s Sawn Timber in Australia, 2012 to 2026 report, in the last two decades there has been a significant reduction in sawn timber imports, as domestic production capacity has expanded. At the same time, exports have grown rapidly in the past five years.

Based on a major survey of builders, other end users and merchants, BIS Shrapnel believes that 2013 will continue to present challenges from imports. However, by 2014, international and domestic conditions are expected to be more favourable to producers as the dollar declines. Global demand for timber will also improve in response to a stronger housing market in the US and strong demand in Asian markets.

The report projects that the demand for sawn timber in Australia during the next decade will be driven by sharp growth in the building and construction sector. Due to the current undersupply of residential dwellings in Australia, BIS Shrapnel forecasts the residential construction sector, which uses more than 70 per cent of the sawn timber produced locally, will grow particularly strongly during 2014 and 2015.

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Carter Holt Harvey say log prices too high

Carter Holt Harvey in Mt Gambier has given Forestry SA an ultimatum to strike a new contract or it will close four of its South Australian operations reports AdelaideNow. Issuing the ultimatum to the State Government this week, the company said it would close its four operations in Mt Gambier and Nangwarry if a new contract with Forestry SA was not struck.More than 1000 people are believed to be directly employed by the company.

In a letter to staff the company said it has demanded that the price it pays for logs to be lowered in return for an expansion of the mills and a commitment to buy more logs. Structural timber operations were continuing to lose money at current log prices. While the company did not specify a time frame for the closure of the mills, any new deal would need to be signed before the State Government sells Forestry SA. That deal is expected to be finalised by the end of the year, but some reports indicate a decision by Treasury is imminent.

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ASH to invest in Heyfield sawmill

Sustainable Hardwoods (ASH), which bought the former Gunns Ltd. Heyfield hardwood sawmill in Victoria, Australia, this past spring, has short- and longer-term plans for investing in the operation, reported The Sydney Morning Herald on 13 August.

In the shorter-term, the company, which is owned by three private investors, plans to increase output by investing in the latest technology and adding a new manufacturing line. The plant’s equipment is 10 years old, said ASH CEO Vince Hurley.

The longer-term plan is to build a new dry mill, he said, noting that ASH has “reasonably long-term licenses,” and that the Victoria government is enacting steps to make long-term contracts possible, which will provide sustainable opportunities, the Herald reported.

ASH paid AU$29 million for the Heyfield mill. Gunns had paid AU$89 million for it in 2009, but made no improvements and lost the timber supply when it failed to pay VicForests for the resource.

The Heyfield operation buys Victoria Ash timber from VicForests and is certified by the Programme for the Endorsement of Forest Certification (PEFC) through the Australian Forestry Standard. The Heyfield operation can process 155,000 cubic meters of hardwood timber annually and has a turnover of AU$55 million, The Sydney Morning Herald reported.

Source: Industry Intelligence Inc, The Sydney Morning Herald


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NZ Carbon Forestry: destination unknown

Carbon Match in their weekly newsletter said they were concerned that many NZ foresters simply didn’t realise how grim the future of carbon forestry appears to be, given current settings. Until NZUs start to trade at least at par with international units, the only real source of demand for NZUs will be from emitters with an NZU-Only policy, from landowners looking to extinguish deforestation liabilities yet to crystallise, or from those who simply want to repay NZUs and withdraw from the ETS.

With respect to the latter, recent announcements may well drive withdrawal from the scheme. Some forest owners report that they are struggling to cope with the uncertainty over the fast forest fix, low prices and the not insignificant costs associated with field measurement requirements. As one recently said, "the ETS is like a savings bank that charges its customers for making deposits."

Source: Carbon Match Weekly, www.carbonmatch.co.nz


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The future for Queensland’s forest and timber industry?

Timber Queensland and the Queensland Government have undertaken to develop a Forest and Timber Industry Plan that will establish a road map for the future of Queensland’s forest and timber industry from 2012 - 2040. If you’ve got some ideas about the challenges facing industry and ways to manage them this is an opportunity to have a say.

Development of the Plan is one of the initiatives in the Queensland Government’s July to December 2012 Action Plan to grow a four pillar economy. There are three key inputs shaping Industry Plan content - results of the industry survey, direct consultation with key industry organisations, industry specialists and individual businesses and a vision and planning forum involving invited industry leaders.

These inputs will be crafted into a Draft Industry Plan that will focus on detailing a vision for the industry in 2040, identifying the challenges to be faced by businesses - both now and in the future – and determining what actions are needed to address those challenges. This draft will form the basis for more extensive consultation with interested parties and the resultant Forest and Timber Industry Plan will be completed by the end of 2012.

The survey represents an opportunity for all interested parties to have their say about what the future of the Queensland forest and timber industry should look like, what are the key issues facing the individual business and the broader forest and timber industry, and importantly, what can be done about it!

To complete the survey go click here (by 31 August) or to find out more about the Plan and it’s development visit www.timberqueensland.com.au


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South Australia’s largest wind farm planned

In renewable energy news, TrustPower has appointed Siemens as their turn-key supplier to construct South Australia’s largest wind farm at Snowtown using for the first time in Australia, world-leading gearless drive wind turbine technology.

The Snowtown II wind farm development will be capable of generating 270 megawatts of renewable energy and powering approximately 180,000 South Australian homes.

TrustPower, a listed New Zealand electricity company, awarded Siemens the contract to engineer, procure, construct and maintain a full turnkey solution for 90 wind turbines including the substation, switchgear and transformers to connect the wind farm into the grid.

The Snowtown II wind farm will cement South Australia as the lead generator of renewable energy having already exceeded the nation’s 20 per cent by 2020 renewable energy target with 26 per cent of South Australia’s electricity now generated by wind. South Australia has now set a target of 33 per cent renewable energy by 2020. The new Snowtown II wind farm is set to help achieve this target. More >>

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Over 150 men found themselves talking to the Truro RSPCA



And on that cuddly note, have a great weekend. For the Kiwis who have endured a few weeks of wet weather, here's hoping for a bit of sun. 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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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.

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