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Friday Offcuts – 29 October 2010

New Zealand has well and truly been down this path – the sale of its state forestry assets. The NZ Government sold off some NZ$1.4 billion in forestry cutting rights alone between 1990 and 1992. Victoria and Queensland have also been through similar sales.

In this week’s issue we have reaction to the news, which had been telegraphed since 2008, that AU$2.8 billion worth of Forestry SA assets are being put up for sale - to help relieve some of the state’s significant debt. Half way round the world it appears Britain's Government is also expected to unveil plans to sell half its woodlands - around 375,000 ha. It's been reported that one-third of the land is to be auctioned over the next four years, with the remainder to be out of State hands by 2020.

With fire season approaching us there are two fire-related stories in this week’s issue. The first is a recent announcement from the Victorian Government where 123 new permanent firefighters are being recruited and three Eriksson Aircranes are being strategically located about the State to provide faster first-strike capabilities in response to bushfires. This is all part of AU$382.4 million of additional funding that was set aside following recommendations made by the Victorian Bushfires Royal Commission.

In another story we’re told that an average of around 29 million hectares of Australia’s 7.7 million square kilometres - and this can vary up or down by a magnitude of four - are burnt each year by fire. As part of the forestry technical event, ForestTECH 2010 being held in Albury on 23-24 November, a number of presenters will be detailing new tools and technologies that have been developed for modelling, managing and fighting forest fires. Similar presentations will be given at the New Zealand event the week before on 18-19 November. Full details on both programmes can be found on www.foresttechevents.com

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Bushfire Research: an Australasian approach

In an average year around 29 million hectares of Australia’s 7.7 million square kilometres are burnt by fire. With seasonal fluctuations however, this area can vary to four times greater or less than this average. For example, in 1974/75, 115 million hectares or 15% of Australia was burnt.

The combination of topography, vegetation and climate see significant parts of the Australian landscape constituting some of the most severe fire-prone areas on Earth. Yet fire is a natural part of the Australian landscape and it has helped shape the continent’s flora and fauna for millennia.

On Saturday February 7th 2009, after thirteen years of drought and on a day of extreme fire conditions, one hundred and seventy-three people died over several hours during the most deadly bushfires in Australia’s history. Around 430,000 hectares of farmland and forest were burnt and 2000 properties and 61 businesses were damaged or destroyed.

Several towns were largely obliterated and around 78 communities were impacted upon. These fires and their consequences stunned the nation. The fires severely burnt some 10,000 ha. of prime native timber and 16,684 ha. of plantation forests, while preliminary estimates of carbon dioxide released to the atmosphere are around 8.5 million tonnes. Direct rehabilitation costs were estimated to be in the vicinity of over $A1B while the overall cost was estimated by the subsequent Royal Commission to be around $A4B+.

In 2003 the Australian government agreed to the establishment of a Bushfire Cooperative Research Centre which, at the time, became one of 56 public-private research centres operating in Australia. The formation of the Bushfire CRC was, and remains, a major initiative of over 40 fire, land management and related agencies and research organisations across Australia and New Zealand (the Bushfire CRC’s current funding is due to expire in 2013).

As part of the ForestTECH 2010 event for Australian technical foresters (similar presentations in New Zealand are also been given), Gary Morgan, CEO, Bushfire CRC will be part of a number of presenters on forest fire fighting technologies. Gary will be outlining recent research that on the use of prescribed fire as part of a risk management strategy for hardwood plantations, the effectiveness and efficiency of aerial fire fighting; computer modelling and fire management and the recent evaluation of large aircraft (a DC 10) to assist in bushfire suppression.

ForestTECH 2010 runs in Australia on 22-24 November and for New Zealand forestry staff, the week before on 17-19 November. Full details on both programmes in the series can be found on www.foresttechevents.com


Forestry decision for SA causes outrage

A State Government’s revelation last Wednesday night that “the decision has been made” and the forward sale of ForestrySA plantation rotations (AU$2.8b worth of timber assets) will go ahead caused outcry amongst the local community at a meeting held in Mt Gambier last week.

The revenue raised from the sale would be used to relieve the state’s significant debt, according to Forestry Minister Michael O’Brien. Local council leaders and stakeholders claimed that the government had misled the public for over two years and were scathing of the announcement and the impact that it could have on jobs in the South East. Mr O’Brien adamantly claimed in a report in the Border Watch that the State Government had always been transparent with the decision to sell the asset since it was made in 2008.

Mr O’ Brien said the number of rotations to be sold and when the sale would go ahead was still unclear and the cabinet would not decide whether it would be one to three rotations until March next year. Mr O’Brien referred to the Victorian and more recently Queensland Government’s similar sales producing more benefits than negative impacts. Source: The Border Watch


SawTECH 2011 Technology Show & Expo

For over 13 years the Forest Industry Engineering Association (FIEA) has been running independent technology updates for New Zealand and Australian forestry and wood products companies. The SawTECH events have detailed the very latest technologies, tools, innovations and operating practices that can be adopted by local sawmiller’s to improve their profitability.

A wide cross section of sawmillers on both sides of the Tasman have been involved in redesigning the SawTECH series From 2011, in addition to Sawmilling Optimisation and Saw Design, Selection & Maintenance, previous technology events on Mill Maintenance, Log & Lumber Scanning and Lumber Quality Control will now be built into this new Technology Show & Expo. The NEW three yearly SawTECH series will be running in both New Zealand and Australia in June 2011.

SawTECH 2011 will be covering all core operations being undertaken in the Greenmill. FIEA will be working closely with major sawmilling suppliers and companies to design the new SawTECH 2011 Technology Show & Expo in the next month or so. At this stage we are seeking Expressions of Interest from companies and organisations who would like the opportunity of presenting or being involved in the New Zealand and Australian SawTECH events. Attached is an EOI Document with further information. Interest in being considered for this new Australian series is requested before Friday 19 November 2010.


Still working your way through the carbon maze?

Below is a web link to a fact sheet that's been put together about the New Zealand ETS, including a detailed comparison with the EU’s emissions trading scheme and the last version of the currently-shelved Australian Carbon Pollution Reduction Scheme. For those still grappling with the finer points and how it all links together, click here.


Sustainable forest management regime up for review

With the five yearly review of Australia's sustainable forest management standards about to commence, the opportunity to help ensure Australia's forest management remains at the forefront of sustainability is open to every interested organisation and stakeholder.

The Australian Forest Standards are a cornerstone of the country’s regime of sustainable forest management for both plantation forestry and native forestry. Through scientific and evidence based standards on economic, social and environmental criteria, the Australian standards provide certainty of the genuine sustainability of forestry activities and the products sourced from them.

More than 21 forest owners and managers (certified organisations) have been independently assessed and audited as meeting the requirements of the Australian Standard for forest management. Through that process, approximately 90% of Australia's productive plantations and native forestry are recognised as being sustainably managed and are required to meet an on-going regime that is regularly audited.

Nominations are open for the broad and inclusive Standards Review Committee. The Committee will consist of around twenty people from a range of backgrounds, interests and expertise. The aim of the review is to encompass in the Australian Standard, all of the issues relevant to the on-going sustainability of forest management in Australia.

AFSL is holding a lunchtime information seminar on Thursday 4 November at The Windsor Hotel in Melbourne. The seminar will go into detail regarding the revision process, how to be involved and what the requirements are for those who wish to nominate to be a member of the Standards Reference Committee.


Victoria to hire 170 new permanent firefighters

The Brumby Labor Government has begun recruiting 123 permanent firefighers who will help make Victoria fire-ready and fire-safe as possible and assist with important planned burning activities.
Environment and Climate Change Minister Gavin Jennings has announced the Department of Sustainability and Environment was calling on Victorians to sign up for the positions which are part of the 170 new permanent positions announced by the government as part of the response to recommendations made by the Victorian Bushfires Royal Commission.

Mr Jennings also announced that three Eriksson Aircranes will be strategically based at Essendon, Latrobe Valley and Ballarat to provide even faster first-strike capabilities in response to bushfire.

“As part of our response to the Victorian Bushfire Royal Commission’s findings the Brumby Labor Government is investing AU$382.4 million in additional funding for fire preparedness and suppression and to more than double fuel reduction over the next four years to 275,000 hectares a year,” Mr Jennings said.

“We are committed to providing more support for volunteers, more firefighers for the CFA, MFB and DSE and additional new equipment as part of the overall AU$867 million package to reform the firefighting effort announced in August. Source: Government of Victoria


New Zealand Log Prices - October 2010

In-market log prices have jumped this month, to be back at April 2010 levels. Inventories have dropped in China and this is currently the primary influence on prices. A KS log is now priced at US$138/JASm3 and a KI log at US$133/JASm3. That is a jump of between US$15/JASm3 and US$20/JASm3 in the past month. China demand and pricing is continuing to drive the market for New Zealand export logs and other markets are obliged to accept the current prices to secure supply.

The Indian market appears to be following China in price and volume, however, the more established markets of Japan and Korea are expressing more caution and restricting supplies at these high prices. The strong demand and subsequent pressure on pricing is expected to continue through into the beginning of 2011, when demand typically declines for the Chinese New Year holiday period.

The Combined Agrifax Log Price Index, which measures returns from the whole forest, has edged up another NZ$2/T this month to be close to NZ$84/T. Strong rises in the export markets drove up unpruned log prices. Meanwhile, a slight softening in the pruned log prices limited this rise.

Log price changes:
North Island
  • Domestic: Pruned grades are down slightly
  • Export: Grades are up $5/T to $15/T

    South Island
  • Domestic: Prices are mostly steady
  • Export: Prices are up $5/T to $15/T

    For more detailed reports contact AgriFax at: www.nzxagri.com/agrifax


    Timber prices in China move upwards

    Continued increases in demand for wood raw-material from sawmills, plywood plants and pulp mills in China has pushed domestic log prices upward and many Chinese companies are increasingly exploring the opportunities of importing more logs and wood chips to supplement the domestic fibre sources. The tight log supply has resulted in higher prices for domestically sourced logs this year.

    Chinese fir sawlog prices were almost 17 percent higher in the 2Q/10 as compared to the same quarter in 2009, according to the Wood Resource Quarterly (WRQ). Eucalyptus logs, mainly used by the pulp industry, have also become more expensive the past 12 months, reaching new record-highs.

    The continued high costs of locally sourced logs has resulted in higher volumes being imported so far this year. During the first eight months of 2010, the total imports of softwood and hardwood logs were up 23 percent compared to the same period in 2009. The importation of tropical hardwood logs has increased almost 50 percent, and Papua New Guinea has overtaken Russia as the major hardwood log supplier to the Chinese sawmilling and veneer industry.

    During the first eight months of this year, imports of wood chips to China have more than doubled compared to last year, as reported in the WRQ. Pulp mills in China have increased their consumption of imported wood fibre dramatically in just two years. The total chip imports for 2010 are likely to be close to five times as much as in 2008. Vietnam is by far the largest supplier of chips followed by Indonesia and Thailand. The three countries together currently supply about 90% of all imported chips.

    Wood Resources International LLC, www.woodprices.com


    British Forestry sell off expected soon

    WoodWeek this week reports that Britain's government will soon unveil plans to sell around half of the woodlands it oversees, paving the way for a huge expansion in holiday resorts, golf courses and commercial logging operations, The Sunday Telegraph reported.

    Environment Secretary Caroline Spelman will unveil the plans to dispose about 50 percent of the 748,000 hectares (1.85 million acres) of forest within days, according to the newspaper. Laws overseeing so-called ancient forests, such as the Forest of Dean and Sherwood Forest, are most likely to be changed to allow companies to cut down trees, according to the Telegraph.

    "We are looking to energize our forests by bringing in fresh ideas and investment, and by putting conservation in the hands of local communities," a source close to the Department for the Environment Food and Rural Affairs (DEFRA) told the newspaper. A third of the land will be sold before 2015, and the rest by 2020, a government source told the newspaper.


    Forestry exports boosts NZ Port results

    Port of Tauranga expects annual earnings this year to meet analyst forecasts of between NZ$51m and NZ$53m, an increase on last year in part due to rising container trade. Exports through the port increased more than 8 percent last year to 9.19 million tonnes, dominated by a 19-percent rise in forestry exports to 6.04 million tonnes. Total trade last year was 13.7 million tonnes, up 2.4 percent.

    During the first three months of the current financial year, the port saw a 10 percent increase in trade, a 25 percent increase in containers and net profit after tax up 10 percent, chief executive Mark Cairns said. The forecast for the year ending June 2011 compared with underlying earnings after tax for the last year of $49.4m, a 9.3 percent increase in turn on the previous year's record profit. Source: WoodWeek


    New light particleboard to be launched in 2011

    At SICAM, which ran in Pordenone, Italy, between October 20 and 23, 2010, BASF, one of the worlds’ leading chemical companies, and SAIB, one of Italy’s biggest derived timber manufacturers, presented their joint project to develop a lightweight particle board. The new wood-based material, based on the Kaurit ® Light system, will be at least 20% lighter than conventional particle board. The product will be launched in 2011.

    “Thanks to our strategic partnership with BASF, we’re developing exciting new possibilities in industrial furniture production. At the same time, we’re satisfying furniture manufacturers’ requirements for a new, lighter material,” says Adriana Conti, Managing Director of SAIB. “The lightweight panel fulfills all regulations for particle boards and can be used as a conventional board”, explains Wolfgang Gutting, Vice President, Glues and Impregnating Resins at BASF. Source: www.forestweb.com


    Stora Enso acquiring 51% of Chinese company

    Stora Enso has signed an agreement to acquire 51% of the Chinese packaging company Inpac International. Inpac is a packaging company with production operations in China and India, and service operations in Korea. Inpac specialises in manufacturing consumer packaging, especially for global manufacturers of mobile phones and other consumer goods. The enterprise value of the company is EUR 82 million. In 2009 Inpac's sales were EUR 82 million and EBITDA EUR 16 million.

    Inpac's main production plants are at Qian'an in northern China, Dongguan in southern China and Chennai in India. The company has approximately 3 100employees. Stora Enso's annual operating profit is expected to be enhanced by EUR 11million. The all-cash acquisition is expected to be closed within six months, subject to approval by regulatory and competition authorities, and other customary closing conditions.




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    ...and one to end the week on...quitting drinking

    Patrick walks into a bar in Dublin,

    Orders three pints of Guinness & sits in the corner of the room,

    Drinking a sip out of each pint in turn.

    When he had finished all three, He went back to the bar & ordered three more.

    The barman says, "You know a pint goes flat soon after I pull it ......... Your pint would taste better if you bought one at a time."

    Patrick replies, "Well now, I have two brodders, one is in America ; & de odder in Australia ; & here I am in Dublin . When we all left home, we promised dat we'd drink dis way to remember de days we all drank togedder."

    The barman admits that this is a nice custom & says no more.

    Patrick becomes a regular customer, & always drinks the same way ....... Ordering three pints & drinking a sip out of each in turn, until they are finished.

    One day, he comes in & orders just two pints.

    All the other regulars in the bar notice! & fall silent.

    When he goes back to the bar for the second round,

    The barman says, "I don't want to intrude on your grief but I wanted to offer my condolences on your great loss."

    Patrick looks confused for a moment, then the penny drops & he starts to laugh,

    "Oh no," he says, "Bejesus, everyone is fine!

    Tis me, .................. I've Quit Drinking!"

    And on that note, have a great weekend. Cheers.

    Brent Apthorp
    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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