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Friday Offcuts – 3 December 2010

Several of the stories covered last week - calculating and using carbon footprint information for forest products sales and carbon forestry - spurred a number of you into action with comments and discussion posted on the e-letters section of the Offcuts website. In last week’s poll on carbon foot-printing, half of the respondents to the poll thought that like FSC – it's going to become a future requirement for doing business in our industry.

A lead story in this week’s issue highlights some negotiations that have just been concluded between Russia and the European Union. The implications of the discussions could be considerable for the forest products industry in this part of the world. Russia’s log export tax plays a significant role in shaping the global log and lumber trade with some 40% of the world’s softwood log exports coming out of Russia. Softwood log taxes rose from 6.5% to 20% in July 2007 to 25% in April 2008 and there has been long discussion on whether Russia would take the next step to 80% in January 2011. To get into the WTO, Russia has just agreed to phase out export tariffs on raw materials – including logs. To which countries the phase out applies is at this stage unclear along with what if any implications it's going to have for the export log trade. We'll know a little bit more on the timber agreement after the EU-Russia summit that's set down for 7 December.

Other news this week includes meetings held during the week to shed some light onto the closure and time frame around the future of Gunns Tasmanian sawmilling, chip and veneer operations, some good news stories on some major awards that have been given out, the introduction of a new Trans-Tasman Timber Design Award for showcasing the innovative use of timber and the posting of new resources on Wood Manufacturing on the Tech Showcase of Friday Offcuts.

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EU - Russia deal could end log export tariffs

Reuters reported this week that Russia and the European Union struck a deal on Wednesday to phase out Russian export tariffs on raw materials. This is designed to smooth the way for Moscow's entry into the WTO. First Deputy Prime Minister Igor Shuvalov said "We have ... an agreement on a text on raw materials," A phasing-out of export taxes "will be imposed from the time we ratify our accession to the WTO," he said.

Russia's willingness to phase out export duties on raw materials such as timber - which drive up the cost of inputs for European manufacturers such as the Nordic timber and paper industries - removes a European veto on Russia's accession.

A report later in the week says that an official with direct knowledge of the negotiations said that Russia plans to cut its timber export duty to about 15 percent of customs value from 25 percent as part of talks with the European Union on its bid to join the WTO. Details of the timber agreement are expected to be announced at an EU-Russia summit on 7 December Paivi Nevala, an adviser to Finnish Foreign Trade and Development Minister Paavo Vayrynen said. Source: Reuters


Emitter buys first carbon units through tender

A buy tender for up to 50,000 tonnes of spot or forward NZUs drew offers of up to 210,000 tonnes. The tender closed at 5.30pm on Thursday last week, and was the first buy tender on the New Zealand domestic carbon market.

The buyer, a New Zealand emitter, was looking for up to 50,000 tonnes of spot units or forward credits that could be delivered by 1 April 2011. Nigel Brunel, of OMFinancial, says that the range of offers was between NZ$20.74 and $21.50, with an average of NZ$21.27. All offers were for forestry units, and included one spot and several forwards with delivery by May.

Source: www.carbonnews.co.nz


Calling former NZ sawmill workers

In New Zealand the Ministry of Health is providing a Special Support Service for former sawmill workers who were historically exposed to pentachlorophenol (PCP) during the course of their employment in the 1950s to the late 1980s. The Sawmill Workers Service aims to help people stay healthy by supporting the early detection of diseases, promoting healthy lifestyles and reducing modifiable risk factors.

The Sawmill Workers Service is based on a free annual health check delivered by a primary health care team in a general practice setting. To receive an application pack or further information on the Sawmill Workers Service, please contact the Ministry of Health: Email: moh@moh.govt.nz, Telephone: 0800 288 588 or Website: www.moh.govt.nz/dioxins.


Forest genetic gains from biotechnology

High productivity forests are required to meet the projected increasing global demand for wood fibre. Genetic improvement of Radiata pine has been delivered by traditional open pollinated or controlled pollination and clonal breeding programmes. Potentially, as outlined by Greg Mann, General Manager, Arborgen Australasia, in the just completed ForestTECH 2010 series, significant additional gains could be delivered by genetically modifying the enhanced germplasm produced by these non-GM methods.

GM crops continue to remain the target of strong opposition on environmental and health grounds, despite the conclusions of more than two decades of environmental biosafety research. GM crops are increasingly seen in the pattern of International Trade and are accepted by importing countries. While 25 countries planted GM crops in 2009, 57 countries approved imports.

The first GM trees were produced 24 years ago and the first field tests were initiated in 1988. China was the first country to release GM trees (Populus hybrids for insect resistance) for commercial planting in 2002. There have now been well over 700 field tests worldwide of GM trees, both forest and fruit. Over 35 forest tree species including various Populus species and hybrids, various Eucalyptus species and hybrids, pines including Loblolly and Radiata , spruce and birch.

The GM tests that have been tested in the field include; faster growth, higher yield, reduced and/or modified lignin (mainly for improved pulping), herbicide tolerance, insect resistance….At the moment, field testing of GM trees is limited in New Zealand to Scion’s research, primarily on the environmental impacts of GM Radiata and field tests of GM Radiata have been also reported for Chile.

Details of the genetic gains that can be made through adoption of biotechnology in this part of the world has been part of the ForestTECH 2010 series. Limited copies of the full proceedings can still be ordered through the Post Event details of the event website, www.foresttechevents.com. As outlined by Greg Mann, biotech plantation forestry is being pursued in some of the major forestry countries in the world, namely China, the US and Brazil. If Australasia doesn’t follow this path, there is a real danger that our competitiveness will be eroded.


Movements in New Zealand lumber exports

In the US, forest products companies have reported declines of 14% in Q3 2010 sales and earnings compared to Q2. James Hardie has also reported plummeting earnings in the US market, more than trebling its first half net loss to US$318.8 million. The low US dollar has created severe difficulties for NZ and other exporters to this market by squeezing margins to practically zero in a market where demand is deathly quiet. US lumber import volumes from New Zealand for the three months to September 2010 are down 25% on the same period a year ago.

In Australia, dwelling units approved have continued their decline, falling another 6% in September 2010, compared to the month prior. ABARE has reported that the Australian coniferous plantation area increased by 0.5% in 2009. However, volumes harvested were down 12.8% for the year. The reduction caused gaps to appear in supply for New Zealand exporters to fill for the majority of 2010. But reports of a lack of recent demand indicate that a reduction in building activity in this market is now apparent. New Zealand lumber exports for the calendar year to September 2010 were 11% above the corresponding period last year. Source: www.nzxagri.co.nz/agrifax


Wood adhesive updates part of new on-line resources

As part of the recently completed Wood Manufacturing 2010 technology series, recent updates on polyurethane adhesives for structural applications, developments in PRF, EPI and PU adhesives and RF curing and some of the international developments in a range of wood adhesive systems were outlined for New Zealand and Australian wood manufacturing companies.

As part of the update on technology resources for wood products companies, selected presentations from the September 2009 series can be downloaded for use and reference through either the Tech Showcase of Friday Offcuts (under the Wood Manufacturing section) or on the Tech Updates section of the FIEA website for FIEA Members.

Both sites provide access to probably the most extensive array of technology resources available to local wood products companies from recent programmes. Sets of proceedings from the recent programme can also still also be ordered by visiting the even website, www.woodmanufacturingevents.com


Gunns chip mill shutdown plan

ABC News reports that Tasmanian timber company Gunns has announced when it will close three northern woodchip mills. It has told workers that the Hampshire mill is to shut in late December, followed by the Bell Bay mill in April and the Massey-Green mill at Burnie in mid-2011. State secretary of the Construction, Forestry, Mining and Energy Union Scott McLean says about 150 employees have been offered redundancies.


Local engineering company picks up major award

Brightwater Engineering Solutions has won the “Environmental Project of the Year Award” at the 2010 Australian Bulk Handling Awards in Brisbane. The award was presented for a Wood Pellet export facility that Brightwater designed and constructed in Albany, Western Australia. The export facility is designed to receive, store and load-out 250,000 tonnes of wood pellets per annum and comprises of a reception grizzly, shuttle conveyor and a fabric clad building. The wood pellets are exported to Europe and are a renewable energy source which in a replacement for coal in boilers.

Brightwater Engineering Solutions is a Welshpool based EPC engineering business that was established in Perth 3 years ago by General Manager, Mathew Fletcher. Brightwater Engineering Solutions is part of the Nelson (New Zealand) based Brightwater Group of Companies.


Timber sales revenue climb 16% for ForestrySA

ForestrySA enjoyed a successful 2009-10 financial year, moving on from the challenges created by the Global Financial Crisis in the previous 12 months. As manager of South Australia’s plantation estate, ForestrySA paid AU$44m to the State Government in taxation and dividends (up from AU$23m in 2008-09) and more than AU$1.2m in rates to various Local Governments.

Total revenue from timber sales increased to AU$126m, up from AU$108m the previous year. Profit after tax was AU$113m (AU$93m in 2008-09) which included an AU$81m (AU$70m in 2008-09) net increase in the value of the plantation. This valuation adjustment comprises an increase in the volume and unit value of the trees.

The 2009-10 Annual Report can be downloaded from the ForestrySA website at www.forestrysa.com.au


Update on Gunns mill closures

Employees at Gunns' Tasmanian sawmills are unsure of their futures after receiving notification of meetings this week with superannuation representatives. On-site meetings are being held this week for workers at the Deloraine, Somerset, Smithton, Western Junction, Lindsay Street, Launceston, and Austins Ferry operations to discuss which mills will be closing and which jobs will be redeployed.

At the Launceston meeting on Wednesday Managing director Greg L'Estrange said that the administrative headquarters of the Tasmanian timber company and the sawmill on the same site would not be closed as part of Gunns' planned divestment of infrastructure. Mr L'Estrange said that the closure of most Gunns operations other than plantations to feed the proposed pulp mill would not be finished by Christmas. The Advocate reported earlier in the week that it believed the last shipment of logs to be processed at the Smithton sawmill will be on the 18 December.

In another story the Tasmania's forest industry has warned Gunns' decision to cut ties with about 50 contractors could lead to the loss of up to 750 jobs. The Forest Contractors Association says the company delivered the bad news at the mid-week meeting in Launceston. Instead of the Federal government's announced AU$22 million assistance package for the troubled industry, the Forest Industries Association's Terry Edwards says about AU$250 million is needed. The Premier David Bartlett is backing the forest industry's call for a massive boost in federal assistance and he told a forum this week that the federal assistance package provided last week was only a start and talks with the Commonwealth are continuing.


World's largest wood pellet plant planned

Vyborgskaya Cellulose, a Russian pulp and paper maker, said that it expected to start producing pellets that can be used in heat and electricity generation from its plant in Vyborg by the end of the year. The plant, located in northwest Russia, will eventually produce about 900,000 tons of pellets per year, making it the largest in the world once operational, said Irmgard Herold, an industry analyst at Bloomberg New Energy Finance. In February, Vyborgskaya said the plant would cost about $100 million to build.

Swedish trading house Ekman & Co., which has an exclusive sales agreement with Vyborgskaya, is initially looking to sell "large volumes" of the pellets to industrial users, Arnold Dale, vice president of bioenergy for Ekman, said by e-mail. "We do, however, already have several smaller contracts to supply premium-grade wood pellets to small combined heat and power plants in Scandinavia," Dale said. "Talks are ongoing with potential distributors in key European consumer pellet markets."

At present, U.S. producers supply most West European power stations, Herold said, while most residential demand is supplied by European producers. "We do expect to be able to compete with the Americas, especially as there is less currency risk and much shorter shipping distances," Dale said.

Source: Tree Frog Daily Forestry News


Trans-tasman Timber Design Awards announcement

NZ Wood and Australian Timber Design Awards announce the introduction of a Trans-Tasman Timber Design Award open to the design industries in both Australia and New Zealand. The awards will be made in four categories; - Residential housing - Commercial construction - Community, and - Multi-storey.

Entries will be drawn from the finalists in the recent Australian and New Zealand national
timber design awards, both of which have taken place in the last month. “This will be the first year such Trans-Tasman awards have been made and we intend it to be the first of many,” says Geoff Henley programme manager of NZ Wood.

Judging for the awards by an Australia/New Zealand panel will take place in the next few weeks with the winners being announced just before Christmas. “It’s not our intention to have a Trans-Tasman Awards ceremony this year, but we are tracking towards an international timber conference that will be held in 2012 at which time all winners between now and then will be given recognition”, says Andrew Dunn, chief executive, Timber Development Association NSW.




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...and one to end the week on...a stunning senior moment

Apparently, a self-important college freshman attending a recent football game took it upon himself to explain to a senior citizen sitting next to him why it was impossible for the older generation to understand his generation.

'You grew up in a different world, actually an almost primitive one' the student said, loud enough for those nearby to hear.

'The Young people of today grew up with television, jet planes, space travel, man walking on the moon. Our space probes have visited Mars. We have nuclear energy, ships and electric and hydrogen cars, cell phones. Computers with light-speed processing... And more.'

After a brief silence the senior citizen responded as follows: 'You're right, young man. We didn't have those things when we were young .. so we invented them. Now, you arrogant little s***, what are you doing for the next generation?'

The applause was amazing ..........

And one more as we head into the weekend. For those of you who missed church on Sunday, here is a recap! Four worms and a lesson to be learned!!!!

A minister decided that a visual demonstration would add emphasis to his Sunday sermon.

Four worms were placed into four separate jars. The first worm was put into a container of alcohol. The second worm was put into a container of cigarette smoke. The third worm was put into a container of chocolate syrup. The fourth worm was put into a container of good clean soil.

At the conclusion of the sermon, the Minister reported the following results:

The first worm in alcohol- Dead

The second worm in cigarette smoke - Dead

Third worm in chocolate syrup - Dead

Fourth worm in good clean soil - Alive.

So the Minister asked the congregation - what did you learn from this demonstration???

Maxine was sitting in the back, quickly raised her hand and said,

'As long as you drink, smoke and eat chocolate, you won't have worms!'

That pretty much ended the service.

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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