Friday Offcuts – 25 October 2013
Click to Subscribe - It's FREE! In this week’s issue we have a couple of recent updates on the Chinese log and lumber markets. After a noticeable slowdown in 2012, China’s expanding housing market has led to strong gains in both wood products from just 12 months ago. CIBC World Markets report this week that China's lumber imports last month increased a staggering 31.7% with log imports also jumping 30.2%. Year-to-date lumber and log imports are both up 14.9% and 16.4% respectively. It’s anticipated that New Zealand this year is going to become China’s largest log supplier (over 11 million m3) surpassing Russia.In another story, European sawmills are now starting to make their presence felt in the Chinese market. According to the latest Eurostat figures, in the first seven months of 2013, EU's softwood log and timber exports to China have more than tripled over the same period of 2012. Finland, Sweden and Germany are leading the charge. As well as Russia, Canada, the US and New Zealand, the Europeans are now playing a much more dominant role in this market. This week the debate on the international competitiveness of New Zealand’s the wood processing industry raised its head again with one of the larger sawmills in the central North Island, Tachikawa Forest Products going into receivership. Sawmillers are continuing to face challenging conditions as demand for export logs, largely from China, continue to push up the prices for domestic processors. The opposition party is now calling for an inquiry into the economics of wood processing. The Government has continued to take the line that the receivership is more closely aligned to specific issues with the mill rather than a more deep seated issue with the current economics of the industry and environment in which its operating. For more on this story and debate, click on the links below. Finally, an update on ForestTECH2013. The two key issues for forestry companies at the moment – improving forestry safety for all workers and how more efficiently and safely get wood off the steeper terrain - have really struck a chord with the forestry industry. With one week to early-bird registrations closing, a record number of around 250 people (from New Zealand, Australia, the US, Canada and Chile) have already registered. As we’ve mentioned – this is going to be a sell out so if looking to attend – register now to avoid disappointment on missing out on a place.
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This week we have for you:
New record level of global paper and board productionDespite the continued decline in North America and Europe, global paper and board production still managed to advance at a meager 0.2% pace to reach a new record level of 400 million tonnes in 2012. Positive growth in tissue and packaging grades continued to offset the retreat in global graphic paper production."For the past four years, China has maintained the top spot for both demand and production of total paper and board, with the US remaining in second place. China accounted for 25% of world demand and 26% of global production of total paper and board in 2012," said Kevin Conley, Senior Economist of World Graphic Paper at RISI. "In terms of pulp production, the United States remained the top producing country in the world with 50.4 million tonnes in 2012. China came in second producing 18.2 million tonnes," continued Conley. Source: RISI Rotorua sawmill in receivership
Tachikawa Forest Products was placed into receivership late last week, which is being
handled by Kordamentha. Tachikawa, the Rotorua sawmill is about 49 percent owned by
Japan’s Tachikawa Forest Products and 38 percent by Sojitz Corp. A report this week says that the mill was in breach of its banking covenants for the past two years, and had its 2012 accounts tagged by auditors over a working capital deficit. KordaMentha’s Grant Graham and Brendon Gibson were appointed receivers on Friday, ending the Japanese-owned wood processor’s attempts to regain profitability after successive years of losses that had accumulated to NZ$12.5 million as at Dec. 31. The sawmiller narrowed its annual loss to NZ$3 million in 2012 from NZ$4.5 million a year earlier, though its working capital deficit widened to NZ$1.3 million from NZ$552,000 in 2011. Financial statements lodged with the Companies Office show Tachikawa was in breach of its banking covenants in the 2011 and 2012 calendar years, and had reached an agreement with Bank of New Zealand to operate within a capped overdraft of NZ$1 million. BNZ was owed NZ$8.3 million as at the end of 2012, down from NZ$9.3 million a year earlier. On Saturday, First Union general secretary Robert Reid, whose body represents about two- thirds of the 120 staff at the mill, said he understood Tachikawa was working towards returning to profitability, but ran out of working capital and wasn’t able to buy logs to meet its order book. For more on this story click here and here. ATLAS Technology changes handsNew Zealand’s Crown Research Institute, Scion is pleased to announce the sale of its commercial software brand ATLAS Technology to software development company Integral Limited. The sale takes effect from 1 January 2014.ATLAS Technology was set up by Scion in 2002 to accelerate development and provision of advanced software solutions for the forestry and wood-related industries. Its suite of software products incorporates the latest science covering every step of the forestry life cycle. “The time is right”, says Scion CEO Warren Parker, “for a new owner to lead the vision and direction of the ATLAS brand”. “We have been looking for the right company that will expand and grow functionality and useability of the ATLAS products, while still being committed to New Zealand forestry companies. “This sale increases the capacity of Scion, through Integral, to provide high quality innovative decision support tools to increase forest productivity, health and profit. We look forward to maintaining strong research links with Integral and contributing to the ongoing impact and value of ATLAS Technology to industry,” said Dr Parker. Scion will retain its software engineering division, which will re-focus on internal research and development as well as technology transfer of science through software to industry. FFR Forecaster, which was produced in partnership with Future Forests Research, will be maintained by Scion. Integral is a long serving provider of software and solutions to the forest industry. The company is excited to have the opportunity to grow GeoMaster and the other ATLAS Technology software packages and assist Scion in delivering its science to the wider forest industry. “Landing GeoMaster, recognised as the leading non-proprietary land information and forest GIS application for the Australasian market, is quite a coup for us as we continue on our path of expansion,” says Andrew Taylor, CEO of Integral. Integral Limited was established in 1991 specifically to service the timber and forest industries. Relationships with companies like Carter Holt Harvey, PF Olsen, Timberlands Limited and many other large and small organisations go back around 20 years and continue today. All ATLAS clients have been informed of the sale, and can continue to enjoy existing relationships with those Scion staff who will move to Integral. There are no staff losses resulting from the sale and restructure of Scion’s software engineering division. China's lumber and log imports booming last monthChina's lumber and log imports in September showed respective increases of 31.7% and 30.2% to 2.2 million m3 of lumber and 4.27 million m3 of logs; year-to-date lumber and log imports up 14.9% and 16.4%, respectively.Lumber. In September 2013 China imported 2,200,000 m3 of lumber at an average cost of $279 per m3. Lumber imports are up 31.7% compared to Sept. 2012 when they were 1,670,000 m3. YTD lumber imports are 17.540 million m3 compared to 15.260 million m3 in the prior period (up 14.9%). Logs. In September 2013 China imported 4,270,000 m3 of logs at an average price of $204 per m3. Log imports are up 30.2% compared to Sept. 2012 when they were 3,280,000 m3. YTD log imports are 33.260 million m3 compared to 28.570 million m3 in the prior period (up 16.4%). Pulp. On a month-to-month basis, pulp imports are down 2.8%, lumber imports are down 0.9% and log imports are up 4.9% when comparing to August 2013. Prices month over month are up 1.2% for pulp, up 0.8% for lumber and up 0.4% for logs. For a full report, click here Source: CIBC World Markets Inc CHPS for cable harvest planning
The Cable Harvest Planning System (CHPS), developed by ATLAS Technology in conjunction with Geographic Business Solutions, is a modern software system that breathes new life into tried-and-true physics. “Payload analysis for cable harvesting is not new,” says Jeremy Snook, business analyst at ATLAS. “While similar systems have been developed in the past, CHPS is the first to be directly integrated into GIS - geospatial software, which is one of the forest manager’s core tools. This provides easy access to detailed information about the terrain, while allowing seamless transition to other day-to-day forest management activities such as harvesting, as well as linking to log yield information. “Much of the forest due for harvesting was planted in the early 1990s on steep, erosion prone land. It’s too steep to use ground-based mechanical harvesting equipment so must be harvested using cable haulers. Planning these harvesting operations is challenging and ensuring the safety of the ground crew is paramount.” Tailholds need to be positioned for maximum hauler reach and payload. Repositioning a tower is costly particularly on combinations of steep terrain and some soils. CHPS uses geospatial terrain data (for example, derived from LiDAR), hauler and rigging characteristics, such as tower height and cable breaking strain, and then applies robust, well established science to determine the best positioning of the tailholds to achieve maximum payload. “CHPS translates rich terrain data into usable information, equipping contractors with a better knowledge of any constraints they may be faced with, such as where hauler vision will be restricted. This helps forest managers and harvesting contractors find optimal locations for the hauler pad and identify solutions along extraction corridors, plan upfront for any safety issues and help them set contract rates. “This provides greater certainty, enabling more informed risk management for contractors and forest growers.” In this year’s Steep Slope Wood Harvesting Conference planned as part of ForestTECH 2013 in Rotorua on 26-27 November, Megan Costello, Harvest Engineer with Ernslaw One will be outlining just how CHPS is being used operationally by the company for their harvest planning. Further details on the event can be found on www.foresttech2013.com. Source: Scion Connections  Outback Rover helps sharpen satellite signals
A prototype autonomous vehicle, or rover, developed by CSIRO is helping scientists improve the accuracy of Earth observation satellites that provide valuable data to our mining and agricultural industries. Just as the Mars Rover Curiosity is gathering information about our neighbouring planet, CSIRO's affectionately nicknamed 'Outback Rover' is helping to calibrate satellites that provide clues to Earth's soil condition, mineralogy and vegetation. Accompanied by researchers from Japan, China, Israel and France, CSIRO scientists recently took the rover prototype on a mission to Lake Lefroy - a huge salt lake in remote Western Australia - to see if they can automate the satellite calibration process. Professor Arnold Dekker, Director of Earth Observation and Informatics at CSIRO, explains that this is where information gathered by satellites is matched against measurements taken on-ground and compared for accuracy. "Satellite data is used for resource exploration, environmental monitoring and agricultural management such as soil mapping. So it must be regularly cross-checked to ensure that observations are accurate," Professor Dekker said. "This process is called vicarious calibration and is undertaken by ground crews who walk in grids or transects, taking measurements with hand-held devices known as spectrometers, as satellites travel overhead. "With its bright and uniform surface, Lake Lefroy is the perfect location to carry this out. However its downside is that it is a long way from any urban centres, meaning it can be very time consuming and take scientists away from their other research for days on end." According to Dr Alberto Elfes, CSIRO's science leader for robotics, this could be about to change. He hopes the rover will be able to collect calibration data autonomously and send it wirelessly back to researchers. "The ultimate goal is to have the rover operate alone, with scientists from over the world able to retrieve data from it or control it remotely in real-time," Dr Elfes said. As well as ensuring the accuracy of the current suite of space travelling cameras and sensors, the information collected by the rover could also be used for the next-generation of satellites that will use high-resolution 'hyperspectral' images. "These satellites will be able to collect more detailed data, including information about dry and woody plant materials and specific mineralogical data that cannot be measured with current operational satellites," Professor Dekker said. The CSIRO team is now analysing the data the 'Outback Rover' collected on its recent mission. The hope is that it will improve the process of satellite calibration, leading to more efficient, productive and profitable mining and agricultural industries.
European sawmills triple softwood log and timber exports to ChinaAfter a slowdown in 2012, China's expanding housing market has driven up its demand for logs and timber this year. Even if Russia, Canada, US and more recently New Zealand are the major suppliers for China, the European sawmills are beginning to make their presence felt on the Chinese market.According to the latest Eurostat figures, in the first seven months of 2013, EU's softwood logs exports to China more than tripled over the same period of 2012. Romania has the lead, with a share of 28% of all European exports (and a 224% increase yoy), followed closely by France (27,9%) and Lithuania (22,9%). Softwood timber exports almost tripled as well, with Finland, Sweden and Germany accounting for 84% of the overall EU exports. Year-on-year, Finnish and Swedish softwood timber shipments to China increased three times, meanwhile those from Germany rose 304%. In January-July 2013, the combined (softwood log timber) value of exports to China reached EUR 185 million, higher by EUR 123 million as compared to January-July 2012. Source: ihb Locally made Nanotechnology instrument for AustraliaIn recent issues of Friday Offcuts we have highlighted the opportunities opening with the revolutionary new technology, nano-crystalline cellulose. This week New Zealand Crown Research Institute GNS Science announced that they beat off competition from Europe and the United States to supply a nanotechnology fabrication machine to the Australian Nuclear Science and Technology Organisation (ANSTO) in Sydney.Known as an ion implanter, it is being shipped to Sydney this week in a container. When installed at ANSTO’s facility at Lucas Heights on the outskirts of Sydney, it will be used to make advanced materials for use in hi-tech industries. ANSTO is the headquarters for Australia’s nuclear science expertise. Potential applications for these ‘new’ materials include industries such as medicine, agriculture, manufacturing, energy production, and transport. Leader of GNS Science’s Ion Beam Technology Group, Andreas Markwitz, said this was the largest single project his group had undertaken in its 15-year history. “There are probably fewer than 10 companies in the world that could build an ion implanter such as this from scratch," Dr Markwitz said. “This will open the door to other lucrative offshore work and we are already looking at the possibility of supplying a similar instrument to India.” The ANSTO deal was particularly attractive because it allowed GNS Science to book time on the implanter in Sydney to further its research and development in nanotechnology. More >>
North America - is there a rally coming?Due largely to the strength of new residential housing starts, U.S. consumption rose by 4.4 million m3 (+7.6%) to 62.5 million m3; Canada’s growth was even higher, up by 10.8% to 15.8 million m3. For the first six months of 2013, U.S. consumption was up by some 8% versus the same period in 2012, while Canadian consumption dipped by approximately 5%.U.S. softwood lumber output in 2012 was 48.8 million m3 (+7.2%), compared with 45.2 million m3 in 2011 (figure 3). Production gains were spread fairly evenly across the U.S., with the West having a slight edge over the South in terms of percentage change from 2011 (6.7% versus 6.0%). Canada’s sawn softwood production rose in 2012 to 39.4 million m3, an increase of 5.4% from 37.4 million m3 in 2011; however, it was still well below the 2004 peak of 62.2 million. In the first six months of 2013, U.S. and Canadian shipments were both higher by about 5%. At 8.8 million m3, North American producers’ offshore exports in 2012 were similar to those seen in 2011: total exports, including trade between Canada and the U.S., increased by 3.3% to 27.7 million m3 (figure 4). With strong demand and much higher prices in 2012, most of the trade stayed within North America (where the returns were the highest). However, increasing demand and prices in Japan allowed for higher exports from the U.S. (+15.2%) and Canada (+12.2%). Exports to China were lower from both the U.S. (-37.2%) and Canada (-15.1%) following a mid-year slowdown. However, in the first six months of 2013, U.S. and Canadian exports to China picked up (albeit from relatively low levels) due to steady demand. Closer to home, Canadian shipments to the U.S. grew by 7.7% in 2012 to 13.4 million m3, and then again by 22% in the first six months of 2013. Source: International Wood Markets Group, www.woodmarkets.com . CHH Kinleith mill wins over electrical outageThe Electricity Rulings Panel has handed down heavy sanctions against the national grid System Operator in a case involving an unplanned outage that closed Carter Holt Harvey’s Kinleith pulp and paper mill in New Zealand. In one of its toughest rulings to date, the panel fined the System Operator – an independent unit embedded in the same building at the grid owner, Transpower – for “deficient” processes causing an incident of “high severity” involving a “systemic” error on Oct. 27, 2010.The main reason for the outage was data wrongly entered in the grid management system by the System Operator some five years earlier, and which was never picked up. Instead of setting the system to react to incidents exceeding Guaranteed Maximum Load, it was set incorrectly to “Rating” values. The panel describes how, after power was fully restored to Kinleith, “the System Operator’s immediate response … was to set the asset ratings to the Guaranteed Maximum Load levels offered by the grid owner.” It was not until the following March that the System Operator self-reported the breach of its governing regulations. Investigations, hearings and additional alleged breaches brought by CHH meant it took another two and a half year to get a ruling. From a maximum fine possible of $20,000, the System Operator was fined $15,000. The panel also ordered compensation, understood to be just short of $500,000, to CHH for a loss of supply that had serious consequences for an industrial operation designed to run continuously and exposed to damage if shut down without warning. The exact compensation sum is confidential, and the System Operator will only pay $200,000 because regulations prevent it making compensation payments above that level. Had the incident occurred just a couple of months later, the maximum available fine would also have been $200,000, after the rules were toughened to further encourage fault-free management of the national grid. While the outage itself lasted less than four hours, the Kinleith mill was out of action for more than a day. The failure was especially poor because CHH had been alerting the grid managers for some days before the outage to unusual operating conditions, which were causing spikes in load on that part of the grid, covering the Tokoroa area. CHH was concerned because its back-up generators were undergoing maintenance at the time. “Despite its efforts, it suffered a break in electricity supply,” the rulings panel, chaired by Wellington lawyer Peter Dengate Thrush. Source: Scoop Fresh take on Forestry Tasmania’s booksA new accounting method has revealed Forestry Tasmania's financial losses over the last three years were far higher than first reported according to ABC News this week. Government businesses have overhauled the way they report their annual results, in line with changes imposed on the private sector by the Australian Securities and Investments Commission.It means state-owned companies are now required to include non-operating costs, like asset revaluations and superannuation liabilities when reporting their final results. Under the new formula, Forestry Tasmania's AU$12 million loss in 2010-11 becomes AU$129 million. The following year its loss amounted to AU$71 million, again significantly higher than the reported AU$27.5 million. A significant decline in the value of the state forest estate is mostly to blame. It has fallen by more than $200 million over the past four years. Source: ABC News New General Manager NSW FPAWith the impending retirement of Russ Ainley in December 2013, Maree McCaskill has joined the NSW FPA as the new General Manager. She has considerable experience in managing peak industry bodies/membership organisations that represent their members at state and federal level and has often been in the hot seat with the media.Her previous roles have been as CEO of the national bodies for the cotton industry, leather, hides and skins industry, beverage industry and her last 7 years with the publishing industry. She has previously chaired the R&D Corporation for wool, been a director of the Zoological Parks Board of NSW and in her early career was the Deputy Director of the RSPCA NSW. Maree has been a writer, commentator and presenter for newspapers, magazines, radio and television. Source: AFPA Canopy Scientists strike gold in leaves
Eucalyptus trees in the Kalgoorlie region of Western Australia are drawing up gold particles from the earth via their root system and depositing it their leaves and branches. Scientists from CSIRO made the discovery and have published their findings in the journal Nature Communications.
"The eucalypt acts as a hydraulic pump - its roots extend tens of metres into the ground and draw up water containing the gold. As the gold is likely to be toxic to the plant, it's moved to the leaves and branches where it can be released or shed to the ground," CSIRO geochemist Dr Mel Lintern said. The discovery is unlikely to start an old-time gold rush - the "nuggets" are about one-fifth the diameter of a human hair. However, it could provide a golden opportunity for mineral exploration, as the leaves or soil underneath the trees could indicate gold ore deposits buried up to tens of metres underground and under sediments that are up to 60 million years old. "The leaves could be used in combination with other tools as a more cost effective and environmentally friendly exploration technique," Dr Lintern said. "By sampling and analysing vegetation for traces of minerals, we may get an idea of what's happening below the surface without the need to drill. It's a more targeted way of searching for minerals that reduces costs and impact on the environment. "Eucalyptus trees are so common that this technique could be widely applied across Australia. It could also be used to find other metals such as zinc and copper." Using CSIRO's Maia detector for x-ray elemental imaging at the Australian Synchrotron, the research team was able to locate and see the gold in the leaves. The Synchrotron produced images depicting the gold, which would otherwise have been untraceable. "Our advanced x-ray imaging enabled the researchers to examine the leaves and produce clear images of the traces of gold and other metals, nestled within their structure," principal scientist at the Australian Synchrotron Dr David Paterson said. "Before enthusiasts rush to prospect this gold from the trees or even the leaf litter, you need to know that these are tiny nuggets, which are about one-fifth the diameter of a human hair and generally invisible by other techniques and equipment." Source: CSIRO Tasmania allocates funding under forest agreementThe State Government is getting on with the job of implementing key elements of the Tasmanian Forest Agreement which is giving industry the confidence to invest in the future. Mr Green announced a AU$1.05 million project at Torenius Timber at Forcett to expand and value-add to its sawmilling business at Forcett.“The development is being supported by a $750,000 grant under the TFA which will see the company produce higher value timber products. The company is expanding its timber drying operations, building a solar kiln and installing a new finger jointing line,” Mr Green said. Mr Green said the construction of an integrated firewood handling facility would also process residues from the mill. Mr Torenius said his company’s investment not only secured existing jobs at his sawmill but would create new job opportunities. “Skilled timber mill workers in the district lost their jobs when the Kelly Mill at Dunalley was destroyed in bushfires and some of those workers will now have chance to stay and work in our community,” Mr Torenius said. Mr Green said the Tasmanian Forest Agreement has put the forest industry on a path that provides both security and new opportunities for the future. “We have already seen innovative new growth plans from Britton Timbers and Ta Ann in Smithton, SFM Environmental Solutions in Hobart, Barry Hill Timbers near Ulverstone and at Artec Industries at Bell Bay. “Artec is the State’s only major residue processing facility and its ability to continue operating is crucial to the future of the industry. Funding assistance of AU$5.5 million has been made available through the TFA Residue Market Facilitation program to enable the business to consolidate its operations through greater efficiencies at its Bell Bay operation. Mr Green also announced that the Tasmanian Native Forest High Quality Sawlog Contract Voluntary Buyback Program has also been finalised. Applications have been accepted from four sawmillers seeking to retire all or part of their minimum contracted volume under the TFA. “This federally funded $15 million program has enabled sawmillers to voluntarily reduce their contracted volume to match the timber volumes agreed under the TFA.  Jobs
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...and one to end the week on...logging monster trees
 And on that note, have a great weekend. Cheers. Brand PartnersOur Partners & Sponsors Friday Offcuts is made possible through the generous support of the following companies.
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