Friday Offcuts – 22 December 2011
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What a year 2011 has been! From revolution across the Arab world to natural disasters in Christchurch, Queensland and Japan, from the euro zone crisis to a tabloid phone hacking scandal, from the demise of Osama bin Laden to the Royal wedding and of course the All Blacks winning the Rugby World Cup. It really has been a remarkable year!
For the forest products industry, it appears the only constant for 2011 has been change. We’ve had seismic shifts in forest ownership, changes around the rules relating to land use, ground breaking agreements for the management – and protection - of Tasmanian native forests, new legislation for carbon trading, a long overdue rationalisation of industry associations, significant changes to R&D funding and delivery and an exchange rate that has set new highs – and lows - for exporters over the year.
Perhaps the most significant change to the forestry landscape over the last 12 months has been in forest ownership. Announcements have been made throughout the year. We tend to take it on board and then move on with our business. Collectively though, rationalisation and consolidation of Australasian forestry plantations has continued at a break neck pace since the MIS shake-up last year. So, just how big has the change been?
Institutional investors, largely US based forestry investment funds, have tended to dominate forests and associated land sales in 2011. The timber land assets of Great Southern Plantations sold for AU$415 million (the largest private forestry estate transaction seen in Australia at the time), Gunns softwood plantation estate (land and remaining trees) in the Green Triangle region, the Queensland Government’s plantation timber business, Forestry Plantations Queensland, Willmott Forests plantation assets and as reported last week, 46,000 ha of Tasmanian softwood forests have all been sold - or in the process of being sold. Sales have largely been to timberland investment management organizations (TIMOs) as well as a mix of local and offshore investors. The For Sale sign has also just gone up on the cutting rights to 81,000 ha of South Australia’s plantation forests.
To put this into perspective, over 370,000 ha (principally cutting rights) of plantation softwoods or over a third of Australia’s total softwood plantations has changed hands this year. Across the Tasman, in addition to several smaller parcels of forest blocks being sold to overseas interests, CHH sold more than 17,000 hectares of CNI forestry blocks to a US led group of investors. The ownership of production forests and make-up of the new owners in Australia – and to a lesser extent New Zealand - has shifted dramatically since the beginning of the year.
With the dramatic changes that have occurred this year I think we’re all now looking forward to 2012 with some optimism. Enjoy the break with your friends and family and we look forward to bringing you the very latest in news and coverage of key issues and technologies impacting on your business in the upcoming year. Our first issue for 2012 will be out on Friday 20 January.
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This week we have for you:
Russia finally joins WTO
The World Trade Organization has given its second and final approval for Russia's membership in the trade body after a record 18-year quest to join. The 153-nation global trade body approved by consensus Russia's application for membership last Friday, giving a boost to the ailing economy of its biggest trading partner, the European Union. Until now, Russia has been the only member of the Group of 20 leading economies still outside the WTO.
The Russian parliament will have up to June 15 next year to ratify the accord and bring it into force. Moscow's lead negotiator Maxim Medvedkov said earlier he expected the deal to be ratified "early next year". The deal is expected to quickly increase EU exports by some 4bn euros (US$5.45bn) a year.
For Finnish export companies, annual savings worth up to hundreds of millions of euros are expected as a consequence of the move. Timo Jaatinen, CEO of the Finnish Forest Industries Federation, estimates that the duties for softwood imported from Russia will be cut by about half. At the same time, the duties levied on hardwood will reduce by about three-quarters from the present level.
Assuming that the imports remain at the current level, the reduction in Russia’s export duties will bring the Finnish forest industry savings of approximately EUR 20 million, Jaatinen calculates. The exports of paper and paperboard will produce annual savings of about EUR 10 million.
Class action likely against Sino Forest
One of Canada’s largest pension funds has joined a lawsuit seeking millions in compensation from Sino-Forest Corp., its management, directors, auditors and a slew of Bay Street firms that helped the scandal-plagued forestry firm raise capital from investors.
The British Columbia Investment Management Corp. (BCIMC), which has $90-billion in assets under management and is an agent of the provincial government, has joined a proposed class action lawsuit led by Toronto legal firm Kim Orr Barristers P.C. and Milberg LLP of New York City, according to documents filed with the Ontario Superior Court of Justice.
BCIMC is, by far, the largest single investor to commence legal action against Sino-Forest, which was once the most valuable forestry company listed on the Toronto Stock Exchange, boasting a market value of more than $6-billion before fraud allegations made by U.S. short-selling firm Muddy Waters caused the stock to collapse in July.
The BCIMC legal action caps a brutal week for Sino-Forest, which is now teetering on the brink of collapse. Last week, Sino-Forest warned it could not file its financial results and expects to be tipped into default by holders of its $1.8-billion in debt.
Sino-Forest’s largest shareholder, Singapore’s Richard Chandler Corp (Mr Chandler is a New Zealand investor), is demanding that the Sino-Forest board of directors resign and that the company’s new chief executive officer, Canadian Judson Martin, be sacked. Chandler and Sino-Forest’s second largest shareholder, Davis Advisors, are demanding that the company stop preserving cash and make a $10-million interest payment on its debt due 15 December. Source: the Globe and Mail
More related to this story:
• Key Sino-Forest investor says replace CEO, directors
• Sino-Forest’s largest shareholder 'disappointed'
• Moody’s withdraws Sino-Forest rating
Carbon-reinforcing technology showing real promise
Of interest to those supplying wood into the building and construction markets is the planned commercialisation in 2012 by Eden Energy of its concrete strengthening technology. Eden, through U.S. subsidiary Hythane Company, produces carbon nanotubes and nanofibers that can be added to concrete to increase its flexural strength.
Preliminary tests show that certain concrete formulations have increased flexural strength of between 15% and 30% after seven days. Increasing the flexural strength of concrete is a boon for the construction industry, allowing for reduced concrete beam dimensions and consequently thinner floors, reducing overall building height.
Eden has been researching concrete reinforced with its nano-carbon products for several months, with tests being carried out by the Hythane Company team in Colorado, as well as in India and Australia under industry and academic collaborations.
For full details on the story and link to the study, check out the latest R&D Works Newsletter
New President and CEO of Innovativ Vision
On 1 December, Jonas Eklind took up his new role as President and CEO of Innovativ Vision AB in Linköping, Sweden. With its WoodEye timber scanner, Innovativ Vision is a leading supplier of systems for quality and production control within the wood manufacturing industry. Jonas Eklind was acting CEO of Innovativ Vision in 2009-2010 and has been CEO of various other international technology companies, some with a focus on process management. Jonas Eklind succeeds Mats Warstedt, who has left Innovativ Vision to head up a different company.
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