Friday Offcuts – 9 March 2012

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We’ve covered three carbon related stories in this week’s issue. In the first, thankfully the brakes have been put on falling carbon prices in this part of the world on the back of the European market picking up late last week. The good news is that CER prices are climbing following the announcement that an unspecified number of permits are going to be withdrawn from the European market. This is expected to start in 2013 and has been set up in order to help meet the regions energy saving targets.

We have the results from a study undertaken by a Finnish organisation that found that the carbon emissions for a wooden block of flats were 5–11 percent smaller than those of a similar concrete house and the final story outlines a new study that shows Governments around the world are increasingly moving to voluntary carbon offsetting markets to engage private sector interests. A number of countries like Brazil, Chile, Colombia, Indonesia, Mexico and South Africa may well use voluntary carbon market mechanisms to underpin or supplement future regulations.

Some of these changes and recent developments re going to be detailed in this year’s Australasian Carbon Forestry event, Carbon Forestry 2012, planned for 22-23 August in Auckland. If interested, register your interest on line and we’ll keep you updated as the programme is being developed.

The other really positive news this week comes out of New Zealand. What’s more it comes from the wood processing industry that’s taken a real battering in recent months. Kaituna Sawmill at the top of New Zealand’s South Island, with predictions for a significant climb in the wood harvest from the Nelson/Marlborough forests, has just been granted consent to triple its throughput. Nelson Forest’s contribution to the regional economy as a consequence could grow from the current $36 million per annum to well over $80 million. This is a really positive shot in the arm for this region and just as importantly, for the wider industry at this point in time.

Finally, around 150 forestry and finance professionals attended this week’s Future Forestry Finance 2012 event in Auckland. We’ll cover some of the key issues that came out of this event in future issues. We’re looking forward to meeting many from the Australian industry in Sydney next week, on the 13-14 March.

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Kaituna sawmill set to expand

Kaituna Sawmill near Renwick could triple its throughput and almost double its workforce after getting planning permission to expand. The NZ sawmill owned by Nelson Forests Ltd, already has resource consent for annual log throughput of 150,000 cubic metres. A new consent will let it increase that to 500,000 cubic metres of logs.

It employs 65 people, and this will rise to about 110 and possibly more through the proposed expansion. Hiring for those extra jobs is expected to start next year. "Nelson Forests estimates that the contribution to the regional economy is currently $36 million per annum for activities associated with forestry, harvesting, transport, wood processing, and the export of logs from Port Marlborough. After the upgrade, this contribution could grow to in excess of $80 million.' said Kaituna general manager Matt Bond.

Nelson Forests had a large radiata pine resource, which made up 30 per cent of the region's total, he said. Projections showed harvest levels from Nelson and other Marlborough forests would increase from 820,000 cubic metres a year to about 1.5 million cubic metres by 2023.

Source: The Marlborough Express

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Rob de Fégely appointed IFA President

Well known forest industry consultant Rob de Fégely has been appointed the new President of the Institute of Foresters of Australia. Rob replaces Dr Peter Volker who retired last year having served as President since 2005.

Chief Executive Officer Cassandra Spencer said “We are extremely pleased that Mr de Fégely has accepted the role as President as he brings over 30 years of experience in not only all the states of Australia and across all industry sectors, but he has also worked in New Zealand, Asia, North America and Europe.

Mr de Fégely was Managing Director of Jaakko Pöyry Consulting in Australia and part of its Asia Pacific management team from 1996 to 2006. Apart from managing his own farm, forest and consulting company he is also Chairman of Cloudy Bay Sustainable Forestry Ltd in Papua New Guinea and on the Advisory Board of Craigmore Sustainables Ltd in New Zealand”.

Speaking in Canberra last week Mr de Fégely said “it is a great honour to be President of the Institute of Foresters and I am humbled to be following a long line of distinguished people who have made a significant contribution to forest conservation and development in Australia over many years”.

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IKEA replaces wood pallets with plastic

IKEA, the international furniture retailer giant, has developed plastic pallets to replace the traditional wooden pallets when shipping goods across its global operations. The plastic shipping pallets, called the OptiLedge, weighs less than two pounds and are durable and 100% recyclable.

IKEA say the OptiLedge are made from copolymer polypropylene, and feature many advantages over paper platforms. "The OptiLedge is less susceptible to moisture, maintains stiffness with flexible loads and is more durable compared to paper pallets," the spokesperson said. "The injection molding process ensures much higher levels of product consistency."

In addition, the OptiLedge may offer savings to other supply chains, as well, by decreasing the costs associated with labor, fuel, packaging and product damage, the spokesperson said.

Originally designed just for IKEA, the company decided to market the OptiLedge and make it available to other retailers and companies. For instance, Best Buy now uses the OptiLedge for products shipping from overseas to the retailer's stores in North America and around the world.

IKEA plans to phase out the use of wooden pallets across its global operations and to transition to lean alternative shipping platforms consisting of its OptiLedge plastic pallets and paper platforms.
"This dramatic move by IKEA sends a strong message to other supply chain stakeholders that there are real cost effective alternatives to traditional wooden pallets," stated Jonathan North, general manager of the business unit responsible for the OptiLedge at IKEA, in a news release. "There is nothing very unique about IKEA's supply chain, so the savings opportunities are equally applicable to other users, whether in the retail industry or not."

The IKEA spokesperson said the initiative to phase out wood pallets is an ongoing process. In North America, IKEA has already eliminated the use of wood pallets, but the spokesperson said there is still a lot of work left to do in Europe. Source: Plastics Today

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Carbon emissions from construction study

During the whole of its life cycle, the carbon emissions of a wooden block of flats are 5–11 percent smaller than those of a similar concrete house. The Energy Programme of the Finnish Innovation Fund Sitra commissioned a study on the carbon emissions of wooden apartment house compared to those of a corresponding concrete house. According to the study, the emissions from the wooden house during the construction phase were 29 percent smaller.

The study of the Energy Programme compared the carbon footprint of what is called a wood-hybrid apartment house; that is, a house where concrete was used in all floors, and of a typical and corresponding house made of concrete. The study was made by Bionova Consulting.

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Nyloboard - a new composite decking product

Nyloboard is a US manufacturer of composite decking boards, exterior trim, soffit, fascia, sheets and sheathing. The company’s composite products have been used by the marine industry for more than seven years by leading boat manufacturers in the U.S. and Canada. Last year, the company launched its new product, NyloDeck, a composite deck board. What’s unusual is that the decking product is made using 100 percent recycled carpet fibre.

Its combined with a proprietary resin and then encapsulated in a monolithic composite board. The board is then finished with edging, embossed and covered with an ultraviolet protectant. The company is tight-lipped about its product and manufacturing process, but boasts that it is the only composite decking manufacturer to use 100 percent recycled carpet fibre.

The company claims that NyloDeck is different from other composite deck products because their synthetic fibers and nylon don’t support any kind of growth. In other words, the product can be submerged in water or float on top of water and will not swell. Because of its complete synthetic nature, it is not susceptible to mould, mildew or termites.

The company’s motto is “no wood; no PVC; no worries.

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Australian and world record holder at AUSTimber

AUSTimber 2012 organisers are excited to announce that Michael Milton – world and Australian record holder, Australia’s fastest skier ever, cyclist, trekker, triathlete, Paralympian, Olympian - will be the speaker for the AUSTimber Welcome Function charity auction, Thursday 29th March.

Michael Milton is widely known as Australia’s fastest skier. He holds the Australian record for the fastest on-snow run ever – regardless of limb count. Michael Milton has won so many awards there is a separate list downloadable from his website. In addition to his long list of sporting achievements, he’s also overcome cancer, twice, he’s climbed Mount Kilimanjaro and walked Kokoda twice.

"We are very excited to have Michael as part of the AUSTimber Welcome Function charity auction. He’s inspirational and for an industry’s that been going through some tough times he’ll be able to inspire because of the life he’s led and his testing of his limits" said David Quill, AUSTimber 2012 General Manager.

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D-Shape 3D printer can print full-sized houses

The growing popularity of 3D printers, such as the Printbot or MakerBot's Thing-o-Matic, testify to the fact that additive manufacturing is slowly entering the mainstream. The devices are now small enough to fit on a desk and they can make all sorts of stuff, such as toys, chess figures, or spare door knobs.

The D-Shape printer, however, is potentially capable of printing a two story building - complete with stairs, partition walls, columns, domes, and piping cavities - using only ordinary sand and an inorganic binder. The resulting material is said to be indistinguishable from marble, and exhibits the same physical properties, with durability highly superior to that of masonry and reinforced concrete.

The building process involves a nozzle moving along a pre-programmed path, extruding a liquid adhesive compound on a bed of sand with a solid catalyst mixed in. The desired structure is erected in a single work session, starting from the bottom up.

While printing a whole house is not quite there yet, the process does show potential in the future. For full details on the story and link to the study, check out the latest R&D Works Newsletter

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NZ spot carbon prices recover from sell-off

New Zealand carbon prices inched up late last week, steadying from a sell-off that tracked a reversal in the European market following a rally on moves to possibly limit European carbon permits.

European carbon prices had rallied rebounding sharply after posting steep losses earlier in the week. Spot permits under New Zealand's emissions trading scheme were seen trading around NZ$7.95, brokers said, edging up from a closing price of NZ$7.85 on Thursday last week and have dropped only slightly this week to around NZ$7.80.

Despite the losses, selling momentum in NZUs has lost some steam in recent weeks, having picked up in late 2011 as investors sold domestic units into relatively cheaper European green Certified Emmissions Reduction credits (CERs). The selling has narrowed the spread between NZUs and CERs to around 15 NZ cents, down significantly from around NZ$1.30 earlier this year. Last month, New Zealand credits briefly fell below their European counterparts.

With much of the premium on NZUs now wiped out and prices down significantly from around NZ$20 a year ago, market participants said the incentive to dump domestic units had dissipated, and that further selling would be limited.

"With NZUs under NZ$10, forest owners don't really want to sell," said Nigel Brunel, an analyst at OM Financial. "Given that they were at NZ$20 not too long ago, they don't want to sell down here, it's not worth it at these levels." The fall from levels around $20 was sparked by weakness in the European market.

Emitters covered by the New Zealand Emissions Trading Scheme must report their 2011 emissions to the government at the end of this month. By May 31 they must surrender permits equal to half their 2011 emissions in order to meet their obligations.

But Brunel at OM Financial said he expected NZU prices would soon move back into double digits, particularly if the CER market rallies. CER prices are seen gaining as speculation brews that a significant number of EU permits may soon be taken off the market.

Source: Reuters

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Global sawlog prices falling in late 2011

Weakening lumber markets in Asia and Europe reduced demand for sawlogs in many countries late last year. As a result, log prices in a number of the major lumber producing countries in the world fell during the second half of 2011, according to the market report the Wood Resource Quarterly.

Sawlog prices in the 4Q/11 were down both in US dollar terms and in local currencies in most of the 20 regions covered by the Wood Resource Quarterly (WRQ) as compared to the previous quarter. The biggest declines occurred in Western Canada, Finland, Sweden, Russia and New Zealand, all countries that have an export-oriented sawmilling sector. Despite the recent price declines, many markets still have close to record high price levels, and are higher than they were in the 4Q/10.

Despite the slowdown in log demand worldwide towards the end of last year, global trade of softwood logs in 2011 was still the highest it had been in four years. Total trade was estimated to be close to 95 million m3, which was nine million m3 higher than the previous year and as much as 24 million m3 more than the bottom-year of 2009. New Zealand, the US, the Czech Republic, Canada and Australia have seen the biggest increases in softwood log exports over the past few years. Russia is still the largest exporting country, but its share of total exports has diminished.

Source: Wood Resources International LLC,

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MAF to become Ministry for Primary Industries

The importance of the whole primary sector to New Zealand’s economy is recognised in the NZ Government’s decision to rename the Ministry of Agriculture and Forestry, says Primary Industries Minister David Carter. The new Ministry for Primary Industries will encompass all government work across the agricultural, horticultural, fisheries and aquaculture, forestry and food sectors, as well as biosecurity. The Crown Forestry brand will be retained because it is a commercial forestry business that stands apart from the policy, regulatory and service delivery roles of the Ministry. The new name will come into effect on 30 April. More >>

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July start up for Amcor’s new AU$500M machine

Amcor Ltd. expects to start up a new recycled containerboard machine at its mill in Botany, New South Wales, Australia, this July, but is not projecting any increase in production capacity, reported ProPrint. While the AU$500-million paper machine is being commissioned, the Australian packaging producer plans to phase out three older machines, canceling out any net increase in capacity.

The new containerboard machine, described as “world class,” will produce a broader range of lightweight and higher-quality papers used in making corrugated boxes, according to Amcor. The company forecasts that annual savings from the new paper machine will be AU$40 million when full production is reached by the third year. The net cost of the new paper machine is expected to drop to AU$280 million once land sales are completed.

To ensure that it remains competitive, Amcor is managing rising energy and labour costs but needs to raise its selling prices, a spokesperson said. The company reported that it had cut its energy use by 34%, its water use by 26%, and its waste sent to landfill by 75%, ProPrint reported.

Source: ProPrint

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New trends identified in timberland investment

A new study on global timberland investment economics has identified some major shifts in the species and regimes that have been attracting timberland investors over the past five years.

According to study co-author Dennis Neilson of DANA Limited, in the five years since the last such study was completed, a distinct shift has been made from almost exclusively investing in the traditional species of pines and firs for sawlog production. More recently many investors (including TIMOs and Endowments) are placing an increasing part of their portfolios with new exotic species, regimes and countries.

The most notable of these is teak, which is now being grown by major investors in several countries including Panama, Guatemala, Nicaragua, Ecuador, Brazil, Tanzania and Mozambique; and with Ghana likely to follow soon. An analysis of over 100 Growing Cost/IRR case studies globally identifies a major advantage in growing teak over many other species. This is a potential for an early return to project net positive cash flows many years before the 20-25 year clearfell age - due to the high value of early thinned logs. There is no similar advantage when investing in growing D. fir or southern yellow pines in the United States.

Another significant trend is the move to growing short rotation energy crops in Latin America and Europe. Some crops now funded by institutions are being harvested every three years. However, attempts to grow these crops in the US South have yet to be proven to be economic. Indeed early signs are that this regime is decidedly not economic at current wood energy prices.

The study has also identified what may be a new wave of timberland investment opportunities over the next 5-10 years. These include a very important global plantation species - rubber wood - which to date has been overlooked/neglected by timberland investors. Not only does it provide early positive cash flow from rubber tapping which hugely reduces net growing costs, but at 20-25 years the wood from the trees can be used for various end uses, from biomass to high value furniture. IRR returns are very attractive. Another "emerging" species may be bamboo, which can also earn very high returns; and other exotics such as African Mahogany and Indian sandalwood.
For further information on the new study, contact Jan Hansen at

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Voluntary carbon offset programs gathering steam

With the future of an international climate agreement still in flux, governments worldwide are turning to voluntary carbon offsetting markets to engage private sector climate actors – and to provide the tools that could shape tomorrow’s regulated carbon markets, according to a study by Ecosystem Marketplace, a project of nonprofit Forest Trends.

At least 21 such government programs are currently underway, and nine of these have emerged in the last four years, according to Bringing it Home: Taking Stock of Government Engagement with the Voluntary Carbon Market. The report profiled 13 such initiatives, of which five were set up by subnational regulators – three in the United States, one in Canada and one in Italy – and eight by national governments in Asia, Latin America and Europe.

The report found that national and sub-national governments’ use of private-sector tools to meet carbon-reduction aims can be partly traced back to the influence of early regional actors such as South Korea and Oregon, as well as to international development multilaterals, and to organizations such as Japan’s Institute for Global Environmental Strategies.

Fifteen countries have joined the World Bank’s Partnership for Market Readiness and another six – Brazil, Chile, Colombia, Indonesia, Mexico and South Africa – could use voluntary carbon market mechanisms to underpin or supplement future regulations. South Africa, in particular, might consider allowing offsets of voluntary origin to be used under its proposed carbon tax, the report says.

The study finds governments have moved beyond their traditional role of providing oversight for voluntary offsetting programs to now performing services ranging from the certification of projects and development of carbon-reduction methodologies to registering offsets and educating buyers.

A report released in January predicts the amount of carbon trading in North America to double this year. The volume of permits and credits traded could reach 179 million tons, valued at $782 million, according to Thomson Reuters Point Carbon.

Source: Environmental Leader

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Buy and Sell

...and one to end the week on...Seamus and Bessie

An Irish farmer named Seamus had an accident with a truck and he was suing the trucking company.

In court the trucking company’s hot-shot solicitor was questioning Seamus.

Solicitor: 'Now didn't you say to the Police at the scene of the accident "I'm fine?"'

Seamus: 'Well, I'll tell you what happened. I had just loaded my favourite cow, Bessie, into the...'

Solicitor: I didn't ask for any details, just answer the question. Did you not tell the Police officer, at the scene of the accident, "I'm fine!"'

Seamus: 'Well, I had just got Bessie into the sidecar and I was driving down the road....'

Solicitor: 'Your Honour, I am trying to establish the fact that, at the scene of the accident, this man told the Police on the scene that he was fine. Now several weeks after the accident, he is trying to sue my client. I believe he is a fraud. Please tell him to simply answer the question.'

By this time, the Judge was fairly interested in Seamus's answer and said to the solicitor:'I'd like to hear what he has to say about his favourite cow, Bessie.'

Seamus thanked the Judge and proceeded.

Seamus: 'Well as I was saying, I had just loaded Bessie, my favourite cow, into the sidecar and was driving her down the road when this huge lorry and trailer came through a stop sign and hit me right in the side. I was thrown into one ditch and Bessie was thrown into the other. I was hurt very bad like, and didn't want to move. However, I could hear old Bessie moaning and groaning. I knew she was in terrible pain just by her groans...

'....Shortly after the accident, a policeman on a motorbike turned up. He could hear Bessie moaning and groaning, so he went over to her. After he looked at her, and saw her condition, he took out his gun and shot her between the eyes.

'....Then the policeman came charging across the road, gun still in hand, looked me up and down, and said, “How badly are you hurt?”

Now, what would you have said?

And on that note, have a great weekend. 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:

This week's extended issue, along with back issues, can be viewed at

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