Friday Offcuts – 24 August 2007
Click to Subscribe - It's FREE! We ran a story last week on the concerns being expressed in Australia that the planned AU$1.5 billion Penola Pulp Mill might not proceed. The reason? The South Australian State Government has a new water licensing policy. Environment Minister Gail Gago announced in Parliament that the commercial forest industry in the Lower South-East will need a licensed water allocation equal to the amount of groundwater deemed to be extracted by trees.Understandably the announcement has caused a major uproar in the timber industry over this last week or so. The new water rules are casting doubt on the AU$1.5 billion project that's planned in Penola. The licensed water allocations will affect Protavia's ability to write long-term contracts with blue gum suppliers. The proposed pulp mill needs a wood resource guarantee of 20 years to proceed. With blue gum plantations having a rotation length of only about eight years, of course that tenure is now under threat. In addition to putting the pulp mill project in jeopardy, large forest owners such as TimberCorp say they won't be able to continue their current planned expansion because of the new rules. Rumours at the moment are going round that companies may not be able to replant, and other plantations would have to be moved. Alan Hansard, CEO of Tree Plantations Australia says the proposed policy won't provide security and will provide uncertainty for forest owners and investors going forward. He says that the policy in its draft form would force the plantation industry to abandon about fourteen thousand hectares of proposed plantings in some regions. Pressure on Premier Mike Rann to intervene and reverse the water policy has come from a joint letter signed by the three CEO's from Timbercorp, Great Southern Plantations and ITC who believe the Penola Pulp Mill to be in jeopardy. The trio believe the water policy is counter to the need for resource security for a sustainable wood fibre industry and basis for new value-adding industries including the Penola Pulp Mill. The industry will be approaching Mike Rann directly in an effort to get the issue of the future of timber plantations in the region and water allocations clarified.
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ArborGen acquires international tree improvement operationsRubicon informed the market today, that, ArborGen - a world leader in forestry biotechnology research, development and commercialisation, which is one-third owned each by Rubicon, International Paper and Mead Westvaco - has announced that it has entered into a series of agreements to acquire the respective tree improvement businesses of IP, MWV and Rubicon (i.e. Rubicon's Horizon2 business) for a total transaction value of US$60 million.Luke Moriarty, the Chief Executive Officer of Rubicon said, "This is an extremely important development for ArborGen - one that will allow ArborGen to significantly advance its business model. In one move, the acquisition of the United States nursery, orchard and tree improvement operations from IP and MWV, and the acquisition of the equivalent Australasian operations (i.e the Horizon2 business) from Rubicon, fundamentally repositions ArborGen from a business in development to an established commercial entity." The combination of these three leading operations into ArborGen's existing activities will provide ArborGen with an immediate and large presence in the sizeable North American marketplace. The combined IP and MWV businesses being acquired had sales of over 300 million treestocks last year, which represented well over a third of the entire pine treestock market in the US South and almost 15% of the hardwood market. It also gives it immediate operational scale, by having operations in 20 locations, spanning 4 countries (the US, Brazil, New Zealand and Australia) and employing over 185 staff. Mr Moriarty added "This transaction is positive not just for ArborGen but also for Horizon2's existing New Zealand and Australian customers". The overall transaction has been structured to ensure each Partner maintains its 33.3% ownership interest in ArborGen following the acquisitions. To enable this to occur Rubicon has acquired from Carter Holt Harvey (for $10 million) the 50% interest in Horizon2 that Rubicon did not already own. The closing of Rubicon's 50% Horizon2 acquisition is conditional upon the receipt of New Zealand's Overseas Investment Office (OIO) approval. The total ArborGen transactions are, in turn, dependent upon Rubicon's Horizon2 transaction with CHH closing and OIO approval being received for ArborGen to then acquire 100% of Horizon2 from Rubicon. Improved efficiencies in road freight for forestry companies
Freight by road in New Zealand is big - and growing. Apart from general freight, the movement of logs, manufactured forest products and wood by-products is the largest freight commodity group in New Zealand. Annual volumes carted by road are currently around 31 million tones each year and this is projected to increase by 10-15% over the next five years as new forests come on stream in regions such as Northland, East Coast and Otago/Southland. New Zealand road freight is expected to almost double by 2020 and is expected to be greater than the country's economic growth.To assist in increasing transport productivity, the forest products industry has been recently involved in a Heavy Transport Review that's being driven by MOT and Transit. A detailed submission was put forward by the NZFOA on behalf of the forestry industry. The submission proposes four vehicle configurations that aim to improve load stability, improvements in productivity and improved fuel efficiency. A suite of concession routes has also been suggested which could result in 84,000 less truck loads, 3.5 million less diesel fuel and $4 million extra road user charges paid. Details of road transport - in addition to rail and shipping issues facing the forest products industry in both New Zealand and Australia will be covered in the upcoming Value Chain Optimisation 2007 conferences that run in Melbourne on 13-14 September and again in Rotorua for the NZ industry on 18-19 September. Full programme details can be downloaded from www.innovatek.co.nz. Lessons from Victorian log auction systemDr. David Pollard, CEO of VicForests spoke at an industry meeting on 11 May in BC. The title of the presentation was "Issues in Corporatisation in Australian Forestry: with particular reference to the Victorian auction system."The presentation discussed the experiences of the Victorian State government which has set out new directions for forestry. This includes the abolition of licenses for the exploitation of publicly owned timber, and their replacement with contracts for future supply through an auction system administered and run by VicForests. VicForests introduced a well documented commercial market-based framework for the pricing and allocation of native forest timber products. The auction system has been touted a success in terms of rational pricing for the resource, driving value adding, and providing incentives for mergers among sawmills. However, as outlined by David Pollard, there are still challenges. The presentation outlining the history of Australian public native forest management and details on the development, design and implementation of the ViForests log auction system is attached here for your information. Source: BC Forum on Forest Economics and Policy Change of heart on Gunns bid
In a surprise move late last week, timber company Auspine's board recommended that its shareholders consider the AU$330 million takeover bid from Tasmanian company, Gunns. A one week extension on the AU$6.15 offer was sought after the original offer was due to expire on Friday. Earlier in the week the company had made a statement that the Gunns' offer was inadequate and anyone who sold to Gunns would miss out on a 12c dividend. Auspine Directors in a statement to the stock exchange on Friday said that Auspine Shareholders should consider the offer because of the softening market and volatility seen in the global share-market last week. Gunns has since increased its share in Auspine from 33.5% to just under 50% and Auspine says the Tasmanian timber company Gunns could take a seat on its board now that its the major shareholder.Native sawmilling Co certified in New ZealandLindsay & Dixon Ltd, a Southland based native forestry and sawmilling company is the first company directly related to the timber industry to be approved and accredited under the new MAF Bio Security Export legislation effective from September 1 2007. Lindsay & Dixon is the only FSC certified native forestry and processing company in New Zealand and remains committed to the principles and criteria of sustainable and legal forestry management.Impact of B.C. forestry strike deepensThe impact of a month-old strike by British Columbia's coastal forestry workers deepened last week with the announcement of layoffs, a production cut and lockout notice all landing on the industry from three separate companies. About 7,000 coastal forestry workers represented by the United Steelworkers walked off the job on July 21. Key issues are work scheduling, severance and protection from contracting out. No talks have yet been scheduled.The last time B.C.'s coastal forestry workers went on strike was in 2003. That strike ended after three weeks when the provincial government stepped in and appointed Don Munroe, a long-time mediator and arbitrator, to direct a new contract. The union planned to start a publicity campaign at Home Depot stores across Canada last weekend asking customers to not buy lumber manufactured by companies where the workers are on strike. Source: Canadian Press World's largest timber clock to be built in WAThe Shire of Nannnup in Western Australia is planning to build the worlds largest all timber clock as part of an AU$2 million town centre. All of the cogs, every working component will be made out of wood. The clock will be the feature at the entrance to a new building and will have a mezzanine floor which you can view the workings of the clock. The federal government has contributed just more than $400,000 to the project. Source: ABC South West WANZ Conservation House built with Aussie woodRevelations that the new Conservation House used large volumesof Australian imported timber makes a joke of the Government's claim that the building is a model for sustainability, says National's Conservation spokesman, Nick Smith. In answer to parliamentary written questions, Conservation Minister Chris Carter has admitted that Conservation House, opened earlier this year, used 8700 metres of Victorian Ash and Tasmanian Oak, and a further 320 square metres of Hooped Pine at a cost of MZ$78,450. "Helen Clark and Chris Carter called the new Department of Conservation headquarters "the first fully refurbished, equivalent 5 star ecologically sustainable building in the country" and highlighted its key attributes, including the "use of Environmental Choice NZ products". "The Government's use of imported Aussie timber in its model "carbon neutral" sustainable building is an awful gaffe and an insult to New Zealand's forest industry". More >> Shipping costs surge on Chinese demand
We know how the costs of shipping have increased. How much? A report sent in by a reader says that the cost of shipping dry bulk commodities, such as coal, iron ore and cereals, has surged to a new high boosted by strong demand, port congestion and a significant lengthening of trade routes.The Baltic Dry Index, the best gauge of the world's dry bulk shipping costs, on 5 August rose above 7,000 points for the first time Wood-based panels growth expected in EuropeEUWID has reported that about 65 production lines for wood-based panels would be coming on line between 2007 and 2008, with Europe receiving the bulk of the projects. By the end of 2007, 36 new production lines would be online around the world, with 13 in Europe. Europe will receive 26 of the 66 product lines commissioned globally by the end of 2008. More than have of the firm orders placed with European plant builders are for MDF/HDF facilities. Source: ITTO TTM ReportNZ Timber Design Guide - Nationwide launch plannedThe 3rd Edition of the Timber Design Guide is an essential reference for merchants or specifiers wanting to use timber and wood related products for their particular project. This brand new edition includes many recent developments and photos ranging from the new timber grading rules to design of multi-storey timber buildings. Other new chapters include design for lateral forces and the design of bolted and epoxied joints.Parliament resumes to consider pulp millState Parliament resumed on Tuesday for a special sitting to consider Gunns' AU$1.5-billion pulp mill project. MP's are expected to spend this week trawling through 1100 pages of permits and conditions for the mill with days of briefings planned before they debate the project.Weinig Group Acquires LuxScan TechnologiesWith the acquisition of Luxemburg scanner manufacturer "LuxScan", the Weinig Group is setting a strategic course for the future market development. "We know that the market for products in the wood optimization sector is large and that the technology required for it continues to offer great potential for innovation", explains the Chief Financial Officer of the Weinig Group, Karl Wachter, talking about the reasoning behind the acquisition. The Luxemburg company's product line covers the whole scanner spectrum for the complete solid wood manufacturing process chain. LuxScan Technologies currently employs approximately 30 persons in Luxemburg and the USA.Jobs
Buy and Sell...and one to end the week on...mine's worn out
In the hospital the relatives gathered in the waiting room, where their family member lay gravely ill. Finally, the doctor came in looking tired and sombre. 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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