Friday Offcuts – 11 June 2010

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A big day today. Friday Offcuts this week celebrates a major milestone. Today marks five years to the day that the Offcuts e-newsletter was first sent out to readers - in its web-based format. The growth, following and feedback has been nothing short of sensational.

After five years we're still going strong. Each and every week we're still getting a substantial number of new subscribers signing on. It's now widely recognised as the principal weekly communication covering breaking news, national and international issues impacting on local companies, technology updates, employment, equipment and sales for all those directly involved in the Australasian forest products industry.

The e-newsletter has now been sent out well over one million times to subscribers inbox's - and read of course by many more. In the last eighteen months we've been delighted to be able to work with a cross section of forest managers and forestry contractors on both sides of the Tasman to develop the WoodWeek weekly e-newsletter which now comes out on a Wednesday. This supplements your regular Friday news fix.

Thanks to all our readers, contributors and advertisers for your ongoing support. We're looking forward to adding some exciting new features that you've suggested, growing the readership, ensuring the weekly e-newsletter remains relevant and of course, continue the quality of direct weekly communication we've developed with you over the last five years through to the next five. To celebrate, we'll add a few more stories to the last story of the week. Come on be honest, this is the one you go to first time every week - isn't it.

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This week we have for you:

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NZ-Chinese joint-venture for European timber exports

Wellington-based forest industry company Forme Consulting Group is planning a major joint venture with a Chinese manufacturer, Tianjin Sunwin Group, to process wood into eco-friendly, high quality components for the European building industry. The companies plan to use a new environmentally safe wood modification process to modify the softwood, radiata pine, from New Zealand plantations into products suitable for substitution of threatened species.

The processing will be done at a factory the companies propose to build near the giant and rapidly-developing port of Tianjin, near Beijing. About 100,000 cubic metres of high grade pruned logs would be primary processed in New Zealand and shipped for further processing in Tianjin.

This is an export project of benefit to both cities - Tianjin and Wellington - and is made easier by the Free Trade Agreement between New Zealand and China. Negotiations on the joint venture with Sunwin are being brokered by Jon Dey of Forme Consulting Group. Mr Dey sees China as the central point of the project's value chain.

A Memorandum of Understanding was signed on 9 June in Tianjin as part of the visit of Wellington's mayoral delegation to China this week. Mayor Kerry Prendergast and delegates were on hand to witness the signing. An application for official consent will be made in Tianjin to build the wood modification factory on about 120 ha of land that forms just part of the vast, 30-square-kilometre Dongjiang Tianjin port - the world's fifth-largest. The wood modification plant would be the centrepoint of a wood processing "cluster village" where locals would be employed to develop the treated wood into the components required by the building industry in Europe.

The modified wood will be used by the high value sector of the European building industry to replace tropical African hardwoods. This is because several European countries are restricting their use of tropical hardwoods to help prevent the deforestation of the world's rainforests. High grade radiata pine logs will be sawn and kiln-dried in New Zealand before being shipped to the new wood modification factory in Tianjin.

China's building industry is also a market for the modified radiata pine. The planned start-up date for the joint venture is late 2012.

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Wood Supply Chain tools outlined in 2010 series

Following on from the running of the Wood Supply Chain Optimisation 2010 technology series, we've had a lot of interest from those involved in forestry planning, harvest and wood flow scheduling, transport, logistics and distribution to access details relating to what the new technologies are and how they're being employed to improve the bottom line.

Close to 250 attended the technology programmes that ran in Melbourne on 19-20 May and again in Rotorua the following week for New Zealand forest products companies. A feature of this latest technology series was linking some of the new innovative tools that have recently been developed by leading technology providers from around the world with some of the smarter local companies who have adopted, integrated and are using the technologies to improve their return and efficiencies within the supply chain.

For those that were unable to get to either event, limited copies of the proceedings can still be ordered here.

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Subsidies to help Tasmanian forest contractors

Tasmania's forest contractors will receive subsidies to enable them to harvest timber from outlying logging coupes under a new plan detailed by the state government. Resources Minister Bryan Green said the AU$3.6 million package was developed in consultation with the forest industry, which has been experiencing a downturn and forced contractors to keep transport costs low.

"Using the AU$3 million assistance package, forestry contractors will be able to work in outlying coupes, that have a higher percentage of sawlog and wood suitable for rotary peeling," he said. "The remaining AU$600,000 will be provided to assist silviculture contractors whose businesses have been heavily affected particularly by the collapse of the managed investment scheme companies."

Mr Green said as a result of the package, he expected most harvesting and cartage contractors to be working for the next six to 10 months at about 70 per cent capacity. Tasmanian Forest Contractors Association chief executive Ed Vincent welcomed the package.

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China paper mill closures to over 4 million tonnes

China's central government has targeted over 4 million tonnes/yr of non-wood pulp and paper mill capacity for closure this year, eclipsing its earlier target of just 530,000/tonnes/yr. China set a new target of 4.32 million tonnes/yr that's to be closed by the fourth quarter, according to its Ministry of Industry and Information Technology.

This latest round of capacity closures, nearly eight times bigger than the total originally slated for 2010, is expected to target straw pulp, "low grade" printing and writing papers, and containerboard, among other grades. Government-mandated closures in China have happened periodically since 2006, after China passed its eleventh five-year plan for the adjustment and revitalization for the pulp and paper industry.

But industry participants were little aware it until mid-2007 as the country geared up for the 2008 Olympics Games in Beijing and closures began happening at a rapid pace. The Chinese government, which has shuttered hundreds of non-wood pulp and paper mills as part of an effort to reduce pollution and modernize the industry, closed an estimated 6.5 million tonnes/yr of total capacity from 2006-2009 including from a second wave that occurred last year. If China reaches its 4.32 million tonne target this year, that would bring the total estimated closures to 10.82 million tonnes/yr of capacity.

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Major international companies drawn to ScanTECH 2010

ScanTECH 2010 is the most complete line-up of international and local technology providers in the area of sawmill scanning and optimisation ever seen in this part of the world. In addition to local suppliers, MPM, Canada, Comact, Canada, JoeScan, USA, ScanMeg, USA, MICROTEC, Italy, and USNR, USA will be participating in this latest technology series.

In addition to rapid advancements that have been made in X-Ray and CT scanning and acoustic tools - from the merchandising yard through to lumber scanning in the mill - a significant part of this event has been set aside for case studies to outline how the gear has been installed, commissioned and run and what it has meant to the bottom line of the mills that have adopted this new technology.

Maintenance, management and running some of this scanning and optimisation gear will be discussed by leading New Zealand and Australian wood producers. The technology is also well advanced so mills have been purchasing second hand gear. With this comes a whole raft of issues re purchase and running the equipment for long term performance. First-hand experience and tips from mills that have headed down this path has been built into the July technology series.

Further details on this series which runs in Rotorua on 21-22 July and again in Melbourne on 26-27 July can be found on

Remember, for those looking to attend or register staff, there is ONLY ONE WEEK before the early-bird registrations finish. Also, significant discounts of a third off the event registration rate have also been introduced for this event so a number of staff from the same mill can attend.

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Managing mechanised forest operations

As forest operations have become more and more mechanised over the last decade they have also become more capital intensive and more complex to manage. This, in combination with increased pressure on the forest industry to keep costs down to remain competitive, means that the management of mechanised harvesting is critical for success to both forest owners and machine owners.

It's more important now than ever to identify and minimise every inefficient aspect of an operation. The CRC for Forestry has designed a workshop, Managing Mechanised Forest Operations, for harvest planners, harvest operations managers, operations supervisors, contractors and machine suppliers / service providers. It runs in Victoria on 7-8 July. It will take advantage of expertise and experience from the forest industry in Australia, New Zealand, South Africa and Canada as well as drawing on experience from other industry sectors faced with similar operation management challenges.

Further details can be found by contacting

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US$1 billion for Indonesian logging moratorium

Indonesia's President, Susilo Bambang Yudhoyono, has announced a two-year moratorium on new logging concessions, part of a deal with Norway in which Indonesia will receive up to $US1 billion if it adheres to a letter of intent signed by the two countries yesterday.
The initiative was warmly welcomed by environmentalists. It will put curbs on Indonesian's lucrative palm oil industry and could delay or slow plans for the creation of a huge agricultural estate in Papua province.

Indonesia is the world's third largest emitter of greenhouse gases, with 80 per cent of those emissions due to deforestation. The rapid expansion of the palm oil sector and granting of millions of hectares in new logging concessions in recent years have accelerated deforestation, including in peatlands. Under the Oslo plan, those concessions will still be able to be logged, but new areas will not be opened up.

Norway will pay the Indonesian government in instalments, and closely monitor whether the forest areas are protected. Norway's Prime Minister, Jens Stoltenberg, said: 'If there is no reduced deforestation we will not pay; if there is reduced deforestation we will pay.'

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Osmose settles lawsuit with New Zealand MP

New Zealand MP says he is delighted a $15 million lawsuit against him has been settled out of court. The case goes back to July 2005 where Drs Robin Wakeling and Nick Smith MP made statements in television, radio and print media that were extremely critical of the efficacy and suitability of Osmose's surface applied boron timber preservative, known as TimberSaver, used to treat house framing.

As a result of the coverage, Osmose issued court proceedings claiming that a number of those statements were untrue and defamatory. Osmose claimed significant damages for losses, as the statements made and the subsequent uproar in the marketplace destroyed the market for TimberSaver.

Subsequently, Osmose joined several other parties to the litigation alleging that evidence showed they had participated in and shared responsibility for the statements made in the media by Drs Wakeling and Smith. The parties Osmose joined to the litigation included Arch Wood Protection (NZ) Ltd (formerly known as Koppers Arch Wood Protection (NZ) and Bay Treatment Ltd.

Osmose in a statement said they also were pleased that they have been able to reach a settlement of the litigation with Dr Smith, Arch and the other defendants. While the terms of the settlement are confidential, Osmose is satisfied with the settlement and with the apology that Dr Smith has provided, in which he acknowledged that statements made about timber treated with TimberSaver were incorrect and unfair to Osmose.

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A letter from the US concerning radiata

Sent from the state of Washington by an American involved in forestry who frequently visits NZ - and even gets involved in building projects down here.

"Bill why is it that radiata imported from NZ costs far less in the States than in NZ. See photo. Diane and Jim spent about $65-70 for the same Product in Nelson - vs US$26.99 or NZ$38."

"This is select grade exterior paneling sheets, 4'x8'x5/8" thick. That's 'T111' & may be called something else in NZ, but is exactly the same stuff (looks like board and batten)."

Readers with any answers may like to respond by clicking on the comment link below.

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Global sawlog prices up 17% in 12 months

In the first quarter of 2010, the Global Sawlog Price Index (GSPI) reached US$76.77/m3, the highest level in over a year, according to the Wood Resource Quarterly. Much of the increase has been the result of a weaker US dollar, but sawlog costs have also gone up in local currencies in many markets, including Finland, Sweden, Germany, Latvia, Russia and New Zealand.

Global conifer sawlog prices have steadily increased for four consecutive quarters in all major world regions. The Global Sawlog Price Index (GSPI), which is based on quarterly conifer sawlog prices in 19 key regions worldwide, increased from US$65.89/m3 in the 1Q/09 to US$76.77/m3 in the 1Q/10, a climb of almost 17%.

The biggest price increases the past year have occurred in Oceania and Northern Europe, while North America has seen only moderate upward price adjustments. Sawmills in Central and Northern Europe continue to have the highest wood costs in
regions producing softwood lumber. These are also regions that have experienced the biggest price increases the past year. In Sweden and Germany, spruce sawlog prices were 28% and 15%, respectively, higher in the 1Q/10 than in early 2009.

New Zealand exports of logs and lumber in the 1Q/10 were 50% and 18% higher, respectively, than the same quarter last year. The increase in shipments is practically all thanks to the continued strong demand for most forest products in China. As a result of the strong export market, domestic sawlog prices have gone up about four percent from a year ago in the local currency and 38% in US dollar terms. Export log prices have increased for four consecutive quarters, and were in the 1Q/10 over 50% higher than the same quarter in 2009.

Pine sawlog prices have also gone up in Australia by almost 40% in US dollar terms, mainly as the result of a strengthening Australia currency. Sawmills in Australia continue to have higher raw-material costs than their competitors in New Zealand.

Source: Wood Resources International LLC.

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Rising power costs pose problem for timber industry

Electricity price hikes in Australia - ranging from 13.29 percent in Queensland to 18 per cent in Western Australia - blow an ill wind for timber processors who must look at ways to reduce their bills says Industry body Timber Queensland.

"Power costs are already nearly the top cost centre for most processors and they are set to balloon on top of the pain most companies are feeling post-GFC," said Rod McInnes, CEO Timber Queensland. Timber Queensland points to bio-energy as way for these businesses to potentially add income from the sale of residue or produce power to offset rising electricity costs.

"Here is an opportunity for the timber industry to reduce one of their biggest costs centres, plus do bit for the environment," said Rod McInnes. "Businesses who may considered looking at bio-energy as a part of their response to the now defunct emissions trading system, could be throwing away money by abandoning plans to investigate these new technologies," he said.

To help timber businesses identify where there could be a return Timber Queensland is holding a one day seminar "Bio-energy under the microscope: fact or fiction?" on Thursday 1 July at the Pavilion Function & Conference Centre in Brisbane. For more information click here


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Buy and Sell

....and one to end the week on...don't mess with a redback spider

An office receptionist got the shock of her life when she found a 70cm long snake entangled in the web of a spider. Tania Robertson, a receptionist at an electrical firm, came in to work on Tuesday and spotted the sight next to a desk in her office. The snake, which had obviously died from the spider's poisonous bite, was off the ground and caught up in the web.

Leon Lotz of the arachnology department at the National Museum said it was only the second time that he had heard of a snake getting caught in a spider's web It is believed the snake got caught in the web on Monday night. But it did not take the spider long to bite it. A red mark on the snake's stomach was evidence of where the spider had started eating it.

Throughout Tuesday, the spider checked on her prey, but on Wednesday she rolled it up and started spinning a web around it. She also kept lifting it higher off the ground, while continually snacking on it.

A very short story.

Man driving down road.

Woman driving up same road.

They pass each other.

The woman yells out the window, PIG!

Man yells out window, B******!

Man rounds next curve.

Man crashes into a HUGE PIG in middle of road and dies.

Thought For the Day:

If men would just listen.

Just one more, the Tax system explained in beer.

Every day, ten men go out for beer and the bill for all ten comes to $100.

They decided to pay the bill by apportioning the total cost of all the drinks in the same way that we, in NZ, pay our taxes.

This meant that:

the first four men (the 'poorest') would pay nothing.
the fifth man would pay $1.
the sixth man would pay $3.
the seventh man would pay $7.
the eighth man would pay $12.
the ninth man would pay $18.
the tenth man (the richest) would pay $59.

The ten men drank in the bar every day and seemed quite happy with this arrangement - until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20. "Drinks for the ten of you will now cost just $80".

The group still wanted to pay their bill the way we pay our taxes - so the first four men were unaffected. They would still drink for free. But what about the other six men? The paying customers? How could they divide the $20 windfall so that everyone would get his fair share?'

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested a graduated price reduction based on what each man was currently paying, so that everyone would benefit. They all agreed that this was a good idea so he proceeded to work out the amounts each should pay:

the fifth man, like the first four, now paid nothing (100% savings)..
the sixth man now paid $2 instead of $3 (33% savings).
the seventh man now paid $5 instead of $7 (28% savings).
the eighth man now paid $9 instead of $12 (25% savings).
the ninth man now paid $14 instead of $18 ( 22% savings).
the tenth man now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once they got outside the restaurant, the men began to compare their savings."I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a Dollar, too. It's unfair that he got ten times more than I did!" "That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!" "Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up. The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

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:

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

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