FORESTRY
PNG Biomass is planting 16,000 hectares of eucalypts in the Markham Valley. Credit: PNG Biomass
Rethinking an industry The government has announced its plans to move into downstream processing of logs. The sector is embracing the change and looking at other ways to innovate and continue to grow. By David James Chief Executive of Papua New Guinea’s Forest Industries Association, Bob Tate, advises Business Advantage PNG that round log exports fell in 2019 by about 12 per cent – to 3.5 million cubic metres. He attributes this fall to lower demand from China, which has been adversely affected by the US– China trade war (the Asian giant takes 90 per cent of PNG’s round log exports). New Guinea has the third-largest expanse of tropical rainforest on the planet. Approximately 30 million hectares (over 60 per cent) of the country’s total land area is covered by forests, owned overwhelmingly by customary landowners. About 10 million hectares produce high-quality tropical hardwoods considered suitable for forestry development. There is a growing push for more downstream processing of logs, especially with the National Government announcing a phasing out of all exports of round logs. Prime Minister James Marape has indicated that every current operator in the forestry sector will be required to submit their plans to go into downstream processing to the National Forestry Authority. ‘By the end of 2020, we will have an inventory and systematically work with them to ensure we fully
mature our forestry downstream by 2025 and beyond,’ he said. Bob Tate says the future in PNG’s forestry sector is to ‘go back to the future’ by expanding PNG’s forest plantation resource and building processing around those plantations. One next-generation business already pioneering sustainable plantations is PNG Biomass, owned by PNG’s largest company, Oil Search. PNG Biomass is planting 16,000 hectares of eucalypts – some 20 million trees – on under-utilised grasslands in the Markham Valley in Morobe Province. The project, which aims to use Forest Stewardship Council (FSC)-certified trees as feedstock for a carbon-neutral 30MW biomass power station, involves fully automated seedling production – a first for the Melanesian nation. In another innovation, its plantations have been designed to allow local landowners to grow cash-crops between the rows of trees for additional income.
Innovation in forestry One company that has already gone into downstream processing is PNG Forest Products (PNGFP). Managing Director Tony Honey says the company is expanding its manufacturing, increasing exports and handling growth. ‘We are producing and exporting some innovative and interesting products that represent value adding to an otherwise basic piece of plywood. Products such as modular bridges and decking into Australia and New Zealand; specialised railway bridge re-decking in Sydney [Australia]; sound barriers along Australian highways, and scarf-jointed bus floors for Australia, New Zealand, Malaysia and Hong Kong.’ PNGFP’s diverse operations underline the requirement for investors to achieve a high level of self-sufficiency in the country. It operates three hydropower stations and is welladvanced with the development of two more. ‘These engineered wood products require us to be innovative, efficient and competitive,’ observes Honey.
54 BUSINESS ADVANTAGE PAPUA NEW GUINEA
