Southern Hemisphere forest industry journal Vol 17 No 3 - September/October 2011
ISSN 1173-5899
Tree heroes and earthquakes
Dodgy deals and government isolationism as foresters dig in over carbon price Source: Corma
September/October 2011 A SouthemTM Publication
Southern Hemisphere Forest Industry Journal Vol. 17 No. 3 1
Contents 4
A Southem View New publishing provides wider options for readers
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Southem People Challenges remain for some sectors as Chile’s forestry overcomes challenges Farewell Brice Landman Arauco’s board strengthens corporate structure in new post for former CEO
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Southem News Australia facing ‘challenging’ plantation future Spending delays dampen construction Chile and NZ joint enviornment approach SA land reform costs balloon Fibria breaks wood transport records Job cuts in South Africa as Sappi restructures Tasmania job losses as report finds business needs time to adapt to changes Sappi Q3 profit drops 20% Arauco inks US$1.5B financing for Uruguay pulp joint venture with Stora Enso China’s forestry sector aims even higher in development
12 Southem Features Tree heroes emerge from the dust of Christchurch earthquakes Carbon Trading: Dodgy deals and government isolationism as foresters dig in over carbon price Foresters take money in arbitrage opportunities Carbon credits and organised crime concerns grow 20
Southem Markets
Cover Photo credit: Jonathan Hansen
© The Southern Hemisphere Forest Industry Journal is published by Trade and Media Services Ltd. Street address: 5 High Street, Rotorua 3201, New Zealand. Mail address: PO Box 6215, Whakarewarewa, Rotorua, New Zealand Tel: 64-7-349 4107; Fax: 64-7-349 4157; Email: info@southem.com; www.southem.com Editor and Director: Michael R. Smith Advertising Sales: Colin Gestro, www.affinityads.com Auckland, New Zealand colin@affinityads.com; Tel: 4-9-444 9158; Mob: 272568014
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September/October 2011
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September/October 2011
Southern Hemisphere Forest Industry Journal Vol. 17 No. 3 3
A Southem View
New publishing provides wider options for readers By Mike Smith Editor and Director
I
t is nearly two decades since this Journal was launched in 1994. In the time since then, the world has become a much bigger place with email and internet connections and a much, much smaller place because of almost instantaneous accessibility to information. Recent years have been catastrophic in terms of natural disasters; with significant adverse impacts for a number of countries in the southern hemisphere. However, the rebuilding required presents huge opportunities for forestry and wood products. The global financial collapse (or GFC as it has been dubbed) brought disaster of a different kind and possibly just as damaging as what nature delivered. The economic impacts from this financial earthquake have yet to be fully realised but are shaking down the industry. What hasn’t changed is the need for high quality, independent information and Trade and Media Services Ltd has secured a strong market with its range of “Southem” publications, as follows: • The Southern Hemisphere Forest Industry Journal • Southem Online • The Southern Hemisphere Forest Industry Yearbook • Southem Country Reports • Forest Information Update This news and information is increasingly being transmitted digitally. The main channel is our southem.com with subsidiary web sites southernhemisphereforestry.co.nz and forestinformationupdate.com providing a window into the services on offer. The transmission of information through our publications is also changing, reflecting trends in the wider publishing world. The rise of social media grabs headlines but the trade publishing market has quietly, but rather rapidly, been converting to digital publishing via new ePub or eBook technology. This has seen the trade publishing market segment considerably increase its eBook output, according to US publishing services company Aptara. Even though this sector is
still in its relative infancy, already one of out of five eBook publishers generates more than 10% of their revenues from eBooks. Trade publishing of the kind undertaken by TMS Ltd has been more involved than any other market segment in aggressively increasing eBook production. Southem is part of this change and from this edition we introduce a new version of the Southern Hemisphere Forest Industry Journal utilising new “turning page” (or flip book) technology. The technology allows readers to more easily read or download the articles and other material. In the past, the Journal has been a “subscription only” publication. With this edition, we have moved to open the Journal up to a wider audience who appreciate our online e-newsletters, such as Southem Online and FIU. Benefits will remain for subscribers: an ability to download content from the subscribers’ only section of southem.com being the main one. This will allow us to provide much more information and data than has been possible within the restrictions of the subscription only publication. Readers will notice the icon at the end of stories or on the top of pages, so subscribers can access a far wider spread of news and information. We have engaged AffinityAds to help provide professional advertising services to those wanting to broaden their reach to include the 22,000 recipients of our news and information services. We are excited to have Colin Gestro and the team on board. The first edition of the Journal was published in November 1994 we hope our loyal subscribers enjoy the benefits the new changes bring to them. At the same time as these changes have occurred, we have acquired a wider and wider readership. Early on, readers were mostly in North America, or Australia and New Zealand, the rise of online services means readers of our publications span the globe. Just on a quarter remain in North America, but today 22 per cent are in Latin America and a further 19% in UK-Europe and the rest being mostly in southern hemisphere countries. Readers span a broad range of decision-makers in corporatem, government and private sector professional positions.
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Southem People
Challenges remain for some sectors as Chile’s forestry overcomes challenges The Chilean forestry industry has recovered from the trials of the past two years but important sectors still face very complex problems, according to Fernando Castilian Raga, President of the Chilean Wood Corporation (Corma). Writing an opinion piece for Corma’s web site, Sr Raga said it was necessary to understand the forestry sector was an industry made up of several –sub-sectors, each with a different reality to the other. This made it difficult at times to see beyond the results
posted by the bigger companies in the reality, which have a higher visibility due to larger results in the international markets. The sector in general has risen back up after the serious financial
Farewell Brice Landman
Arauco’s board strengthens corporate structure in new post for former CEO
The Wood Council of New Zealand has marked the passing of Brice Landman, member of the Wood Council and Chief Executive of Carter Holt Harvey Pulp & Paper. Mr Landman passed away suddenly at his home on Thursday the 22nd September 2011. "Brice was highly esteemed person involved in the Wood Processing industry, and has had significant influence on industry developments throughout his career" Doug Ducker, chair of the Wood Council said in a statement. "His knowledge and advice was both keenly sought and provided. We are truly grateful for his contribution over the years, and all share in regret at his passing". Mr Landman was involved in leading both his company and the industry as a whole through a turbulent time of change in the pulp and paper industry. Before returning to New Zealand, he was also chief executive of UK Paper.
Directors of the Chilean forestry and forest industry group, Arauco, have moved to strengthen the higher structure of the company’s corporate management by creating the position of Executive Vice President, which will report directly to ARAUCO’s Board. Matías Domeyko Cassel, former Chief Executive Officer of the company, was designated to serve in this new position. The creation of the Executive Vice Presidency is a result of the significant growth experienced by ARAUCO’s businesses in recent years, in its business lines as well as its international expansion. Incorporating the best international practices for corporate governance as seen in businesses similar to ARAUCO in size and importance was deemed convenient, to strengthen the management and development of the company and its subsidiaries. TCristián Infante Bilbao is the new Chief Executive Officer. Mr. Infante was previously Corporate Management and Development
Fernando Castilian Raga, President, Corma, the Chilean Wood Corporation
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crisis of 2009, which was made worse by the earthquake at the beginning of 2010, and had recovered to a great extent in terms of lost work and the global figures for production and exports. However, an important segment – small and medium sized industrial enterprises - and that of forestry services face very complex problems.
M a t í a s Domeyko Cassel
Director. He has broad experience in ARAUCO’s lines of business, and in past years he has served as head of subsidiaries in Argentina and Brazil and has had significant participation in the Montes del Plata pulp project in Uruguay.
September/October 2011
Southem News
Australia facing ‘challenging’ plantation future New figures showing the area of Australian tree plantations has shrunk reflect a problem for the nation’s future wood and carbon offset needs, the Australian Forest Products Association (AFPA) said in a statement. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) found the overall area of plantations dropped by 0.6 per cent between 2009 and 2010. It has also reported the smallest area of new plantations establishment since the early 1990s. “Australia has a major challenge in meeting our future wood demands. A population of 35 million by 2050 will require 7.1 million new dwellings,” said CEO David Pollard. “If we don’t plan now for en-
Spending delays
dampen construction The Chilean Construction Chamber has reduced from 11.3 to 9.5% its growth projection in this sector for 2011, due to delays in the public spending, El Mercurio reported. However, the reported noted that the major companies in the sector were experiencing better levels of activity and have assured work, at least, up to 2013. Contracts for works – indicating a backlog in the industry – were estimated to be worth about US$5 billion, based on total data obtained of the main construction companies in the country: SalfaCorp, Besalco, Socovesa, Claro Vicuña Valenzuela, Belfi, Ingevec, Moller & Pérez-Cotapos, Echeverría Izquierdo e Icafal. In most of the cases, the amounts outstrip the same period last year and they are the highest to have been registered for the companies.
couraging investment in new tree plantations, we will not be able to domestically supply the wood for homes in the future,” Dr Pollard said. “There are two other options for Australia. One, we will build future homes with timber imported from countries with often weaker environmental regulations, or two, we can increase the use of emissions intensive alternatives such as steel and concrete. “A House of Representatives Committee has been investigating these challenges through the Inquiry into the Australian Forest Industry. The constant pressure on the forest industry to reduce its reliance on native forest management means new policies to enable longrotation plantation investment are
desperately needed. “While we look forward to the committee’s report, it is clear that Australia needs a new national forest plan to meet the challenge of supplying home-grown wood for the future. “It is worrying that recent government policy decisions will not encourage new tree plantation establishment, such as severely restricting commercial plantations from the Carbon Farming Initiative. This is ironic considering that forestry is a carbon positive industry sector with great potential to reduce emissions, while at the same time supporting jobs in regional communities,” he said.
Chile and NZ joint enviornment approach NZ Environment and Climate Change Minister Nick Smith and Chilean Environment Minister, María Ignacia Benítez, recently met to reaffirm a commitment of both countries to work cooperatively on environmental issues. “Chile and New Zealand have many geographical and climatic similarities. We both sit on the earthquake-prone Pacific rim of fire, have long mountain ranges, extensive coastlines, active geothermal areas, and forests with related plant species,” Dr Smith said in a statement. “Our Government agencies, research and science institutes, universities and businesses work closely together and, through the Trans Pacific Strategic Environment Cooperation Agreement, we have a programme spanning climate change, renewable energy and fresh water management.” “Both New Zealand and Chile are members of the 32-country Global
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Research Alliance that is seeking the best ways to reduce agricultural greenhouse gas emissions. New Zealand also has significant experience reporting on greenhouse gas emissions and that’s why we are sharing our expertise with Chile through a climate change inventory project,” Dr Smith said. The Ministers discussed future opportunities for both countries to work together. “I welcome the opportunity to deepen the strong relationship between New Zealand and Chile which will have flow-on benefits for our economies and the environment,” Dr Smith said.
September/October 2011
Southem News
SA land reform costs balloon
South Africa’s Department of Rural Affairs and Land Reform has requested from National Treasury an additional 2.3 billion rand (US$277 million) for the current financial year, to shore up its land restitution programme, Business News has reported. According to the department's acting director general, Moshe Swartz, the current allocation of 2.6 billion rand (US$314 million) would allow for 360 backlog claims and only 90 new claims to be finalised. “It is expected that in the outer years (of the three-year Medium Term Expenditure Framework) it will not be sufficient to settle all targeted claims,” Swartz is reported as telling the Parliamentary Portfolio Committee on Rural Development and Land Affairs recently. He is quoted as saying should
Whose land is it? (Source: SA Tourism)
the 2.3 billion rand be approved then this would allow the department to settle approved claims and those claims where offers had already been made, and then do further research on new claims. Swartz said the approval of additional funding for restitution would ensure that no further shifting of funds was done with the Land Reform Programme.
Fibria breaks wood transport records August was a record-making month for the Aracruz Unit of the Brazilian group Fibria. Records for wood shipments via the Terminal of Caravelas (BA), reached important levels. Two new records were recorded for the volume of eucalypt wood carried in August. In the historical daily record 32,077 cubic metres was transported, surpassing by 694 cubic metres the previous record, registered in July 2008. Already the monthly record of 2011 reached 783,395 cubic metres, exceeding the previous high, achieved in July this year with 780,248.19 cubic metres. The daily record covers all wood carried in the plant in only one day with the contributions from road, railroad worker and marine
Chile native wood company hydro plan Chilean native wood manufacturer Maderas Tantauco has presented a project to the to the Environmental Impact Agency (SEIA in Spanish) a project for the build a hydroelectric power station in Chonchi, in the Region of Los Lagos, Diario Financiero reported. The project suggests a total investment of US$12.5 million and will have an installed power of 6.17 MW, with what the company projects will an annual energy generation of 22.77 GWh.
FSC tick recycled paper company The Argentine company Papelera Rio Quequen has become the first recycled paper-maker in the country to achieve FSC certification. The company was certified via SCS Argentina. The company focuses on the market for corrugated paper, Kraft paper and paper for making tubes.
Timber treatment ‘revolution’
transport systems. The volumes had been carried through to an average distance of 250 km, evidence of the logistical complexity involved, the company said in a statement.
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New timber impregnation technology from Australia is being described as being “revolutionary”. The technology is being promoted as a way for to meet demands from timber processors for an improved and environmentally friendly way to preservative-treat their products. Invented by Queensland scientists, including those from Carter Holt Harvey the New Zealand based forest industry group, the technology was recently picked up by global timber preservation giant Osmose for further development.
September/October 2011
Southem News
Job cuts in South Africa as Sappi restructures South Africa’s Sappi has signalled “significant” job cuts under a newly announced restructure plan. The paper and packaging group says the strategy behind the restructure of its Southern African operations is aimed at adapting to changing customer needs and to match its assets to profitable markets. Sappi said in the statement it was implementing further cost reductions at both administrative and production levels, after already closed the 47-year-old Adamas mill in Port Elizabeth “We expect that these measures will lead to a significant additional reduction of jobs during the first
half of the 2012 financial year,” the company said in a statement reported in Engineering News. Sappi expected to realise savings and benefits of about R250-million (US$31 million) a year, the report said It also sees savings of about R100-million (US$13 million) a year as a result of avoided maintenance capital expenditure. The restructuring of its Southern African business forms part of an updated strategy to deal with tough market conditions and the continued declining trend in the demand for graphic paper.
Tasmania job losses as report finds business needs time to adapt to changes The forest industry in the Australian island state of Tasmania needs time and certainty to transition to a new future, a long-term study by the Australian National University and the Cooperative Research Centre for Forestry (Forestry CRC). The study which began in 2006 found that job losses in Tasmania's forest industry are accelerating. Job numbers in the industry halved over the past three years. ANU Research fellow and leader fo the CRC for Forestry's Communities project Dr Jackie Schirmer told there are 3,500 jobs left in industry, down from 7,000 in 2008. While the job losses are spread across the state, some regions are experiencing greater losses than others. In terms of the industry restructure underway through the Heads of Agreement now being negotiated by government, Jackie Schirmer says the industry needs to be given
time to adapt. "Give them enough time to adapt to changes, all the changes need to be implemented over a period of time that lets business and workers adapt. They also need to be given the resources to do that. Currently no banks will lend to a forest industry business because there is such an uncertain future". "If the changes proposed go ahead there will be a lot of businesses that will need to exit the industry. But some of those could actually stay as an operating business and diversity outside the industry if given the opportunity". See link below to download more details and the report.
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Sappi Q3 profit drops 20% South Africa’s Sappi Ltd announced an operating profit excluding special items of US$60 million in the quarter ended June 2011 compared to US$75 million in the same quarter 2010. In a statement, the company commented on plans to restructure the paper and packaging business of Sappi Southern Africa. The restructure was underway in order to improve profitability, in conjunction with the approximately US$340 million conversion of the Ngodwana pulp mill to chemical cellulose production are progressing. In its results’ presentation, the company said its Southern Africa performance was unfavourably impacted by extended annual shuts at Ngodwana and Saiccor during the quarter. The regional domestic markets suffered as a result of the strong local currency which led to increased competition from imports. Included in the special items was US$6 million for the quarter for a plantation fair value adjustment and Black Economic Empowerment charges.
September/October 2011
Southem News
Arauco inks US$1.5B financing for Uruguay pulp joint venture with Stora Enso Companies affiliated to the Chilean forestry group Arauco have signed nearly US$1.5 billion worth of deals to finance a pulp project in Uruguay. Arauco (or Celulosa Arauco y Constitución S.A) recently notified Chilean securities authorities of the fund-raising. The group said it had earlier this year announced its subsidiary Inversiones Arauco Internacional Limitada and Finland’s Stora Enso approved the “Montes del Plata” project. This includes the construction of a state of the art pulp mill with a guaranteed capacity of 1.3 annual tons, a dock and a power plant fueled by renewable resources. The project will be located in Punta Pereira, in Uruguay’s Colonia department. Arauco’s Uruguayan affiliate companies has now signed a loan contract with Banco Interamericano de Desarrollo termed IDB Facility Agreement for US$454,000,000, and a loan contract with a number of financial entities termed Finn-
This Google map image shows the location of the planned pulp project being built jointly by Chile’s Arauo and Finland’s Stora Enso. vera Guaranteed Facility Agreement for US$900,000,000 in order to finance the “Montes del Plata” project (of which the company owns 50% shares), the announcement said.
China’s forestry sector aims even higher in development China's forest industry is growing faster yearly and forestry resources are being utilised more rationally and effectively than ever but yet the country still aims to implement further adjustments, according to the head of the state forestry administration. China Daily reported the latest statistics from the State Forestry Administration (SFA), indicate the total output value of the forestry industry reached 1.66 trillion yuan (US$255 billion) in the first eight months of the year, up 9% from the same period last year.
September/October 2011
"Recent years have witnessed significant growth in the industry. Last year, the output value of forestry surpassed 2 trillion yuan, which was quite a breakthrough for us," said Jia Zhibang, head of the SFA. In China, forests are defined as woods covering an area of more than 1 mu (667 square metres) with a crown density -- the amount of sunlight blocked by plant material -- at or above 20%, according to the SFA. Coming together with the rising output value in the sector is the im-
provement in its structure. According to the SFA, the ratio of the primary industry, secondary industry and tertiary industry in the sector was adjusted to 39 to 52 to 9 from 52 to 41 to 7 in 2005. The weight of the latter two industries kept growing over time. The SFA said growth in secondary industry was mainly boosted by wood and bamboo products while forest tourism helped to shore up the tertiary industry.
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Southem News
The sun always shines at forestry expos in this tale of two events Forestry and forest industry events in New Zealand and Argentina yield positive results but some troubling undercurrents still remain. It is really a tale of two forest industry expos – one in New Zealand and the other in Argentina. Although vastly different, the two countries’ forest industries expos had similar under currents to some extent. The New Zealand edition has struggled to get off the ground again, after initially being cancelled by the previous organisers in 2010 due to the impact of the economic recession. The Argentine event was coming off previous highs, at a time when wood product exporters have found the going very hard. Nevertheless reports indicate companies are buoyant about prospects and were positive about the opportunities presented by both events. The New Zealand expo’s business project manager Sandra Kai Fong said the event had exceeded expectations, according to the event’s business project manager. Forest Industries Expo 2011 was
held in Rotorua between 5 and 7 September as an international showcase of forestry and forest industries. Included in the event were a series of tech clinics and a conference. As well, the event was started with the launch of a forestry and wood processing strategy for the Bay of Plenty, a key industry region nationally. Sandra Kai Fong told the Journal the level of machines sold and the number of people through the gates had exceeded expectations. Totals included the following: • 2,200 people through the gates over the three days of the expo • 80 at the conference • 470 at technical clinics • 110 exhibitors As far as deals done were concerned, she said that the potential top deal was for NZ$10 million, with a couple of NZ$1 million and another couple in the mid-hundreds
of thousands of dollars. Visitor numbers were somewhat impacted by the event being held mid-week to cater for a wood handling competition the previous weekend and Rugby World Cup events the following weekend. However, it was not only about the numbers but also the quality of visitors and sales inquiries, Kai Fong said. “From the exhibitors I spoke to, they were getting good quality visitors.” She said the expo had had a bit of a hiatus where it did not proceed two years ago, when forestry had gone through a dip. The economy is not exactly on a high, although log exports are much higher with sales to China being strong, so what is the difference? Sandra Kai Fong said this time the expo was tied in as part of the Rugby World Cup event being held in New Zealand from 9 September which in part was showcasing New Zealand business. As well as the heavy duty
Visitors to the USNR and Skookum stand at Rotorua viewed an innovative beam structure (right). Big rigs are always popular at industry events (below). Southem pics
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September/October 2011
Southem news ‘It was not only about the numbers but also the quality of visitors and sales inquiries - Sandra Kai Fong, organiser of the Rotorua event.’ harvesting and pruning equipment, the organisers wanted to make sure to show the full range of services the sector could offer. Meanwhile, in Argentina, the forest industry shrugged off talk of recession to meet in the last week of September for the Feria Forestal staged at Posada in the province of Misiones, the country’s main forestry region. At the launch, the provincial governor, Maurice Closs, was quoted by La Nacion as highlighting the readiness of refunds to forestry companies in sector currently exporting but avoided referring to sawmillers who are exporting due to concerns over a local tax on products. The fair attracted 350 Argentinean companies as well as from neighbouring nations like Brazil Chile, Bolivia, Paraguay and Uruguay. In the report, Lerer highlighted the sustained growth of the forest industries in recent years, especially with the application of the law 25,080 for promotion of plantation forests, sanctioned in 1999. At the moment there are 15,200 companies operating, offering direct and indirect employments to nearly 500,000 people. While Chile, with a smaller but better exploited land area, sell US$6,000 million a year, given the highly value added of its production, Argentina export revenues amount to only US$1,200 million annually, since of the 24 million cubic meters
of wood available annually, only 12% are used. “Forest industry development is fundamental to our country, whose land presents advantageous conditions, allowing forests to grow faster than the international average,” said Adrián Lerer, president of the Argentina Forestry Association (AFOA). The manager of the Chileanowned Alto Paraná, Pablo Mainardi, said that the company, owner of plants in Misiones and in the capital province of Buenos Aires, planned new investments totalling US$50 million in Argentina. He indicated that US$10 million will be destined to new pine and eucalypts plantings; another US$10 million in conversions aimed at environmental improvements and better operational security, and the rest for two specific projects: the first, being increasing the output of fluff pulp used in diapers, and the other, adding value to the melamine board factory. One aspect of the Argentine forest fair was that for the third year running, it included a section for the country’s huge cattle ranching sector. A statement from the fair management said the purpose of the two sector shows running together was to show mixed systems of production, alternating the breeding of animals with the growing of trees. Numbers visiting the fair were not known but organisers said they expected them to be more than 100,000 visitors
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Timber protection has become a popular topic in recent years, so this Kop-coat display drew a few visitors at the NZ Forest Industries Expo 2011 (above). (Southem pic)
Visitors are welcomed at the Posada, Argentina Feria Forestal (Above). Pic: FAIMA
This chainsaw stand was one of a number outdoor events attracting visitors in Rotorua (above).
September/October 2011
Southem Feature
Tree heroes emerge from the dust of Christchurch earthquakes
Lives were lost, buildings crushed like empty tin cans but some unlikely heroes have emerged from the devastating earthquakes in Christchurch, New Zealand – trees grown below hills may have saved lives. Mike Smith reports on how the NZ School of Forestry at the University of Canterbury is following up this history-making event to measure the impact on tree growth and how trees may help protect communities from future disasters.
S
tudies being carried out in Christchurch, New Zealand, will not only find out more about the impact of earthquakes on tree growth but also the role trees play in protecting communities during such devastating events. Dr Justin Morgenroth, a lecturer at the NZ School of Forestry, University of Canterbury, is undertaking research into how earthquakes in September last year and February 2011 affected trees in Christchurch. Dr Morgenroth, who received his PhD in the past year, has been involved in lecturing at the university for a few years, mainly in the geo-spatial aspect of forestry.
“I’ve always had a bit of a soft spot for understanding tree growth in difficult or challenging environments,” he says, Urban forestry has always been a strong side interest, because there is no more challenging environment than taking a tree out of its natural environment and planting it in the middle of a concrete Justin Morgenroth jungle. This led him into the current research following the Christchurch earthquakes when a “new normal” was established for the city.
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September/October 2011
Southem Feature Christchurch is renowned internationally for the beauty of its parks and reserves (left). Trees stretch across much of the city to the Pacific Ocean (right). Photo credits Christchurch City Council
Sand volcanoes and liquefied soil at McHaffies Reserve (right). Photo credit Justin Morgenroth
The New Normal
More on the tree heroes later but first, some background. On 4 September 2010, Christchurch experienced a magnitude 7.1 earthquake. Since that first earthquake, Christchurch has experienced a further 7,000 aftershocks, including a 6.3 magnitude earthquake on 22 February this year, and a double impact of a 5.7 magnitude earthquake followed one our later by a 6.3 magnitude one on 13 June 2011.1 To further underline the extent of the damage, it should be noted that the series of earthquakes has resulted in this being the largest ever insurance claim for an urban area worldwide. Insurance council estimates have put the cost of the earthquakes at NZ$15 billion and rising. A new government estimate of NZ$7.1 billion included with 30,000 houses suffer1
Source: Justin Dr Morgenroth. Earthquakes, Tree and the New Normal. Poster.)
September/October 2011
ing damage costing more than NZ$100,000. Colleagues at the Christchurch City Council invited Dr Morgenroth to go along on tours with them to view the damage to trees that they had to respond to. “I jumped at the opportunity.� A survey of 98% of Christchurch parks has shown there are about 65,000 trees, and those have all been inspected over-and-over again since the earthquakes. Initially, the inspection process is quick, pin-pointing those trees with obvious damage or learning, so it was possible to inspect hundreds in a day. As result of the inspection process, the council has removed about 400 trees, which Dr Morgenroth says is not a drastic number and only about 50% more than normal annual removals. Although the numbers may not be huge, it was important to note that a lot of the damage may be concentrated. One small city park, for instance, might have lost 30-40 trees or virtually all of its canopy cover.
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Southem Feature
Tree leaning and soil liquefaction at Hagley Park, Christchurch. Photo credit, Jonathan Hansen.
Direct Tree Damage
Tree damages spans the entire city, although it reflects those areas more damaged by earthquake impacts than others – for example, the north and western suburbs were less damaged than those in the hills and eastern suburbs. In the hills, a lot of trees were damaged by falling rocks and landslips resulting from the earthquake. Some impacts resulted from what could be called “good damage”, in that the trees were planted with a specific protection purpose to minimise downhill damage due to rock slips. A kilometre long shelterbelt of pines and macrocarpa in an area called Morgans Valley stopped a great deal of rock fall from damaging the property below it. “So tree damage up there was mostly from large rocks or boulders often slamming into stems and snapping them off altogether.” On the flat, much of the damage was due to what is called “liquefaction”, a now common term for the impact of an earthquake on soils. As Dr Morgenroth explains: “During violent shaking, sandy soil particles realign and settle in a more compact manner, reducing the pore volume. This subsidence squeezes water out of pores and upwards towards the soil surface. Sand volcanoes eject sand upwards, where it is deposited onto the surface. The resulting soil profile is stratified comprising a settled, compacted lower layer and a loose upper layer.” Resulting changes in soil properties may affect hydrology, aeration, and soil chemistry, so effects are likely on root development and function. Liquefaction was so extensive and widespread that houses and cars sunk into the unstable earth. The
danger from the phenomena has led to large areas in eastern Christchurch from being classified as “red zone” where houses cannot be rebuilt due to the condition of the land. In some cases, houses are found to be stable but have been “red zoned” due to the risk of liquefaction from the soil below. “Trees were no different. They sunk as the liquefied soil lost its structure and its ability to hold things up.” While people usually didn’t think about trees weighing anything, trees do weigh a tremendous amount and they sunk. However, the trees didn’t often sink evenly across the root plate, so there was differential slumping resulting in a severe lean and real stress on one side of the root system. “In some cases, if it was a large tree there would be more weight pulling or leaning downwards, in which case there was more force, more tension on those structural roots. In some cases, they just buckled, delaminated, and let go in which as the trees fell completely over.” A data set from the city council has categorised trees as being “juvenile, semi-mature, mature or over-mature” rather than by age group but it does provide an indication of size and age. Most of the damaged trees were found to be in the “mature or over-mature” groups, as larger trees succumbed to liquefaction or differential settling.
Soil Damage Impacts
The areas where large-scale liquefaction has occurred will present a long-term challenge for trees in that the rooting environment has changed drastically for them, Dr Morgenroth says. The vents which opened up in the earth during liquefaction pushed up a layer of fine sand on to the surface of the soil. The fine layer of sand on top of the soil can be as much as 40-50 cm deep. “So basically, you have half a metre of very fine sand sitting on top of the soil surface.” Roots do not enjoy growing at depth, Dr Morgenroth says, and they typically grow near the soil surface to take advantage of rainfall and optimal soil aeration environment, and nutrients. So as roots shift upwards they will encounter a new environment, one which is very strongly different to the old environment in which they grow. “Whether it’s good, bad or neutral is something only time will tell I suppose.” However, it was possible to make guesses at how the new environment will impact tree growth. The fine, sandy texture of the new soil is not expected to have great water-holding ability but, be-
14 Southern Hemisphere Forest Industry Journal Vol. 17 No. 3
September/October 2011
Southem Feature
Mass soil movement on the Avon River. Photo credit, Tim Easterbrook.
cause it is very fine, it might hold water very well. Another feature is that there is virtually no organic matter in the liquefied soil layered on top of the top soil. Nil organic matter will contribute to the soil properties, such as the pH, nutrient inputs, physical structure and how roots are able to function within the soil.
Measuring History as it Happens
In cooperation with the city council, Dr Morgenroth has launched a case study in McHaffies Reserve, a small reserve containing just 13 eucalypts ranging in DBH (diameter at breast height) from 50-175 cm. The site was characterised by substantial liquefaction, with loose sand deposited by sand volcano es measured and modelling showed the extent and depth of the deposition. In some areas, 45cm of loose sand was deposited over the subsided original grade. The question being asked in the study is: How will the Eucalyptus trees respond to the drastically modified soil environment. “It was important for me to get out there right away and intensively sample the soil within McHaffies Reserve. I needed to understand what this new soil was; what kind of beast I was dealing with.” Once the sampling was done, analysis has been undertaken to measure those things best known to have an impact on plant growth – organic matter content, moisture holding ability, the ability of the soil to hold nutrients, and pH. This research will involve monitoring the trees year-after-year as they grow. “History has shown us that following an earth-
September/October 2011
quake there’s a period of declining growth but because those are only backward looking studies many, many years after the fact, we don’t know what caused that decline in growth, what caused the decline in growth and what changes were there in the environment that resulted from that decline in growth.” So the study was set up to look at short-term changes in function or physiology, and try to explain how that might result in long-term growth patterns. When it is suggested to Dr Morgenroth that he is really, in a way, measuring history as it happened, he says: “My interest has always been looking at trees in a difficult environment and this just falls into that. It’s taking a live organism, changing the environments around it completely and seeing how it responds.” For the most part, trees grew in the one environment and to have such a dramatic change would put their plasticity to the test.
Tree Heroes Explored
During this southern hemisphere summer, work will be undertaken on the protection values trees provide during earthquakes, as highlighted by Morgans Valley, mentioned earlier. Undergraduate summer students have been brought on to do some rock fall modelling and look at how forests might be used in protective capacities. “It’s an aspect a few of us staff members here (at UC) have latched on to and said ‘what a positive way to use trees’ and we would like to learn a bit more about it really.”
Southern Hemisphere Forest Industry Journal Vol. 17 No. 3 15
Southem Feature
The Google map (left) shows the centre of Christchurch City to the west and the green triangles illustrate some of the parks throughout the city. Morgans Valley is to the south-east, running up into the Port Hills. The Brighton spit area runs along the eastern shoreline, with the estuary entry opposite Sumner.
Protection forests are quite common the world over, Dr Morgenroth says, in alpine communities in Europe and there was no reason why they shouldn’t be used to greater effect in New Zealand. “They (trees) were used very well here in this particular instance. That’s the reason that Morgans Valley community remains there today, because of the combination of a protection and a forest they used.” The oldest trees are 80 years old and at the time Morgans Valley was a single farm homestead protected by the original pines. However, as a condition of selling off land for subdivision, the council said more protection forest needed to be planted, so that the area downhill would not be affected by rock falls, a known characteristic of the area. In this case, the far-sighted condition insisting on trees planted above the sub-division saved the community from potentially deadly rock falls.
Unusual Tree Loss on Seaside Spit
Another study being undertaken involves a bit of a mystery surrounding trees on a land surrounding an estuary to the east of Christchurch. The South Brighton spit separates Christchurch from the Pacific Ocean and pines and macrocarpa trees are planted around the estuary. Although most likely planted as commercial plantation, over the years this has developed into a recreational area for the city.
The forest suffered a great deal of tree loss during the earthquakes. Hundreds of pines had to be removed, many due to the trees tipping over. However, many trees appeared to be dying for no particular reason as pine needles started to brown off. The council approached Dr Morgenroth with the idea that there was a salinity problem. The LiDAR data the council had collected showed the land in the area of the estuary had actually dropped by 40 cm. This suggested that all the estuary water had more potential to come inland and pollute the soil with salt. In an effort the test whether the land was suffering from salinity, the university researchers measured the electrical conductivity of the soil, a standard test, but found that the levels were nowhere near high enough to cause any sort of damage. “So we threw out that idea and came to the tentative conclusion that after the earthquake, that area was inundated with water and the combination of the drop in land and the liquefied soil, which really holds on to the water at the beginning before it dewaters, it was just soaking with water and remained that way for weeks. So during the growing season, the pines were sitting with wet feet. Knowing that radiata pine isn’t a particularly big fan of wet feet, it was suggested this may have been the reason for this slow decline and council have taken this on board.
16 Southern Hemisphere Forest Industry Journal Vol. 17 No. 3
September/October 2011
Southem Feature
Dodgy deals and government isolationism as foresters dig in over carbon price
T
he long shadows of protectionism and crime are starting to fall over the carbon markets many forestry companies are hoping reap a bonanza from as southern hemisphere plantations mature. Some of the shadows may be of the foresters own making, but others have come from external factors The external factors include the following: • New restrictive regulations, and • concerns over organised crime. Governments, including those in Australia and New Zealand, have signalled a move to ban the trade in industrial Certified Emission Reduction units (CERs). This follows concerns that a flood of cheap CERs may, in New Zealand’s case, undermine the price for New Zealand Units (NZUs). At the same time, the Australian Government has issued a statement on the risk that carbon credits could be used for money laundering purposes as they could be bought and traded using criminal proceeds to disguise the true origin of the funds. Richard Hayes of Environmental Intermediaries & Trading Group Ltd, who has previously highlighted aspects of the NZ Emissions Trading Scheme (NZ ETS) in the Journal, says concerns over the impact from a flood of industrial CERs do pose quite a high risk to the market. However, he does raise concerns that artificially managing the market with a ban on industrial CERs raises the spectre of government control.
Carbon Prices
The industrial CERs come from the Clean Development Mechanism of the Kyoto Protocol, under which developed countries can sponsor a project in a developing country so there is an emission reduction activity. If that emissions activity did not occur, the owner receives CERs. Government concern surrounds the types of projects called industrial process projects, involving two areas: • Nitrogen which has got a global warming potential of 310 times the amount of CO2; and • hydro-fluoro carbons which have a global warming potential of 20,000 times a ton of C02. Recently some projects under this banner have
September/October 2011
been launched on a large scale, so that 6070% of the CERs created under the Clean Development Mechanism are classified as being industrial process-type CERs. The units from these projects were being sold en masse in the European Union and the European ETS for compliance purposes Richard Hayes and were achieving a price of anywhere between 14 and 20 Euros. “The EU became aware quite quickly that people were altering the fundamental way their processes were working in order to generate these credits, and the credits themselves were so cheap to create at the order of 10 Euro cents each, that it was massively profitable just to create these credits and not to create the actual industrial process they were supposed to be a by-product of. So the result of that was that the EU simply clamped down on that and they’ve banned them from the EU from the end of the first commitment period which is the end of 2012.” Hayes says this is going to mean a lot of these credits will be looking for somewhere to be sold, and currently this mean one of just three markets: • Japan • The New Zealand ETS • The potentially emerging Australian ETS “So there’s a lot of concern in the New Zealand market that we might become a dumping ground for very cheap CERs and, therefore, undermine the fundamental construction of the NZ ETS,” says Hayes. The NZ ETS is based on the fact the government wants the price of carbon in the marketplace to change emitters’ behaviour, so reducing New Zealand’s emissions, and not necessarily reducing emissions elsewhere. One corollary in the whole process driving the planned change in New Zealand, at least, is that under the Kyoto Protocol there is a theoretical limitation to the extent to which a CER can be used in terms of a country’s ability to meet its obligations.
Southern Hemisphere Forest Industry Journal Vol. 17 No. 3 17
Southem Feature Hayes says he is yet to see that mentioned. “Certainly, the idea of having any amount of very cheap credits flooding into the market, given the New Zealand market is quite thin, probably is quite a high risk.”
Government and Forestry Reacts
As noted in the previous Journal, two recent instances exemplify how the New Zealand price for carbon units can be dictated by the price of CER units. “But I think you’ve also got to look at the fact that this is a functioning market, and just because the international price of carbon has dropped, to suddenly try to cut the New Zealand price of carbon from the international price is probably a short-term fix. It is probably from a long-term perspective a little questionable.” This is particularly so, he says, given the fact that most of the credits are coming from timber or forest plantations planted between the mid- to late-1990s. Most of these trees are expected to be harvested around 2020, in what is called the “wall of wood”, and expected to see an upsurge in consequent emissions from the forestry and forest industry sector of the economy. “So what at the moment amounts to a very plentiful source of carbon credits are post-1999 Kyoto forests is, in another seven to eight years time likely to become a significant liability. I think if you start fiddling with the ETS every time there’s an unwanted external influence or even an internal unwanted influence, it tends to send messages to the market that the scheme is not reliable, and tends to cause problems with the price.” The majority of EU carbon price reductions had been triggered by three factors: • The first being the global financial crisis • The second, and more recent, concern over some of the regulatory structures in Europe, which probably triggered a July 2011 price drop. • The third, that Greece’s sovereign debt is leaving the banks at risk and has altered the exchange rate in favour of NZUs. • One of Hayes’s clients has raised concerns about a proposal in the New Zealand ETS revision proposal to have a compulsory pooling of forest-based carbon credits of about five, so that for every 100 NZUs that foresters are issued, five are held back by the government as an insurance pool.
“Clients are saying ‘hold on a minute – we can go and buy that insurance on the commercial market for less than half the price the government is going to pay’. So they characterise it along the same lines the supplementary pricing schemes and other instruments we were more familiar with in the late 1970s and early 1980s. The Supplementary Minimum Price (SMP) Scheme was introduced to guarantee prices to meat and wool producers at a level appropriate for income adequacy and for the encouragement of increased farm production and export earnings. The scheme was subsequently abandoned in the free market reforms of the later 1980s. “When one responds to these unexpected external influences, one always goes back to look at what has perhaps worked before as a response. And the sort of response we are seeing generically is typical of past responses.” Nevertheless Hayes says it is important to note that the European Union is excluding the industrial class of credit and it probably does logically follow that countries with similar scheme in the South do the same. “I think if we were trying to exclude them and the Europeans were saying they were okay, then that would be more of an isolationist and a sort of arbitrary approach.” However, it was important government deliver definitive regulatory statements as quick as possible otherwise people would be unable to plan. “We’ve already seen a lot of volatility in carbon price and I think the less information there is in the market and the less certainty the more likely we are to end up with volatility.” While a carbon price similar to that proposed in Australia took an element of risk out of the scheme, the free market, if it was left to operate commercially, probably gave a “true” carbon market and allow people to invest against that carbon price. Foresters in New Zealand are not prepared to sell units for under $20, Hayes says. He has yet to find anybody to explain the relevance from a computational viewpoint where that number came from. “But foresters aren’t interested in a price under $20 so it will be interesting to see how that affects the dynamics of the market. A lot of forest owners are sitting on their hands with units in their EUR accounts and not interested in selling around the $14-15, so time will tell.”
18 Southern Hemisphere Forest Industry Journal Vol. 17 No. 3
September/October 2011
Southem Feature
Foresters take money in arbitrage opportunities As one whose company has to operate within the scope of the NZ ETS and is also fully involved in the international carbon credit marketplace, Richard Hayes has a good overview.1 Hayes says that the NZ review committee’s preliminary report had made the comment that only 25% of the expected forest-based carbon credits had already been issued. “I believe from the other numbers that I’ve seen that, for example, the number of participants in the NZ EUR that a lot of foresters have stayed away from registering.” There were two types of foresters – • Those managing pre-1990 forests subject to compulsory registration, who are entitled should they register by the end of the year for compensation for a change of land use. • Post-1989 foresters who are effectively able to opt into the ETS and are not required to do so. “It appears that effectively neither group has opted in, in any great volumes at this stage.” Hayes says from a supplier’s perspective, if everybody had opted in, it could be expected that there was going to be a surplus pre-2012 of forest-based credits in comparison with the expected volumes of credits that needed by the various emitters. 1
“Of course, that dynamic has changed completely as soon as the price of international credits has come down below the $25 threshold.” Certified emissions reduction credits (CERT credits), where credits are earned from a new technology project or emissions reduction strategy in a developing country, are permitted in the NZ ETS. “So last year in December, when these CER credits dropped below NZ$20, from the point of view of supply, there was effectively an infinite supply of credits of that type in the NZ ETS and certainly they were cheaper than NZUs and they dragged the price of the NZU down.” The CER-type of credits can be bought on an option basis and are traded in hundreds of thousands a day and millions every month and were available for purchase every day for delivery on 31 March 2012. “So you don’t even need to pay for them and have holding costs from, say, today until 31 March.” The CER credits had brought a completely different element into the market and Hayes says he believed many emitters bought a large number of CERS in December 2010 and a large number were sold when the price of CERs went above $25 again and the market for NZUs crept up and peaked around $22. “Those emitters were simply cashing up their CERs and buying NZUs from $18, $19, $21, making themselves an arbitrage profit.”
Rugby in heaven while world holds breath over global climate change. Southern Hemisphere Forest Industry Journal. Vol. 17 No. 2. June 2011.
Carbon credits and organised crime concerns grow The role of organised crime in carbon markets is increasingly coming under the spotlight. The Australian Crime Commission (ACC) was recently moved to issue a media release regarding the issue under the heading “Organised crime and carbon trading schemes”. Michael Drew, a professor of finance at Griffith University in Queensland, was reported as saying organised crime groups were “deeply engaged in money laundering in the global carbon market” and that carbon tax fraud had become “one of the most profitable scams” across Europe. Professor Drew said making the carbon market a prime target for criminals was the estimate that carbon trading was forecast to be a US$3 trillion market by 2020 – worth more than the world oil market.1
The ACC noted in its statement “Organised crime is motivated by profit, and criminals look to exploit markets where there is money to be made. “There is some risk that carbon credits could be used for money laundering purposes as they can be bought and traded using criminal proceeds to disguise the true origin of the funds. Carbon credits pose similar money laundering risks to other financial products which represent value such as securities and derivatives.” In March 2008, the ACC produced a classified Discussion Paper for stakeholders on the topic of emissions trading. While the overall level of risk assessed at that time was not high, it was assessed that any major defrauding of this national scheme could adversely impact participating parties and the community.
1
Source: Carbon schemes a Mafia ‘honeypot’. Greg Stolz, The Daily Telegraph, September 29, 2011.
September/October 2011
Southern Hemisphere Forest Industry Journal Vol. 17 No. 3 19
Southem Markets
Chile exports and prices Chile Pulp Product Exports ($M) 400 350 300 250 200 150 100 50 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S
0 2008
2009
2010
2011
Chile Panel and Board Exports (US$M)
Chile Paper Product Exports ($M) 40.0
35.0
35.0
30.0
30.0
25.0
25.0
20.0
20.0
15.0
15.0
10.0
10.0 5.0
5.0
0.0 2007
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S
0.0 2008
2009
2010
450.0
1,800.0
250.0
400.0
1,600.0
200.0
350.0
1,400.0
150.0
300.0
1,200.0
250.0
1,000.0
200.0
800.0
150.0
600.0
100.0
400.0
50.0
200.0
50.0 0.0
Plyw ood
Q2
2010
Q1
Woodchips
Q4
2009
Q3
Q2
Q1
Q4
Q3
Q2
Lumber
Q1
2008
Q4
Q3
Q2
Q1
Q4
2011
Fish meal (US$/T.M.B.)
Q3
2010
Q2
2007
0.0
Bleached pulp (US$/T.M..)
2011
100.0
Q1
0.0
(Pulp and Fish Meal)
(Copper and Oil)
2,000.0
2009
2010
Fibreboard
Chile Lumber, Woodchips, Plywood Exports Inex (100: 2003)
500.0
Oil (US$/bb.)
2009
Plywood
Chile Commodity Prices (US$/unit)
Copper (US$/lb.)
2008
2011
2011 Total
Source: Chile Government data.
PINE LUMBER: Pine lumber exports from Chile totalled US$659.9 million in the 12-month period ended September 2011, up 23.2% on the year ended September 2011. WOOD PRICE INDEX: The price index for exported lumber products levelled out in the first two quarters of 2011 but were higher than in the first half of 2010. Total index price in Q2 2011 was 146.2 compared to the high of 152.9 in Q3 2010 but was higher than the 135.1 of Q2 a year earlier. PULP: The value of pulp product exports continued an erratic increase, lifting to US$3,923.5 million in the 12-months ended September 2011 or 24.5% more than in the year ended September 2010. PANELS AND BOARDS: The value of Chile’s exports of panel and board products climbed through the winter of 2011, rising to US$498.6 million in the year ended September 2011, or 12.1% more than in the September 2010 year. COMMODITY PRICES: As illustrated in the graph, commodity prices were generally firmer through the start of 2011 but have trended down somewhat through the middle part of the year. The bleached pulp price was US$719.2 per metric ton in September 2011, or 4% lower than a year previously.
20 Southern Hemisphere Forest Industry Journal Vol. 17 No. 3
September/October 2011
New Zealand exports and housing New Zealand lumber exports (NZ$M)
New Zealand lumber exports by value trend (US$/M3)
400.0
400
350.0
350
300.0
300
250.0
250
200.0
200
150.0
150
100.0
100
50.0
2010
Pine lumber
2011
2009
Wood products
New Zealand Log Exports (US$M)
2011
New Zealand Building Consents (number by month) 2,500
140 (Houses and Apartments)
120 100 80 60 40 20
3,000 2,500
2,000
2,000
1,500
1,500 1,000
1,000
500
500
2009
2010
2011
0 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A
0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
0
2010
(All dwellings)
2009
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
50 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
0.0
Southem Markets
2007
2008 Houses
2009 Apartments
2010
2011
All dwellings
Source: Statistics New Zealand
LUMBER AND WOOD: The value of pine lumber exports from New Zealand to the 12-month period ended August 2011 was NZ$714.9 million, or 6.7% less than the previous year. VALUE TRENDS: A lift in value per cubic metre sold over the summer period was followed by a dribbling decline through 2011, dropping to US$279/m3 in August. LOG EXPORTS: Log exports from New Zealand at US$1,252 million rose 10.6% in the 12 month period ended August 2011. HOUSING CONSENTS: Annual numbers for residential building consents issued in the year ended August 2011 were down, with a trending increase put down to work post the Christchurch earthquakes. Building consents issued for houses fell 20% in the year ended August 2011, at 12,428, compared to the August 2010 year.
September/October 2011
Southern Hemisphere Forest Industry Journal Vol. 17 No. 3 21
Southem Markets
Australia trade and housing Australia Wood Product Trade (A$M)
Australia Log Exports (A$M)
120
30
100
25
80
20
60
10
0
5
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
20
2008
2009
2010
Exports
0
2011
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
15
40
2008
Imports
2009
2010
2011
Pulp Product Trade (A$M)
Australia Paper Product Trade (A$M) 350
45
300
40 35
250
30
200
25 20
150
10 5
0
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
50
2008
2009
2010
Exports
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
15
100
2011
2008
Imports
2009
2010
Exports
Australia Building Approvals (total and private sector by month)
2011
Imports
Source for data: Australian Bureau of Statistics
16000 14000 12000 10000 8000 6000
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
4000 2000
2009
2010 Total dwellings
Private sector houses
2011
WOOD TRADE: Wood product imports at A$1,068 million rose 13.3%% in the 12 months ended August 2011 when compared to the August 2010 year. LOG EXPORTS: Log exports in the 12 months ended August 2011 reached a total value of A$212 million, or 32.1% more than a year earlier. PAPER TRADE: After falling through the tail end of 2010, paper product imports rose during much of the period to August 2011 but the year ended August 2011 figure was down 3.9% to A$2,687 million. PULP TRADE: Pulp product exports of A$252 million were just 1.9% higher in the year ended August 2011 compared a year earlier. HOUSING STARTS: As illustrated in the graph, housing starts in Australia started to firm up but the year ended August 2011 was down just 1.0% on the August 2010 year, at 157,342.
22 Southern Hemisphere Forest Industry Journal Vol. 17 No. 3
September/October 2011
Southem Markets
South Africa trade and housing South Africa Lumber Product Trade (Rand Million) 7000
1000.0
6000
800.0
5000
600.0
4000
400.0
3000
200.0
2000
0.0
1000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
1200.0
2009
2010 Exports
0
2011
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
South African Residential Building Consents (R'000)
2009
Imports
2010
Residential
2011
Total
South African Paper Trade (Rand Million)
South Africa Pulp Trade (Rand Miillon)
700.0
800.0
600.0
700.0 600.0
500.0
500.0
400.0
400.0
300.0
300.0
200.0
0.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
100.0
0.0
2009
2010 Exports
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
200.0
100.0
2009
2011
2010 Exports
Import
2011
Imports
Sources: Statistics South Africa and Department of Trade and Industry.
LUMBER TRADE: Exports of lumber product in the 12 months ended July 2011 were valued at a total of R6,693 million (US$842 million) or 11.8% lower than in the July 2010 year. HOUSING STARTS: The value of residential building approvals in South Africa rose 8.7% in the 12-months ended July 2011 compared to the July 2010 year, at a total of R27,885 million in value (US$3,505 million). PULP TRADE: The value of pulp product exports for the 12 months ended July 2011 at R5,968 million (US$750 million) were up 14.3% on the July 2010 year. PAPER PRODUCT TRADE: The value of paper product exports for the 12 months ended July 2011 at R4,377 million (US$550 million) down by 9.3% on the July 2010
September/October 2011
Southern Hemisphere Forest Industry Journal Vol. 17 No. 3 23
NZ Log Price Summary June 2011 Quarter and 12-Quarter Average As at: September 2011 September 2010 (Quarter)
December 2010 (Quarter)
March 2011 (Quarter)
June 2011 (Quarter)
12-quarter average
Pruned
148-219
176-203
179-197
155 - 181
170
Unpruned A-grade
127-144
118-121
132-144
133 - 148
119
Unpruned K-grade1
109-118
106-130
130-148
125 - 145
110
Pulp
103-105
100-120
129-137
110 - 176
97
P1
125-156
130-154
128-147
130 - 152
133
P2
108-127
109-132
110-127
122 - 130
109
S1
97-103
97-100
88-98
99 - 125
94
S2
89-101
92-102
92-103
86 - 105
88
L1 and L2
71-99
73-102
72-103
74 - 115
79
S3 and L3
81-94
80-86
82-92
81 - 92
75
Pulp
44-59
46-58
47-57
48 - 61
51
Generic Log Type & Pricing Point EXPORT (NZ$ per JAS m3 f.o.b.)
DOMESTIC (NZ$ per tonne delivered at mill
Source: NZ Ministry of Agriculture and Forestry, Senior Analyst, MAF Policy Information & Regions 2 = Korea grade
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September/October 2011