Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

More than enough wood fibre to supply proposed Kawerau plant

'More than enough' wood fibre to supply proposed $180M Kawerau plant, report says

By Tina Morrison

May 22 (BusinessDesk) - Concerns that there may not be enough wood fibre to supply a new $180 million particleboard plant proposed for Kawerau have been quashed by an industry study which concludes "there is more than enough wood available" although it notes the increased demand may push up prices in an industry dependent on low-cost supply.

China’s Guangxi Fenglin Wood Industry Group last year announced plans to establish a plant in Kawerau by 2020 to produce 600,000 cubic metres of panel boards a year and generate 100 new jobs, at an expected cost of $180 million.

That prompted push back from some in the industry, with the Wood Processors & Manufacturers Association of New Zealand raising concerns that timber mills in the region didn’t produce enough wood fibre to supply the proposed plant as well as existing big pulp mills of Kinleith in Tokoroa and Tasman in Kawerau, which are owned by Japan’s Oji Fibre Solutions. Fenglin’s proposed plant is expected to initially produce particle board and later expand to medium-density fibre board (MDF).

"There is more than enough wood available to support an additional 700,000 cubic metres of domestic fibre demand," Finland forestry consultancy Indufor concluded in its evaluation of wood fibre availability for New Zealand Trade and Enterprise. "The question becomes the availability by fibre type (and hence fibre cost)."

Pulp log prices in New Zealand have remained remarkably static over recent years even though prices for other log types have surged higher.

Data from NZX's agricultural analysis business AgriHQ shows average national pulp log prices have fallen over the past six years, from $52.60 a tonne in the first quarter of 2012 to $50.50 a tonne in the first quarter of this year. That's in contrast to other log prices, with A-grade export logs surging from $82.70 a tonne to $131.30 a tonne over the same period, and domestic S1 logs jumping from $98.40 a tonne to $131.20 a tonne.

Indufor notes that industrial fibre is "relatively low cost', and is sourced from forest operations in the form of pulp logs and residues from logging operations and sawmills.

"Low raw material costs are crucial to competitiveness, and hence the viability of the industry," Indufor said.

The forestry consultancy said low-quality small diameter logs, which had traditionally been used by local industrial fibre plants have experienced strengthening demand in recent years as a result of a buoyant log export market competing for a similar product and solid domestic demand.

This meant central North Island industrial fibre plants had to source logs from other regions and use industrial and small sawlogs that could otherwise be exported.

"This highlights that the shortfall is an economic rather than physical deficit," Indufor said. "If the price for low-grade export logs drops, the volume available for domestic consumption will increase."

The use of forest binwood had increased in recent years to help meet shortfalls and shorter binwood types were underutilised due to handling costs and the fact that it was less suitable for the pulp and paper sector, Indufor said. The short binwood was suitable for particleboard although there is uncertainty over volumes and the cost of extraction, it said.

The report noted that demand for sawmill residue was strong, with all central North Island woodchip consumed and additional supply sourced from as far afield as Northland and Taranaki. Shavings were frequently burnt on site for power or heat generation or used in agriculture, sawdust showed periodic surpluses and other mill residues were used on site or sold as boiler fuel, it said.

"The impact of the new facility on central NI wood fibre availability (and hence cost) will therefore depend on the quantity of ‘in-surplus’ material that is available, namely short or less accessible forest binwood, and to a lesser extent, sawdust from processing facilities," Indufor said.

It estimated about 250,000 cubic metres a year of forest binwood may be available although it will only be recovered if it can be delivered at a lower cost than the next cheapest supply source, and sawdust volumes of 100,000 cubic metres a year are also likely to be available.

"The balance of the new demand (350,000 cubic metres per annum) will need to be fulfilled by logs currently being exported (mostly industrial grade and small sawlogs), as well as further inter-region transfer of logs and woodchips," it said. "This will push up the average delivered cost of fibre to all fibre users in the North Island."

Indufor said some increase in domestic sawmilling activity is possible, with the increased capacity helping contain fibre costs.

"If a greater volume of whole logs was processed onshore, then there would be extra mill residues available for domestic industrial fibre consumers," it said.

Capacity would need to increase by at least 25 percent, or 900,000 cubic metres above 2017 consumption, in order for the impact on feedstock price to industrial fibre consumers to be contained, it said. Higher forest binwood recoveries would also assist in containing fibre price increases, it said.

Fenglin’s planned investment in Kawerau has been hailed as a huge benefit to the district by Mayor Malcolm Campbell, who noted the area had traditionally faced a shortage of job opportunities.

Founded in 2000, Fenglin was one of the earliest engineering board manufacturers in China and the first in Guangxi Province, according to its website. Listed on the Shanghai Stock Exchange, Fenglin has three MDF plants and one particle board plant in China with total capacity of 810,000 cubic metres a year, and also owns about 14,000 hectares of forests to secure wood supply.

With plants in China’s Guangxi and Guangdon provinces, the company said it began to explore more international opportunities from 2015.

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

DIY Law: Government Exempts Some Home Improvements From Costly Consents

Homeowners, builders and DIYers will soon have an easier time making basic home improvements as the Government scraps the need for consents for low-risk building work such as sleep-outs, sheds and carports – allowing the construction sector ... More>>

ALSO:

Media Awards: The New Zealand Herald Named Newspaper Of The Year, Website Of The Year At Voyager Media Awards

The New Zealand Herald has been labelled a “powerhouse news operation” as it claims the two biggest prizes – Newspaper of the Year and Website of the Year – along with many individual awards at the 2020 Voyager Media Awards Website of the ... More>>

ALSO:

ASB Bank: ASB Takes The Lead Again With New Low Home Loan Interest Rate

ASB has moved again to support its customers, cutting a number of home loan rates, including the two-year special rate to a new low of 2.69% p.a. Craig Sims, ASB executive general manager Retail Banking says the reduced rate will be welcome news for many ... More>>

ALSO:

Nathan Hoturoa Gray: The Problems With Testing And Case Statistics For Covid-19

To begin to understand disease transmission in a country requires adequate testing of your population with properly vetted, accurate tests. As the world struggles to find what 'adequate percentage' of the population is necessary, (estimates predict ... More>>

ALSO:

RNZ: Fletcher Building To Lay Off 1000 Staff In New Zealand

The construction company will cut around 10 percent of its workforce as it struggles with the fallout from Covid-19. More>>

ALSO:

Can Pay, Won't Pay: Cashflow Moves Urged

Government Ministers are asking significant private enterprises to adopt prompt payment practices in line with the state sector, as a way to improve cashflow for small businesses. More>>

ALSO:

Gordon Campbell: On Why We Should Legally Protect The Right To Work From Home

For understandable reasons, the media messaging around Level Two has been all about “freedom” and “celebration”, but this is not necessarily going to be a universal experience. When it comes to workplace relations, Level Two is just as likely to ... More>>

ALSO:


Telecoms: Spark Welcomes Spectrum Allocation And Prepares For 5G Rollout Over The Next 12 Months

Spark welcomes spectrum allocation and prepares for 5G rollout over the next 12 months Spark today welcomed the announcement of the direct allocation process of 5G spectrum, with the Company to be offered management rights to 60 MHz of 3.5 GHz ... More>>

ALSO:


Trade: Record Monthly Surplus As Imports Dive

Imports in April 2020 had their biggest fall since October 2009, resulting in a monthly trade surplus of $1.3 billion, Stats NZ said today. “This is the largest monthly trade surplus on record and the annual goods trade deficit is the lowest ... More>>

ALSO:


Media Blues: Stuff Chief Executive Buys Company For $1

Stuff chief executive Sinead Boucher has purchased Stuff from its Australian owners Nine Entertainment for $1.
The chief executive was returning the company to New Zealand ownership, with the sale is expected to be completed by 31 May.
"Our plan is to transition the ownership of Stuff to give staff a direct stake in the business as shareholders," Boucher said in a statement.... More>>

ALSO:

RNZ: Bar Reopening Night 'much, Much Quieter'

Pubs and bars are reporting a sluggish first day back after the lockdown, with the fear of going out, or perhaps the joy of staying home, thought to be a reason for the low numbers. More>>

ALSO:

Stats NZ: New Zealand’s Population Passes 5 Million

New Zealand's resident population provisionally reached 5 million in March 2020, Stats NZ said today. More>>

NIWA: Seven Weeks Of Clearing The Air Provides Huge Benefits: Scientist

Seven weeks of lockdown has provided evidence of how pollution can vanish overnight with benefits for the environment and individuals, says NIWA air quality scientist Dr Ian Longley. Dr Longley has been monitoring air quality in Auckland, Wellington ... More>>

ALSO:

Government: Milestone In Cash Flow Support To SMEs

A significant package of tax reforms will be pushed through all stages in Parliament today to throw a cash flow lifeline to small businesses. More>>

ALSO:



University Of Canterbury: Astronomers Discover The Science Behind Star Bursts That Light Up The Sky

University of Canterbury (UC) astronomers are part of an international team that has revealed how explosions on the surface of a white dwarf star can increase its brightness by thousands or millions of times making it look like a new star. For ... More>>

Air NZ: Air New Zealand Adds Business-timed Flights For Regions

Air New Zealand will operate business-timed flights in and out of a number of regional ports from next month.
The flights will allow customers in Hamilton, Tauranga, Napier, New Plymouth, Palmerston North, Nelson, Dunedin and Invercargill to undertake a day of business in either Auckland, Wellington or Christchurch... More>>

ALSO: