There is an abundance of blue gums planted in the Great Southern Region of Western Australia with plantation establishment peaking in 1999 to 2001. With an estimated harvest time in 8–12 years, chip exports from Albany were 1.6 M tonnes in 2008 and 2009. However, demand has dropped significantly due to the Global Financial Crisis with exports from Albany dropping in volume in 2010.
Currently, this resource is chipped and exported overseas for high quality paper production. With this volatility and sole use, suppliers are keen to diversify their markets away from the dominant chip market to give them another customer.
In the Great Southern Region of Western Australia over 150,000ha of plantation blue gum are currently under cultivation. These have the potential to sustain supply in excess of 2.5 M tonnes per year. A significant number of these plantations have received Forest Stewardship Certification.
Lignor will also be supplied with forest thinnings and residues of three Western Australian hardwoods — jarrah, karri and marri — which are sustainably managed by the Western Australian State Government’s Forest Products Commission (FPC). These FPC forests have been independently certified to:
- AS4708:2007 — Australian Forestry Standard (AFS) which is endorsed by the Program for the Endorsement of Forestry Certification (PEFC)
- ISO14001:2004 — Environmental Management System (EMS), the international standard for environmental management systems.
These certifications are received after rigorous, ongoing auditing and assessment by an accredited third party auditing firm. To achieve and maintain certified Chain of Custody, Lignor needs to demonstrate a systemic approach to continuous improvement, consistently addressing issues at the root cause. (See FPC website)
FPC is a very committed supplier and is very keen on adding value to the produce of Western Australia’s managed forests. The Minister of Forestry has signed the following statement.
16 October 2009 - Government of Western Australian
“The Western Australian State forests which produce jarrah, karri and marri are managed to world’s best practice. All Western Australian jarrah, karri and marri are supplied only from regrowth forests on a sustainable basis with no timber sourced from old growth forests.
The Forest Products Commission of Western Australia has achieved Australian Forestry Standard (AFS) certification of its operations. The Defined Forest Area registration (area that has been certified) now applies to the forest area available for timber harvesting under the Forest Management Plan 2004–13 and which is not subject to active mining tenement.
The AFS is endorsed by the international Program for Endorsement of Forest Certification schemes (PEFC), which means that the standard is recognised both in domestic and international markets. The Forest Products Commission is also managing to the Environmental Management System (EMS) and conforms to international standard ISO 14001.
I understand an agreement had been reached with Lignor Ltd in October 2007 for sufficient resource of jarrah, karri and marri to supplement the blue gum resource required by Lignor to produce a range of high quality eucalyptus based engineered wood products. The FPC is now in final negotiation to enter into a modified supply agreement that will be in line with the latest technology and market developments.”
Terry Redman MLA
Minister for Agriculture and Food; Forestry; Minister Assisting the Minister for Education
This support appears to transcend political parties as the previous Minister, from a different party, signed a similar statement in 2007.
In the past Australia has run a current account deficit on wood and relied on softwood imports in particular from NZ hence the Federal Government launched in 1997 the Plantations for Australia Vision 2020 which was intended to make the country self sufficient in timber by 2020. However with the run down in timber supply from NZ, we will be facing marked shortage of softwood timber. Meanwhile the eucalyptus plantations have increased and plantings peaked in 2000 meaning that we have a wall of plantation hardwood hitting the market while shipments of chips are down considerably due to GFC. Most of the plantations established in the last decade have been funded trough Managed Investment Schemes which have suffered a loss of confidence in recent years. As a result, listed plantation forestry companies have experienced sharp share price falls. Australia has a vested interest in engaging with a portal such as Lignor to convert this surplus of plantation eucalyptus currently being chipped into engineered wood which can substitute the former supplies of softwood and structural timbers no longer available from native forest resources.
RESOURCE SIDE: The establishment of softwood plantations in Australia peaked in the late 1970’s while they peaked in NZ around 1994 with nearly 100,000 ha being planted that year. Since then Australia and NZ’s softwood annual plantations have reduced markedly with there being a net deforestation in NZ plantations in 2007 as the Carbon tax of c NZ$14,000/ha came in from 1 January 2008 on pre–1990 plantations being felled and not replaced.
Australia has reduced timber harvesting from native forests significantly over the last decade so that there are reduced supplies of heavy structural timbers from the native hardwood timbers.
DEMAND SIDE: This shortage of softwood is exacerbated at the moment by the rise in demand from China becoming the dominant importing softwood market. Years ago it used to be Korea now its China as the Shanghai local government issued “the most comprehensive and detailed code for wood-frame structures in China” according to The Times. Hitherto China had been reliant on mainly bricks and concrete for low rise housing. Yet bricks are very energy dependent with about 25% of China’s coal requirements being used to fire bricks. Mining bricks from clay also consumed about 0.75 M hectares of prime arable land according to Reuters and employs some of the lowest grade labour. Timber supplies from Russia become harder to get. Russia has put tariffs on its log exports but these have exacerbated the situation that already the Russians have harvested the easy to get logs and have to travel further into the perma frost to harvest more timber yet the rise in global temperatures has meant that their harvest season is shorter in winter further restricting supply.
There is talk of softwood log price rises in NZ of 30% over the next year. All this augurs well for Lignor.
Lignor has been approached by entities in two other Australian states to look at using the resource there as well as interested parties for overseas.