The new technological line for production of wooden pellets has been launched in a special ceremony at Lesosibirsky LDK No. 1 (Segezha Group, part of Sistema JSFC) at the end of the year 2018.
The presentation ceremony was attended by Аleksandr Uss, Governor of Krasnoyarsk Krai, c, and other heads of the Krai and the company.
The capacity of the new enterprise is 70,000 tons of ready pellets in a year, which will be exported all over Europe, but the designed solution allows to increase the output volume by nearly 1.5 times.
The investments into the pellet production facility amounted to RUB 816.6 million.
A month after the factory first started in “test mode”, the first batch, 120 containers, was loaded with approximately 2400 tonnes of pellets for European customers.
Biofuel production is one of the key areas of the Segezha Group in Ecology and Environmental Protection. The launch of a new factory allows the company to use wood processing resources to the fullest extent, providing handling of sawing by-product and processing it into biofuel and heat energy.
Photo: Mikhail Shamolin, Chairman of the Board of Segezha Group
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MaskinLeverantörerna (ML), the Swedish trade association for suppliers of mobile machinery and equipment, has announced that it will launch a brand new Swedish Forestry Expo, which will take place June 3-5, 2021, at the Solvalla Harness-Racing Track in Stockholm, Sweden. The fair aims to be a meeting place for professional, large-scale forestry with forest machinery the focal point.
According to a statement, the launch of the fair is an initiative of the trade association and its members. The Swedish Forestry Expo will be open to all exhibitors who have relevant products for large-scale forestry, forest machines, allied equipment, and accessories. This includes companies that are not members of MaskinLeverantörerna.
The new trade fair aims to be an easily accessible meeting place where one as a visitor can clearly experience all exhibitors in the area. In addition to the fair, meetings and seminars will be organized, as knowledge transfer is an important part of the experience.
The organisers, MaskinLeverantörerna (ML) says that it has already confirmed the participation of several major forest machinery brands including Eco Log Sweden AB, John Deere AB, Komatsu Forest AB, Rottne Industri AB, and Ponsse AB.
We want to create a more focused fair for professional forest equipment buyers, where machinery is the focal point. The choice of Solvalla as the fair arena felt natural, as we have good experience from there with the Swedish Machine Fair and the location meets the requirements for accessibility, said Björn Bäckström, CEO of MaskinLeverantörerna.
Photo: Björn Bäckström, CEO, MaskinLeverantörerna (ML), the Swedish trade association for suppliers of mobile machinery and equipment
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The recent UN Report on climate change has put renewable energy back in the headlines, and rightly so. If we want to avoid the most serious damage from climate change, we need an all-in approach, solutions that are available today, and policies that support our working forests.
While solar and wind power are the most talked-about renewable solutions, bioenergy is a critical part of the mix – and one that is available right now. As an alternative to coal, wood pellets help power utilities reduce their carbon footprint up to 85% on a lifecycle basis, often without undergoing major renovations to their existing infrastructure. Power generation using biomass also provides a reliable, clean source of energy that complements the intermittency of wind and solar energy.
The Guardian reported last week that “the capacity of renewable energy has overtaken that of fossil fuels in the UK for the first time, in a milestone that experts said would have been unthinkable a few years ago.”
Bioenergy is making this possible. Countries like the UK, Denmark, Sweden, Germany, and Japan are increasingly turning to wood-based bioenergy. Across Europe, biomass represents more than 60% of renewable energy consumption, and is widely seen as essential to the strategies for meeting ambitious carbon reduction goals. That’s why The Economist recently noted: “if climate targets are to be met … it will be impossible without the contribution of a critical, yet often overlooked source of renewable energy: modern bioenergy.”
Just as importantly, wood biomass – and strong demand for forest products — helps ensure forests stay forests. Today, in the southeast U.S., private forest owners are growing 40% more wood than they remove every year. Why? Because additional demand raises the value landowners can get from keeping their land as managed forests. Absent strong demand for wood, landowners have the incentive to convert their land for a higher return. That could mean less environmentally beneficial agriculture, or worse – a housing development or a strip mall.
But, we also must recognize that not all biomass is good biomass. How we source our wood is critical. As the world’s largest producer of wood pellets with an expanding footprint, we take seriously our responsibility to maintain and improve forest health. Enviva uses industrial wood waste (like sawdust), or low-grade wood – including “thinnings,” limbs, tops, or crooked and knotted trees that would otherwise not get used for lumber or other higher value products. We only source from land that will continue to be re-forested. And we are leaders in transparency. Under our Track & TraceTM program, we identify the specific origin of wood that we receive from the forest, and we make that information public.
We have long embraced third-party certification, and we work with the world’s foremost forestry organizations, including the Forest Stewardship Council (FSC), the Program for the Endorsement of Forest Certification (PEFC), the Sustainable Forestry Initiative (SFI), and the Sustainable Biomass Program (SBP). This week, I’m pleased to be joining the SBP Board. Forest certification programs provide a consistent, verifiable and transparent framework for evaluating the sustainability of a company’s operations, from forest to product. At Enviva, we believe in appropriate safeguards and continuous improvement, and I look forward to sharing what we’ve learned as SBP plays an increasingly important role in the sustainability of our industry.
The climate is changing. We need to move forward with workable solutions that can meet today’s energy needs, and protect our forests at the same time. Only an all-of-the-above approach — that includes wood biomass — can get us there.
Enviva announced recently that the conditions precedent to the organization’s previously announced take-or-pay off-take contracts to supply 630,000 metric tons per year (MTPY) of wood pellets to a major Japanese customer have been satisfied and the agreements are now firm. Under the terms of the agreements with Mitsubishi Corporation, Enviva will be the exclusive, long-term imported biomass fuel supplier to the Aioi Bioenergy Corporation, a joint venture between Mitsubishi Corporation Power Ltd. And Kansai Electric Power Co, Inc., which is converting an existing oil-fired power plant to biomass.
Under these contracts, Enviva Partners, LP (NYSE: EVA) (the “Partnership”) and Enviva JV Development Company, LLC, the Partnership’s sponsor’s joint venture with John Hancock Life Insurance Company (U.S.A.), will supply approximately 180,000 and 450,000 MTPY of wood pellets, respectively. Deliveries under the contracts are scheduled to commence in late 2022 and continue for at least 15 years.
“Our partners at Aioi Bioenergy and Mitsubishi Corporation are at the forefront of Japan’s commitment to reducing the impacts of climate change,” said John Keppler, Chairman and Chief Executive Officer of Enviva. “We are privileged and honored to be the sole source of supply of sustainable wood pellet fuel to the Aioi facility, one of the largest dedicated biomass projects in Japan announced to date, and we look forward to helping Mitsubishi and Kansai deliver on the promise of renewable energy.”
Enviva Partners, LP and its sponsor have now finalized long-term off-take agreements with counterparties in Japan that will total 1.5 million MTPY by the end of 2022.
About Enviva Partners, LP
Enviva Partners, LP (NYSE: EVA) is a publicly traded master limited partnership that aggregates a natural resource, wood fiber, and processes it into a transportable form, wood pellets. The Partnership sells a significant majority of its wood pellets through long-term, take-or-pay agreements with creditworthy customers in the United Kingdom and Europe. The Partnership owns and operates six plants with a combined production capacity of nearly three million metric tons of wood pellets per year in Virginia, North Carolina, Mississippi, and Florida. In addition, the Partnership exports wood pellets through its owned marine terminal assets at the Port of Chesapeake, Virginia, and the Port of Wilmington, North Carolina and from third-party marine terminals in Mobile, Alabama and Panama City, Florida.
About Enviva Holdings, LP
Enviva Holdings, LP is the world’s largest producer of wood pellets, a renewable and sustainable energy source used to generate electricity and heat. Through its subsidiaries, Enviva Holdings, LP owns and operates wood pellet processing plants and deep-water export terminals in the Southeastern United States. They export pellets primarily to power plants in the United Kingdom and Europe that previously were fueled by coal, enabling them to reduce their lifetime carbon footprint by about 80 percent. They make pellets using sustainable practices that protect Southern forests, and employ about 800 people and support many other businesses in the rural South, where jobs and economic opportunity are sometimes scarce.
John Keppler, Chairman and Chief Executive Officer of Enviva
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The sawmill specialists at SERRA based their new XT 135 mobile saw on their stationary XE models to create a whole new performance class of mobile saws.
SERRA – one of Germany’s most innovative companies, according to the judges of the “Top 100” competition – specializes in sawmill technology and in particular in horizontal band saws. However, it is increasingly also becoming the go-to company for high-performance mobile sawmills.
These products help cut down on product miles, as they are taken to the raw material (wood) rather than the other way around. Predominantly used in contract sawmilling, mobile sawmills are usually powered by electric motors, often in combination with suitable generators that produce the electricity on site. Alternatively, some versions are equipped with a combustion engine.
To ensure the sawmills are as mobile as possible, they are usually designed to be transported by car, which means they are restricted to the maximum towing weight of 3.5 metric tons. Naturally, that has implications for the power and performance of the mobile sawmill.
However, SERRA started to wonder what the point is in having a lightweight mobile saw that is only ever towed by a heavy tractor or truck. That question ultimately led to the development of the new XT 135 model. The new product is based directly on the heavy stationary XE models and features an extremely robust build.
The XT 135 is designed to offer unlimited equipment options and aims to impress with its sheer performance data. For instance it processes logs up to 135 cm in diameter, has a large cutting length thanks to a hydraulically foldable extension, boasts a variable saw head with plenty of space above the saw blade, offers easy access to the saw blade through a hydraulic lid opening, and the weather cover on the lockable operator station even provides a little bit of shelter
SERRA Maschinenbau GmbH (83253 Rimsting, Germany)
Photo: SERRA XT-135 mobile saw
Timber Queensland held its Annual General Meeting last week. A unanimous decision by members present, elected Mr. James Hyne, Stakeholder Engagement Manager, Hyne Timber as the new Chair and Mr. Paul Bidwell Deputy Chief Executive, Master Builders Queensland as Deputy Chair.
Timber Queensland Chair Mr. James Hyne said the incoming Board has a strong eye to the future given the significant potential for further industry growth and development. “A key strength of the industry body is its diversity of members and Directors who understand all facets of the industry and the opportunities that are available for future growth,” said Mr. Hyne.
“Timber Queensland provides a united, powerful voice on political, technical, market development, industrial and environmental issues. As an industry, we have a positive story to tell as timber really is the ultimate renewable,” he said.
The other Directors elected at the AGM included:
– Skene Finlayson, Managing Director, Finlayson Timber and Hardware
– Robert Tapiolas, Director, Parkside Group
– Curly Tatnell, Chairman, DTM Timber
– Doug Simms, Managing Director, Simms Group
– Islay Robertson, Chief Operating Officer, HQPlantations
– John Ryan, Fabrication Sales Manager, Sunshine Mitre 10
– Bob Engwirda, Chief Executive Officer, Hurfords Wholesale
“We also look forward to the launch of the Queensland Parliamentary Friends of the Queensland Forest and Timber Industry Network in 2019, with the inaugural reception to take place in the Premier’s Hall on 27 February,” Mr. Hyne said.
Timber Queensland Chief Executive Officer, Mick Stephens said the Board has identified some key priorities going forward, including long-term resource security and manufacturing competitiveness, including low cost energy and opportunities such as promotion of bioenergy.
“Now, more than ever before, our industry’s future rests on Government decisions that will be made during the next few years. These decisions will impact resource availability and will influence manufacturing investment and the use of our products in the built environment,” said Mr. Stephens.
Source: Timber Queensland
After several years of “break” dedicated to the construction of shredders / hammer shredders for medium / small composting plants, Pezzolato re-proposes the S18000 model driven by a 545 Hp Iveco C13 engine.
The rotor, equipped with 62 mobile hammers, has one meter in diameter and is 1800 mm wide.
Set up on a MAN TGS 35 500 truck, the car is powered from the truck cab with a 10.4-meter Palfinger Q130LD104 outrigger crane.
To move into the working position the S18000 crumbles rotates on a thrust bearing and slides on the truck frame.
The operator’s driving position is sliding to allow the machine to be powered from both sides.
A report released by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) today highlighted continued growth in Australia’s forestry sector thanks to favourable conditions in key markets, particularly housing and international trade.
ABARES Executive Director, Dr Steve Hatfield-Dodds, said Australian forest and wood products statistics: March and June quarters 2018, reported the fourth consecutive year of growth for the value added by the forestry and forest product manufacturing industries, to $8.8 billion.
“We are seeing strong domestic demand for wood products, with a 4.4 per cent increase in house commencements compared to the previous year, while the number of new other residential buildings—such as units and townhouses—also increased,” Dr Hatfield-Dodds said.
Domestic demand for wood products remains at high levels. Following four years of consecutive growth, the estimated volume of logs harvested stabilised in 2017−18 at 32.9 million cubic metres.
Exports of Australia’s wood products were higher than ever in 2017–18, increasing for the fifth consecutive year to reach a record $3.6 billion, on the back of record high exports of woodchips, paper and paperboard, and roundwood.
Overseas demand for woodchips, sourced mainly from Australia’s commercial hardwood plantations, remains strong with woodchips exports reaching $1.3 billion. The report finds the Chinese market accounted for the majority of total wood product export growth in 2017−18. In fact, according to ABARES, 47 per cent of Australia’s wood product exports went to China, a market now worth $1.7 billion.
Australia’s demand for overseas wood products in 2017−18 also increased, to $5.6 billion across all major wood product import categories, driven by growth in imports of wood-based panels and miscellaneous forest products.
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Cascades Inc. will invest $58 million to modernize and add new tissue converting equipment its Wagram, NC plant. The Canada-based manufacturer of green packaging and tissue products will install five new state-of-the-art converting lines and modernize four existing lines. The company will hire 66 full time employees to operate the new equipment, and an additional 50 temporary jobs will be created to prepare the building and install the equipment. The commissioning of the new converting lines is expected to begin in April 2019 and will be finalized in the first quarter of 2020.
“This modernization project is directly aligned with the objectives set out in our strategic plan,” said Mario Plourde, Cascades President and CEO. “It will not only allow us to replace aging equipment with modern and efficient technology, but will also improve our integration rate, increase our geographical footprint and extend our ability to serve our customers in the United States. With today’s challenging market conditions, this is a crucial investment that will reduce our manufacturing and transportation costs, improve our environmental footprint and more importantly, bring us closer to our customers.”
The Wagram plant produces hand towels, paper towels, bathroom tissue and napkins marketed under the Cascades PRO brand, which serves the Away-from-Home markets. The plant will be largely supplied by the Cascades tissue plant located 30 miles away, in Rockingham. Upon completion of the project, the Wagram plant converting capacity will increase from 5.3 million cases per year to close to 15 million cases per year, resulting in a global capacity addition of 3 million cases for the Group.
“International manufacturers like Cascades are thriving in North Carolina,” said North Carolina Governor Roy Cooper. “Our state’s global reputation attracts new investments and jobs because companies know North Carolina’s skilled industrial workers will help them succeed here. These new jobs are an extra welcome boost for an area working to recover from Hurricane Florence.”
Cascades employs 11,000 people who work in over 90 production units in North America and Europe.
Photo: Mario Plourde, Cascades President and CEO.
As of 2019, Pollmeier Massivholz GmbH & Co. KG will be offering spruce laminated veneer lumber (LVL), which is to be produced at the Creuzburg / Thuringia site. So far, only beech veneer plywood, known as BauBuche, has been produced in the plant, which went into operation in 2014.
“I see the new veneer plywood products made of spruce as an ideal addition to our product range. Spruce laminated veneer lumber is an established material that is used in structural timber construction for many standard components in non-visible areas. By contrast, beech laminated veneer lumber is mainly used for visible timber constructions and heavily loaded individual components. This means that spruce laminated veneer lumber is not in competition with our BauBuche products, “explains Managing Director Ralf Pollmeier.
“In recent years, we have optimized our veneer lumber production. Now everything is running smoothly and we want to go into 3-shift operation in 2019. This gives us sufficient production capacity for the production of laminated veneer lumber products from both types of wood. Both product lines have high growth potential, “adds Pollmeier.
Pollmeier will offer spruce laminated veneer lumber in various strength classes both as an exclusively longitudinal product as well as with transverse layers. The new Pollmeier Fichte LVL will be presented to the public for the first time at the Bau in Munich in January 2019 (stand no. 318 / hall B5).
In 2012, the hardwood specialist Pollmeier surprised the industry with the construction of the world’s first hardwood-processing laminated veneer lumber plant. Thus Pollmeier entered new technological territory. After the start of production in autumn 2014, the production had to be partially rebuilt and optimized.
The beech veneer plywood from Pollmeier was a world novelty and is still the only constructional material industrially manufactured from hardwood. The BauBuche has been able to prove its efficiency in numerous reference projects throughout Europe and is today valued in both timber engineering and interior design.
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ArborGen has entered into an agreement with Gerdau Aços Longos S.A. (Gerdau) that gives ArborGen exclusive rights to develop and commercialize Gerdau’s genetically improved eucalyptus clones in Brazil. The partnership will expand the products ArborGen can offer its customers and allow it to expand into new markets. The company began offering Gerdau seedlings in November 2018.
ArborGen is one of the largest sellers of eucalyptus and pine trees seedlings in Brazil. It already has exclusive rights to commercialize International Paper’s eucalyptus clones in Brazil and is developing its own proprietary clones as well. Working primarily through contract nurseries, ArborGen’s eucalyptus products are already available in Mato Grosso, Mato Grosso do Sul, São Paulo and Paraná states.
“This expanded agreement allows ArborGen to address important markets such as Minas Gerais and Bahia. The new clones offers growers high wood density and excellent yield, making them ideal for charcoal and energy markets,” said Gabriela Monnerat, general manager of ArborGen Brazil.
ArborGen is the largest global supplier of seedling products and a leading provider of improved technologies to the commercial forest industry.
Photo: Gabriela Monnerat, general manager of ArborGen Brazil.
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Jussi Pesonen, President and CEO of UPM, will assume, on top of his regular duties, temporary responsibility as the Head of UPM Biorefining. The businesses and the transformative growth initiatives in Uruguay and biofuels formerly reporting to Heikki Vappula, will continue operations with existing resources and plans.
UPM will initiate a process for permanent management arrangements in due course.
UPM Biorefining consists of pulp, timber and biofuels businesses.UPM has three pulp mills in Finland and one mill and plantation operation in Uruguay. UPM operates four sawmills and one biorefinery in Finland.
Photo: Jussi Pesonen, President and CEO of UPM
Mercer International Inc. reported strong results for the 3Q ended September 30, 2018 due to higher pulp sales realizations. Operating EBITDA in the current quarter was $86.7 million compared to $64.3 million in the 3Q 2017 and $60.5 million in the 2Q 2018.
For the 3Q 2018, net income was $41.2 million, or $0.63 per share, compared to net income of $21.1 million, or $0.33 per basic and $0.32 per diluted share, for the 3Q 2017 and $16.8 million, or $0.26 per share, in the prior quarter of 2018.
In the 3Q 2018 operating income increased to $63.3 million, or by approximately 69% from $37.5 million in the prior quarter of 2018, and approximately 52% from $41.7 million in the same quarter of the prior year. The increase in the current quarter over the prior quarter is primarily due to lower maintenance costs at its pulp mills and higher pulp sales realizations.
David M. Gandossi, the CEO, stated: “Our agreements to acquire Daishowa‐Marubeni International Ltd. and the Santanol sandalwood business reflect our disciplined approach to acquisitions and capital allocation. Both advance our long‐term value creation strategy to deliver sustainable profitable growth. These businesses leverage our core competencies and complement the world‐class assets that comprise Mercer’s platform for growth.”
Mercer International Inc. is a global forest products company with operations in Germany and Canada with consolidated annual production capacity of 1.5 million tonnes of NBSK pulp and 550 million board feet of lumber.
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Cairngorm Capital Partners acquires the leading timber merchant, Arnold Laver & Co Limited. It joins Cairngorm Capital’s other timber brands, Thornbridge, North Yorkshire Timber and Rembrand to create the largest independent timber business in the UK, with combined revenues approaching GBP 250 million, which will be known collectively as The National Timber Group.
This acquisition is Cairngorm Capital’s 16th proprietary acquisition since July 2016 and the next step in its buy and build strategy to create The National Timber Group. The Group was formed with the aim of consolidating the highly fragmented specialist UK timber merchant market.
In less than 12 months Cairngorm Capital has established a market leading timber business, with a national presence extending from the north of Scotland to London and the South West. The new enlarged Group, which consists of 52 sites and over 1300 employees, is led by Rob Barclay, Group Chief Executive, who joined the Group in June.
The Group has three divisions: a Scottish division that is headquarted in Grangemouth and led by Alex McLeod, who joined the Group as Managing Director, Scotland, in September; one comprising the Arnold Laver brand, headquarted in Sheffield and led by the Arnold Laver management team and a third, comprising the North Yorkshire timber brand and headquartered in Northallerton, is led by Nick Kershaw, Managing Director. With strong, highly trusted regional brands, each of the underlying companies will retain their existing trading names.
Arnold Laver is a family run company established in 1920. It imports, distributes and manufactures a wide range of timber, panels, decorative surfaces and joinery products, serving public and private sector construction, house-building and commercial companies.
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“This new mill represents our commitment to the State of Alabama and to the region,” said Westervelt President and CEO Brian Luoma. “South Alabama was always our preferred location, and the local community offers the workforce and resources that will support our long-term strategy for this facility. We are grateful for the support of Governor Ivey, Chairman Rush and Mayor Day, and we look forward to being a part of this community.”
“The Westervelt Company has long played a prominent role in Alabama’s booming lumber industry and has done so while promoting good environmental stewardship,” Governor Kay Ivey said. “I’m very excited to see that Westervelt is thriving and that they are building their second mill in rural Clarke County. This manufacturing facility is going to have a major impact on this area and give dozens of people a chance to earn a living from a trusted company.”
“The Westervelt Co.’s deep roots in Alabama date back for generations, and I’m pleased to see this family business continue to invest and grow in the state,” said Greg Canfield, secretary of the Alabama Department of Commerce. “The company’s new lumber production facility in Clarke County represents an important job-creating project for a rural area, and it will provide a boost for the forest products industry throughout the region.”
“We are very proud to welcome The Westervelt Company to the region,” said Clarke County Commission Chairman Jackie R. Rush. “I’ve been involved in these discussions from the beginning, and throughout the process, The Westervelt Company’s team has been a pleasure. We’re all looking forward to helping them succeed in our community.”
“The City of Thomasville has been honoured to be a partner with the Clarke County Commission, the State of Alabama and many others as we worked shoulder to shoulder to attract The Westervelt Company to rural southwest Alabama,” said Thomasville Mayor Sheldon Day. “This project will have a tremendous impact on our community and our rural region.”
“We’re excited to be a part of this community,” said Joe Patton, Vice President and General Manager, Wood Products. “It’s not only a great fit for us because of the location and proximity to our resources and facility, but because this region and our new neighbours have so much more to offer.”
The facility will produce approximately 250 million board feet of lumber annually and create 125 new jobs. The expansion will take advantage of the proximity of the company’s timberland and other facilities, as well as workforce and existing customer bases.
“We are extremely happy that The Westervelt Company has elected to make a large capital investment in Clarke County and the Alabama-Tombigbee Region,” said Frank Dobson, Director of Development, Alabama-Tombigbee Regional Commission. “The company has a strong history with the State of Alabama and will provide good jobs to our area while continuing their legacy of stewardship.”
“The BID Group is extremely proud to be chosen as the turnkey supplier for The Westervelt Company’s new sawmill facility,” said Travis McDonald, Turnkey Solutions Senior Vice President. “We have a longstanding relationship with their team, and they are widely recognized throughout the industry as innovative and successful operators. Along with Westervelt’s engineering group, we will construct a facility with a no-compromise approach to safety, efficiency, logistics and productivity.”
Construction is expected to begin mid-2019, with operations beginning in late 2020.
Photo: Westervelt President and CEO Brian Luoma
McCarthy Transport have put two purpose built 58 ton gross units on the road to cart from their Pakihi Log Storage yard in Carterton to CentrePort Ltd. These units will reduce the number of trucks going over the Rimutakas each day.
The purpose of these heavy trucks is to have four standard units cart 44 ton gross into their yard (28 ton pay load) and then the 58 ton gross units taking 38 ton pay load to the Port, 10 extra ton adds up over the year.
These new units are purpose built by McCarthy Transport Engineering and feature the latest safety technology from Volvo Trucks.
A first for McCarthy Transport is the EXTE auto tensioning winches, this ensures the load is under constant restraint and the drivers don’t have to stop and do this manually. Thanks Steve McDougall and Paul Teddy for the photo and info.
Until about six months ago, B.C.’s forestry companies were riding a lumber bull market.
Record-high lumber prices in the U.S. had muted softwood lumber duties, and B.C. forestry companies were netting record profits.
But the party may be over reports Nelson Bennett, BIV.
A shrinking timber supply and high log prices in B.C. and a sudden drop in lumber prices in the U.S. have created a sudden bear market for B.C. sawmills.
“We think the majority of those folks are going to be able to land in other opportunities within our company in our other operations,” James Gorman, vice-president of government and corporate relations for West Fraser Timber, told Business in Vancouver. “But at the end of the day, that’s still 135 positions that won’t exist in British Columbia in the forest industry.”
Starting in January, West Fraser will take about 300 million board feet out of production – roughly 13% of West Fraser’s B.C. production.
Almost all other major forestry companies are also cutting production in the fourth quarter, including Conifex Timber Inc. (TSX:CFF), Tolko Industries, Canfor Corp. (TSX:CFP) and Interfor Corp. (TSX:IFP).
Tolko announced last month that it would lay off 100 workers at its Quesnel sawmill, and on November 9 Conifex announced that it is temporarily curtailing its production at its Fort St. James sawmill for two weeks, affecting 180 to 200 workers.
Last month, Interfor announced it would reduce production at all three of its B.C. Interior mills, and on November 1, Canfor announced it was curtailing production at all of its B.C. sawmills.
Two weeks ago, Teal Jones Group shut down sawmills for one week – its seventh one-week curtailment this year.
“The lack of availability of logs was the main driver for us taking the downtime,” said Teal Jones CFO Hanif Karmally, adding that the level of raw log exports is a contributing factor.
The recent curtailment announcements came at a time when B.C. forestry companies were announcing hundreds of millions of dollars in acquisitions outside of Canada. Tolko recently announced it is taking a 50% stake in a lumber mill in Mississippi, and Canfor announced November 9 that it is buying a sawmill in South Carolina for $110 million. And, on November 15, Canfor announced it is investing $580 million to take a 70% stake in a Swedish lumber company.
American lumber prices have fallen by roughly half since May: to just over US$300 per 1,000 board feet from nearly US$600.
The higher lumber prices had muted the impacts of U.S. softwood lumber duties. But now that prices have fallen, companies will be feeling the pinch.
“When you’ve got scarce fibre, which pushes prices for it up, and then you’re paying duties on top of that, and your market price has declined significantly, that puts companies into the bite,” said Susan Yurkovich, president and CEO of the Council of Forest Industries. “And that’s why you’re seeing announcements about curtailments, either temporary or permanent.”
It’s not lower lumber prices in the U.S. so much as high log prices in B.C. that are the biggest problem for companies operating in this province.
“Timber prices in British Columbia are now among the highest in North America, and that’s a result of too many mills chasing too few trees,” Gorman said.
The mountain pine beetle infestation, which started more than 20 years ago, has been a short-term blessing and a long-term curse for B.C. forestry companies.
A surplus of dead and dying trees meant a timber supply bonanza. But most of that beetle-killed timber has been used, and more recently wildfires have taken a bite out of an already shrinking annual allowable cut (AAC).
Fires in 2017 took 22% out of the AAC for Quesnel and 18% for Williams Lake, for example.
Doug Donaldson, minister of forests, lands and natural resource operations, was unavailable to comment on government policies on the annual allowable cut or log exports. But Gorman said there’s not much the provincial government can do about the problem anyway.
Forestry companies have known for about a decade that a long-term decline in B.C.’s AAC was coming, which explains why so many B.C. companies have been investing in sawmills in the U.S., where there is still an adequate timber supply. The biggest players now own more sawmills in the U.S. than in Canada.
David Elstone, executive director of the Truck Loggers Association, which represents logging companies, said sawmill curtailments will affect loggers, depending on how long they last.
“The scary aspect of this whole story is, while the balance sheets have been repaired through the good times for the sawmills,… contractors are left with balance sheets that have not grown any fatter. It just means we’re probably going to have a lot less contractors when it comes out the other side here.”
The “other side” could be 2075. That’s when the AAC in B.C. is expected to return to normal.
In 1987, B.C.’s AAC peaked at 90 million cubic metres. The long-term forecast is for an AAC of 58 million cubic metres by 2025. The AAC is expected to return to between 65 million and 70 million cubic feet around 2075.
Meanwhile, over the next decade, demand for lumber in the U.S. is expected to remain strong, and Canada will continue to be its main supplier, according to a recent report by ForestEdge LLC and Wood Resources International LLC. But Eastern Canada, not B.C., will fill that role.
Canfor expands with Swedish acquisition
Vancouver-headquartered Canfor Corp. (TSX:CFP) is now an international forestry company, thanks to the acquisition of a Swedish lumber company.
Canfor last week announced plans to acquire 70% of Vida Group for $580 million. Vida owns nine sawmills in Sweden and produces 1.1 billion board feet per year.
Over the years, Canfor’s expansion outside of B.C. has mainly been in the U.S. and other parts of Canada. The Swedish acquisition expands Canfor’s customer base and positions it as an international wood manufacturer.
Canfor CEO Don Kayne acknowledged that B.C.’s shrinking annual allowable cut (AAC) is partly behind the expansion outside of North America, but he added that market access was the main consideration.
“More importantly, I think this has been driven more by our customers and their desire to see Canfor grow with them.”
Kayne added that most of Canfor’s production still comes from Canada, and the bulk of that is from its B.C. sawmills and pulp mills.
He said Canfor still believes B.C. is well positioned geographically to grow in the long term in the Asian and U.S. markets, but Kayne added that the reduced AAC resulting from forest fires and the mountain pine beetle infestation limited opportunities to expand in B.C.
Kayne said Canfor’s customer base is global and the company needs to ensure a reliable supply of quality wood products.
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The expansion means forty-five new jobs will be added to operations at the facility. The development represents a $40 million corporate expansion.
Governor Phil Bryant tweeted an approving response earlier in the day.
“Since opening its sawmill in Newton two short years ago, Biewer Lumber has been an active and supportive member of the Mississippi business community. The company’s expansion and creation of 45 new jobs speaks volumes to the strong business environment found throughout our state – an environment that fosters growth and innovation for all of Mississippi’s corporate partners,” Gov. Phil Bryant said.
The sawmill opened in 2016. Biewer Lumber operates four other sawmills in the Midwest and three lumber distribution centers.
“In order to be competitive, you have to keep up with technology and demand. There is no better place than Newton, Mississippi to make this investment,” said Biewer Lumber President and CEO Tim Biewer.
The Mississippi Development Authority and the City of Newton provided support by making public road improvements.
Photo Courtesy: MS Development Authority
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One year after leading B.C.’s largest-ever forestry-sector delegation to Asia, B.C. Forests/Rural Development Minister Doug Donaldson is taking an even larger group to three key Asian countries this winter in a push to expand exports beyond the suddenly slowing American market reports Chuck Chiang, BIV.
Donaldson, whose portfolio also includes Lands and Natural Resources Operations, will visit South Korea, Japan and China Dec. 5 -15 with a group of officials from more than 40 companies, research institutions, unions and trade associations. The number of entities represented by the delegation in last year’s trade mission (to China and Japan) was around 30.
The key difference, Donaldson says, is that this year’s edition will include a large First Nations component. He noted that he realized during last year’s trade visit that it behooves the province to put First Nations communities in direct contact with potential customers in East Asia, since most of these communities’ lumber businesses lack the scale to reach Asia by themselves.
“We’ve consistently had conversations with First Nations communities around tenure and processing more wood locally, so it just makes sense for those First Nations who are interested in growing their economies to have representation on this trip,” Donaldson said. “The major licensees can often establish their own connections – although they do find it worth their while to come along on this trade mission, as well – but there’s a significant contingent of people who represent licensees that aren’t as large, and this trip helps open doors and and make the connections.”
China, Japan and South Korea are B.C.’s second, third and fifth largest wood-product export markets respectively. The three markets combine to make up about 29% of B.C.’s current wood-product exports, although each presents a distinct opportunity for local companies, officials said.
B.C. has been on a major bull market in terms of lumber exports until this summer, when a sudden drop in U.S. lumber prices removed the insulation between B.C.’s forestry industry and the softwood lumber duties imposed by the United States. Prices in the American market for lumber fell from US$600 per 1,000 board feet to US$300 this month.
There are additional factors contributing to a slowdown; officials have cited a striking timber supply in B.C. due partially to wildfires. The downturn has resulted in West Fraser Timber Co. cutting shifts at sawmills in Quesnel and Fraser Lake and laying off 135 workers. West Fraser estimates the adjustment will take 13% out of the company’s B.C. production.
“There are certain things that government can do to ensure we have jobs in rural communities that depend on forestry, and there are areas where it’s difficult to exert influence on as a government – global markets on lumber prices, for instance,” Donaldson said. “But this trade mission is one example of something where the B.C. government has a very legitimate and importance role, and we are acting on it to make sure that there will continue to be rural jobs in forestry.”
Photo: B.C. Forests/Rural Development Minister Doug Donaldson
Source: Chuck Chiang