Proposed regulations put projects on hold

THE GOVERNMENT’S PLANNED REGULATION OF THE FORESTRY industry may stall four of its projects to expand the firm’s processing capacity, says Forest owner, Ernslaw One.

Chief Executive, Paul Nicholls, told Parliament’s environment select committee that the potential powers the Government is seeking – to intervene in the log sales and contracts of forest owners – are “absurd” and go against any sensible business practices.

He says the lack of detail and open-ended scope of the proposed regulations in the Bill, means any consideration of expansion at the firm’s pulp and timber operations near Tangiwai will be “on-hold”. This could be for anything up to two years until the implementation of the Bill and its implications are fully realised.

Mr Nicholls says the scuppered projects could potentially lift the capacity of the combined Tangiwai operations over five years from about 660,000 cubic metres a year now, to a million cubic metres a year.

“Honestly – if the Government wants this level of control of how logs are grown and sold in NZ then they should buy the forests and manage them themselves,” he says.

Others told the committee that Forestry Minister Shane Jones’ bid to try to ensure a predictable flow of logs to domestic processors is an effort to fix a problem that doesn’t exist.

Grant Dodson, Chief Executive of Dunedin City Council-owned City Forests, says the industry has been “ambushed” by the Minister and the Bill.

“This is not a log supply issue. This is purely a pricing play,” he told the committee. “The Bill is an absolute disaster for the industry and it cannot proceed in its current form.”

Kaingaroa Timberlands Chief Executive, Robert Green, says forestry is a “breakdown” industry: “Every component of the wood flow needs to be used and the company needs access to export markets to ensure it can sell the full range of log grades coming out of its harvest. The potential restrictions on that from the bill could have significantly negative impacts.”

ForestX’s Graham West, sums up the issue: “The Government’s Log Traders Bill has stirred up the inevitable adversarial position-taking in the sector, without providing any real leadership. The issue remains as to how this vital sector stabilises and progresses given strong Chinese market influence. The log market is heavily subsidised by the Chinese Government’s policies and monetary conditions. We are too small to take our own stand in a Donald Trump fashion. We need to play within the rules being set by the Chinese. Only by New Zealanders, including government, collaborating with intelligence and innovation will we come out ahead. Surely a ‘Forestry Development Conference’ would be a sensible next step?”

NZL