Su­per­sized Red Stag

Australasian Timber - - FRONT PAGE - By Mandy Parry-Jones

AS YOU turn off New Zealand’s State High­way 5 and onto Waipa State Mill Road it all looks very ru­ral. When I was there in Novem­ber 2014, it was abuzz with moun­tain bike rid­ers charg­ing up with cof­fee at the Waipa café.

But just a few kilo­me­tres fur­ther up the road the Red Stag site comes into view, and fills the view. This is a vast site; no won­der it has been cho­sen to house the largest sawmill in the south­ern hemi­sphere.

Ac­cord­ing to The Cut­ting Edge: A his­tory of Waipa Sawmill the mill is an in­sti­tu­tion in New Zealand, par­tic­u­larly in the North Is­land where it is lo­cated.

It was built by the New Zealand Gov­ern­ment in the 1930s as a pol­icy in­stru­ment to move the in­dus­try from milling na­tive tim­ber to pro­cess­ing ra­di­ata pine and Dou­glas fir. While it was very suc­cess­ful in its first few decades of work its suc­cess pe­tered off and its main rea­son for be­ing was as the main em­ployer for the Ro­torua area.

Two at­tempts tried to re­vive the mill, one as a Sta­te­owned en­ter­prise and the sec­ond as a pri­vate en­ter­prise, both failed, then Phil Verry and son Marty saw po­ten­tial where others saw prob­lems and within six years had the busi­ness back on its feet.

Now it’s not just back on its feet, it is lead­ing the pack with vi­sion, fore­sight and the prom­ise of huge in­vest­ments. Our trip to the mill was to in­ter­view Red Stag Gen­eral Man­ager Tim Rigter, and check out the progress to date and the fu­ture site.

“This in­vest­ment de­ci­sion is a vote of con­fi­dence by the board in the Red Stag man­age­ment team and staff who have built up the busi­ness al­most from scratch since 2003, when we pur­chased Red Stag from re­ceiver­ship,” Red Stag group CEO Marty Verry told Aus­tralasian Tim­ber.

Al­to­gether the amount bandied around as the cost of in­vest­ment is NZ$120m, a siz­able chunk of money in any­one’s terms. At the mo­ment just half is the in­vest­ment for stage one, there are two stages in to­tal.

“It’s a bit more than that be­cause we’re putting in a new power sup­ply so it’s more like (NZ)$65 mil­lion,” said Tim Rigter.

“The first stage has started ... to make room for where we are go­ing to build the new sawmill we had to re­lo­cate our chip­ping sys­tem – our screens, our chip bins, our chip pad.

“We’ve done that this year so that next year we can start build­ing the new build­ing for the new sawmilling equip­ment.”

Just in front of where the new sawmill build­ing will be built stands the old chip­ping sys­tem next to a new con­crete struc­ture that has started to be filled with new chip­ping equip­ment.

It is so placed so that the changeover from one chip­ping sys­tem to the next can be done seam­lessly. It has to in­te­grate into the cur­rent mill with­out any hic­cups, as the new sawmill as that will take at least an­other year or so to come on stream.

“We’ve got the de­sign for the build­ing (sawmill) and all the equip­ment - we de­signed the equip­ment then we de­signed the build­ing around the equip­ment,” said Mr Rigter.

“We hope to start the build­ing about Fe­bru­ary or March next year; the build­ing should be com­plete by about Oc­to­ber or Novem­ber.

“Sawmilling equip­ment will start to ar­rive by Oc­to­ber or Novem­ber, so we want to put that straight into the build­ing.” It should be op­er­a­tional by mid-2016.

Equip­ping the su­per­mill

US com­pany USNR has been cho­sen to sup­ply the equip­ment which is mostly 'off-the-shelf' items. Sounds so sim­ple when you put it like that but not when you look at the ca­pac­ity of what is be­ing a 'su­per­mill'.

Waipa will have an an­nual log in­put ca­pac­ity of 1.2 mil­lion tonnes run­ning on two shifts us­ing the lat­est sawmilling, scan­ning and op­ti­miza­tion equip­ment which will tie into the mill’s cur­rent back-end bins and stacker.

The in­vest­ment will lift the com­pany’s an­nual out­put from 450,000m3 cur­rently to 700,000m3 in five years but only with fur­ther site in­vest­ment on the sec­ond stage.

For now let’s fo­cus on stage one, where log sup­ply be­gins at the log in­feed decks through the step feeder and log load­ing con­veyor.

USNR’s Mil­lTrak 3D sen­sor sys­tem will be po­si­tioned above the step feeder to con­trol the f low of logs onto the con­veyor for auto ro­ta­tion scan­ning, ahead of the re­cip­ro­cat­ing quad roll log turner.

At the log turner, a Pre­ci­sion Geo­met­ric Log Ro­ta­tion (PGLR) sys­tem will mon­i­tor and cor­rect the turn of the log in real time and the ELI po­si­tion­ing in­feed fea­tures slew and skew ca­pa­bil­ity, that in­cor­po­rates three sets of scan­ners to scan and mon­i­tor the log’s po­si­tion as it is be­ing pro­cessed by the cut­ting tools.

Chip heads will ex­pose the sides of the cant, then a se­ries of ver­ti­cal fee­droll mod­ules (VFM) and sharp chains will se­curely guide and feed the cant through two quad band­mills, where up to eight side­boards will be dis­patched. The re­sult­ing cant will pro­ceed on to the HSS gang line. The HSS will be an 8” sin­gle bot­tom ar­bor shape saw­ing gang sys­tem. The con­fig­u­ra­tion of the shift­ing saws on the ar­bor will al­low for a vari­able tim­ber pocket to pro­duce a cen­tre cant and/or boards that will feed the ex­ist­ing trim line down­stream.

USNR’s Mil­lTrak sys­tem will mon­i­tor and di­rect the f low of side­boards from the band­mills to twin edger lines down­stream, and also from the edger un­scram­blers through the scan­ners to the Edger Max­i­mizer po­si­tion­ing in­feeds.

The edgers will be 5-saw, top ar­bor ma­chines with close-cou­pled picker out­feeds to sep­a­rate the tail­ings from edged boards. The op­ti­miza­tion sys­tem through­out the new mill will be based on the Mil­lEx­pert plat­form.

At the pri­mary and HSS lines it will uti­lize Smart TriCam sen­sor tech­nol­ogy.

Where vi­sion-based scan­ning tech­nol­ogy is ap­plied it will be com­bined with the lat­est BioLuma sen­sor tech­nol­ogy.

One unique new fea­ture in this in­stal­la­tion will be the BioVi­sion side pro­file scan­ning sys­tem that will scan the sawn cant faces at the #2 sharp chain out­feed to iden­tify the boundary be­tween sap­wood and core­wood.

The sys­tem will uti­lize BioLuma 2900LVG sen­sors with in­te­grated, high def­i­ni­tion laser pro­file, color vi­sion and GrainMap tech­nolo­gies. The re­sult­ing data will pro­vide the cant op­ti­mizer the in­for­ma­tion to dy­nam­i­cally model the sap­wood and core­wood bound­aries.

The sys­tem’s Grade Zone fea­ture will al­low spe­cific low-grade lum­ber prod­ucts to be sawn from the low­den­sity core­wood.

The edger op­ti­miz­ers’ trans­verse scan frames will fea­ture USNR’s BioLuma 2900LV sen­sors with high den­sity laser pro­fil­ing and color vi­sion tech­nolo­gies, pro­vid­ing edger grade scan­ning ca­pa­bil­ity.

Edger BioVi­sion will clas­sify knots by size, lo­ca­tion and qual­ity, as well as iden­tify splits, shake and stain.

“This new sawmilling tech­nol­ogy, along with our ex­ist­ing kiln dry­ing and treat­ment tech­nol­ogy, is far ahead of any­thing cur­rently used in New Zealand, and the re­sults are straighter, dryer, stronger and more di­men­sion­ally sta­ble tim­ber for our cus­tomers and their cus­tomers,” said CEO Marty Verry. If this equip­ment all sounds high tech and fu­tur­is­tic, that’s be­cause it is. This type of tech­nol­ogy is state-ofthe-art for sawmills and not seen be­fore as a com­plete pack­age in our neck of the woods.

“Tech­nol­ogy keeps im­prov­ing all the time and the com­puter power,” ex­plained Mr Rigter.

“I guess the main thing for the sawmill – that we don’t do now – is there will be a dif­fer­ent log mix. We’ll be able to cut big­ger logs.

“We’ve cur­rently got two log lines one is a small log line and one is a large log line. We’ll be able to fo­cus on

big­ger logs, you get a bet­ter recovery out of big­ger logs.

“The tech­nol­ogy will po­si­tion the log ac­cu­rately to one de­gree, it will ro­tate the log so that you’ve got the best po­si­tion – so auto po­si­tion­ing of the log and its got slew and skew so you can max­imise what you get out of the log. It’s po­si­tion­ing the log and it’s po­si­tion­ing it in front of the saws.

“Then the other big ad­van­tage is the curve saw­ing gangs, that’s been around a long time but we haven’t got curve saw­ing gangs at the mo­ment. That will give us a bet­ter recovery, bet­ter length of tim­ber, bet­ter grade of tim­ber be­cause you’re fol­low­ing the grain of the wood. That will give us bet­ter fi­bre con­ver­sion out of the log and there’ll be lower costs of pro­duc­tion.”

Stage Two wait­ing in the wings

So that’s stage one, pretty im­pres­sive in it­self but add it to stage two and it’s not only im­pres­sive but a very big deal for a coun­try as small as New Zealand.

For the sec­ond stage to jump off the draw­ing boards it may take a bit more work. It has been said that the sec­ond stage is de­pen­dent on New Zealand tak­ing on a Wood First pol­icy. A change of gov­ern­ment has made that a lit­tle less likely.

“Yes, we need to grow the mar­ket we sell ap­prox­i­mately 60% of the do­mes­tic mar­ket we want to grow the pie in the do­mes­tic mar­ket,” said Mr Rigter.

“If we had a pol­icy in New Zealand where they do as­sist the use of wood, that would help, that would grow the pie.

While the re­cent elec­tion didn’t as­sist Red Stag as they hoped, Mr Rigter said they are still work­ing on it.

“The present gov­ern­ment is still open to it. They are look­ing at it to see if they can as­sist. The ter­mi­nol­ogy is chang­ing, it was Wood First now some are call­ing it low car­bon – there’s a grow­ing aware­ness of it.”

Ba­si­cally the Wood First pol­icy cen­tred on the gov­ern­ment en­sur­ing that in ev­ery in­stance where a new gov­ern­ment build­ing or ren­o­va­tion was planned tim­ber would be con­sid­ered as an op­tion in the de­sign stages. It had to be eval­u­ated as a pos­si­ble ma­te­rial.

What this does is force the gov­ern­ment to see where wood can be a real ad­van­tage struc­turally, en­vi­ron­men­tally and eco­nom­i­cally. Once gov­ern­ment sees the ben­e­fits it has a f low-on ef­fect down the line to ar­chi­tects, spec­i­fiers, builders and even­tu­ally the hous­ing mar­ket.

“There’s a lit­tle bit of mo­men­tum but we need some cost ef­fec­tive so­lu­tions and un­less you start to build lots and lots of build­ings with en­gi­neered wood prod­ucts some­times peo­ple don’t know the prod­ucts,” said Mr Rigter.

“This is where we thought the gov­ern­ment would lead the way and that would make it eas­ier for other peo­ple to fol­low. The gov­ern­ment is the big­gest con­struc­tion cus­tomer in New Zealand – why not sup­port tim­ber, which would be good for ab­sorb­ing car­bon? It’s still a work in progress.”

The Wood Pro­cessers and Man­u­fac­turer’s As­so­ci­a­tion in New Zealand sur­veyed its mem­bers this year and found that such a pol­icy would likely trig­ger NZ$1.17 bil­lion of in­vest­ment.

“With the grow­ing aware­ness of wood’s en­vi­ron­men­tal, ther­mal, and earth­quake prop­er­ties, as well as the po­ten­tial for re­gional em­ploy­ment and ex­port growth, I ex­pect the gov­ern­ment to fol­low Canada, France, Ja­pan and parts of the USA in adopt­ing such a pol­icy in due course,” said Mr Verry.

Gov­ern­ment pol­icy is only one of many fac­tors af­fect­ing the de­ci­sion on whether to build the sec­ond stage.

“That’s just one fac­tor that we want to grow the pie,” said Mr Rigter. “If that doesn’t hap­pen we can still see the sec­ond stage hap­pen­ing, ei­ther by sell­ing more do­mes­ti­cally or ex­port­ing more.

“A lot of that is de­pen­dent on for­eign ex­change rates, logs cost and ship­ping –

if those things line up we could eas­ily go to the next stage be­cause we can make it eco­nomic.”

The sec­ond stage equip­ment is a boiler to get more en­ergy to dry the wood, the kiln, trim plant and plan­ers. That’s the next NZ$60m.

Ac­cord­ing to Mr Rigter the de­ci­sion about that stage is ex­pected to be made 12 months out be­cause there are big lead times with a new boiler and kilns it could take up to two years for the equip­ment to be made and in­stalled.

Stage one is ba­si­cally about a sawmill that can cut large vol­umes of logs, 700,000cu can be sawn on two shifts but the com­pany only has pro­cess­ing ca­pa­bil­ity to do about 450,000cu.

Stage two is about get­ting pro­cess­ing ca­pa­bil­ity to process that ex­tra 250,000cu which is en­ergy to dry the wood, the kilns and treat­ment plant.

“There’s al­ways op­tions, like you can cut wood green and ship it, we’ve done that,” said Mr Rigter. “When you spend a lot of money on a new mill you al­ways think of the fu­ture. We’re po­si­tion­ing our­selves to take that next step.”

Red Stag’s piece of the pie needs to be in­crease, a lift in mar­ket share from 25% to 40% is pos­si­ble but only with the sec­ond stage up and run­ning. With just the first stage Mr Rigter ex­pects a mar­ket share lift of around 35%.

“Aus­tralia is a main mar­ket, we’ve al­ways ex­ported to Aus­tralia,” said Mr Rigter.”There’s def­i­nitely growth in the Aus­tralian mar­ket if we’re com­pet­i­tive.

“China is a maybe, in Asia we do sell some prod­ucts but it’s a maybe it’s all de­pen­dent on log costs and the costs of the mar­ket. We do a fair bit in the pa­cific Is­lands.

“It’s re­ally Aus­tralia first, then Asia, which is re­ally China which is kiln dried prod­uct that they use for fur­ni­ture then the Pa­cific Is­lands, then New Zealand, but we’re look­ing to grow all of them.”

Ac­cord­ing to Marty Verry the com­pany is see­ing con­tin­ued op­por­tu­nity to in­crease mar­ket share dur­ing a pe­riod of strength in the New Zealand and Aus­tralian mar­kets out to 2018.

“Af­ter that we ex­pect a pe­riod of high com­pe­ti­tion and con­trac­tion of the sawmilling sec­tor, as Christchurch and Auck­land’s res­i­den­tial growth slows and the econ­omy cy­cles,” said Mr Verry

“This will be partly off­set by in­creas­ing wood pen­e­tra­tion of the medium rise res­i­den­tial and com­mer­cial mar­kets in ur­ban cen­tres, where wood has cost and pre­fab­ri­ca­tion ad­van­tages.”

The com­pe­ti­tion is also good news for home­builders, with Red Stag ex­pect­ing tim­ber prices to fall up to 10% as a re­sult of the added mar­ket com­pe­ti­tion.

From the sounds of this in­vest­ment it would ap­pear as though New Zealand is cut­ting a lot more tim­ber than in the past but that’s not so ac­cord­ing to Red Stag.

There’s been a lot of ra­tio­nal­i­sa­tion with many smaller mills go­ing un­der and so the com­pany is still cut­ting about the same amount of wood as it did 10 years ago, which is dis­ap­point­ing.

There are now five big mills in the coun­try. An es­ti­mated 25 sawmills have closed in New Zealand in the last 10 years, as larger more ef­fi­cient op­er­a­tions have ex­panded.

“It’s a long term trend that we are de­ter­mined to stay ahead of,” said Mr Verry. “I think we are prob­a­bly the low­est cost pro­ducer in Aus­trala­sia now, but this in­vest­ment will mean an­other step change re­duc­tion to our cost base, mainly through scale and get­ting more recovery and value from logs.”

Stack­ing up the odds

If you haven’t got the tech­nol­ogy to in­crease pro­duc­tiv­ity or keep your costs down or in­crease fi­bre recovery it doesn’t stack up eco­nom­i­cally.

The com­pany has a full time equiv­a­lent of 330 staff on site but no in­crease is likely in those num­bers be­cause of the tech­nol­ogy es­sen­tial to make the new sawmill eco­nom­i­cally vi­able.

“We vis­ited a lot of sawmills over­seas,” said Mr Rigter. “It’s been driven by what logs do we want to cut, un­der­stand­ing the mar­kets they go to and then you se­lect the equip­ment.

“It comes down to what saw milling equip­ment can cut large logs ef­fi­ciently. We looked at two north­ern US com­pa­nies for equip­ment.

“The mill will be the largest in south­ern hemi­sphere, we looked at Brazil and Chile and there’s a lot of big sawmills there but on one site this will be the largest.”

So to build the largest you need a size­able site, Red Stag in Waipa has 80-hectares. Mr Rigter said the idea had orig­i­nally been to put the mill in the town of Ro­torua be­cause of the rail link there but it was de­cided that it might cause en­vi­ron­men­tal is­sues.

The site at Waipa is rel­a­tively f lat, close to town and close to the for­est so it was not a bad sec­ond choice at all. The tim­ber will be trucked from the site about 70 kms to town, as it is now.

“Trucks are get­ting more ef­fi­cient, they’ve just changed the leg­is­la­tion so now they can carry about an ex­tra 20% so they’ve gone from 44 tare to 54 tare so they can carry an ex­tra 10 tonnes,” said Mr Rigter. “That’s made road al­most as ef­fi­cient as rail.”

The in­vest­ment also means more chip residues in the Cen­tral North Is­land, which the com­pany says can ei­ther help un­der­pin new in­vest­ment in pulp and paper op­er­a­tions or po­ten­tially a new MDF plant or the like fur­ther down the line.

With volatile pric­ing and de­mand in ex­port log mar­kets, log sup­pli­ers wel­come the new in­vest­ment in sta­ble do­mes­tic pro­duc­tion.

“We would like to ac­knowl­edge the sup­port we have had from Red Stag’s log sup­pli­ers. It has given us the sup­ply con­fi­dence to make this in­vest­ment,” said Mr Verry.

Per­haps it’s not sur­pris­ing that the in­vest­ment is com­ing about since tim­ber is New Zealand’s third largest ex­port but on the other hand the size of this in­vest­ment is sur­pris­ing. It will put New Zealand and Red Stag on the world map.

Out­side the main gates.

Tim Rigter in­side the main of­fice build­ing.

The new chip plant to the left, the ex­ist­ing one ahead.

Ex­ist­ing dry­ing fa­cil­i­ties that are still high tech as they have one build­ing with two lines of wood be­ing dried.

They built a huge clear span hold­ing area sub­sti­tut­ing as much tim­ber for steel as they could to prove it could be done eas­ily.

This is where the new mill will be built.

Out­side the cur­rent mill with feed lines.

In­side the cur­rent mill.

The new chip fa­cil­ity build­ing.

Part of the ex­ist­ing chip fa­cil­ity.

Ma­chin­ery in­side the new chip fa­cil­ity.

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