Supersized Red Stag
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.