How to at­tract a new saw mill to cen­tral North Is­land

New Zealand Logger - - Dana Conference 2018 -

WHAT DOES NEW ZEALAND have to do to en­cour­age over­seas in­vestors to build a new sawmill in the cen­tral North Is­land to use the re­gion’s grow­ing re­source?

Just days af­ter a del­e­ga­tion from New Zealand, in­clud­ing Min­is­ter Shane Jones, vis­ited China to press that ques­tion, the sub­ject was hotly de­bated at the 2018 DANA Forestry Con­fer­ence in Taupo last month.

And to put it squarely into per­spec­tive, Mark Smith of For­est In­vest­ment Ad­vi­sors (FEA), showed con­fer­ence del­e­gates the re­sult of a sur­vey of mills from dif­fer­ent parts of the world that high­lighted the cost of pro­duc­ing and then ship­ping lum­ber to Shang­hai, putting New Zealand among the most ex­pen­sive.

The rea­sons, he says, are partly due to the high net cost of wood here and partly to our high saw mill costs.

A con­sor­tium of Taupo busi­ness in­ter­ests has pro­posed a brand new $86 mil­lion mill that could make use of the lat­est milling tech­nolo­gies, along with geo­ther­mal heat for dry­ing, con­sum­ing 400,000 tonnes of A-grade logs per year, which could lower some of those costs and make it com­pet­i­tive to some of the best mills in South Amer­ica. But no in­vestors have put up their hands to back the project.

Mean­while, China con­tin­ues to buy huge vol­umes of lum­ber from Rus­sia and other coun­tries, in­clud­ing Canada and we’re also see­ing tim­ber pro­duced in China from New Zealand Ra­di­ata Pine logs be­ing ex­ported back here and sold for less than we can pro­duce it.

Se­qual Lum­ber’s Ex­ec­u­tive Direc­tor, David Turner, who vis­ited China with the Jones del­e­ga­tion, has some ideas on how we can con­vince the Chi­nese to get on board with New Zealand lum­ber.

He says we need to con­sider what is im­por­tant to China and cur­rently it’s about pro­vid­ing and then pro­tect­ing the jobs of its peo­ple.

Mr Turner says that New Zealand needs to con­vince China that the pri­mary pro­cess­ing of logs into boards is not go­ing to dis­ad­van­tage its own work­ers. He says sawmills em­ploy a small num­ber of peo­ple, but down­stream pro­cess­ing into prod­ucts such as fur­ni­ture em­ploys far greater num­bers of peo­ple and de­liv­ers added value and that is what we should be ar­tic­u­lat­ing.

But he adds that any­one ex­port­ing tim­ber to China faces an “un­fair” mar­ket be­cause China tips the bal­ance in favour of its own wood pro­ces­sors with use of lo­cal taxes and other bar­ri­ers.

New Zealand also faces huge com­pe­ti­tion from Rus­sia, ac­cord­ing to Den­nis Neil­son, who also vis­ited China re­cently to ob­serve the wood mar­ket.

Mr Neil­son says around six mil­lion cu­bic me­tres of sawmill ca­pac­ity has been com­mis­sioned by Rus­sia in the last three years and an­other three mil­lion cu­bic me­tres of pro­duc­tion will be com­ing in the next three years. All of it aimed at the Chinse mar­ket – and Rus­sia has the ad­van­tage of be­ing able to ship it eas­ily across the bor­der on rail wag­ons.

With Rus­sia re­cently an­nounc­ing that it will im­pose even higher taxes on logs ex­ports, there will be greater em­pha­sis on milling the wood in fu­ture, he says.


Hopes are still high of at­tract­ing in­vest­ment in a new sawmill in the cen­tral North Is­land.

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