shfij vol 17 no 3

Southern Hemisphere Forest Industry Journal Vol. 17 No. 3 1September/October 2011

Tree heroes and earthquakes

Source: Corma

Dodgy deals and government isolationism as foresters dig in over carbon price

A SouthemTM Publication

f o r e s t i n d u s t r y j o u r n a l

Southern HemisphereVol 17 No 3 - September/ October 2011 ISSN 1173-5899

2 Southern Hemisphere Forest Industry Journal Vol. 17 No. 3 September/October 2011

© The Southern Hemisphere Forest Industry Journal is published by Trade and Media Services Ltd. Street address: 5 High Street, Rotorua 3201, New Zealand.

Mail address: PO Box 6215, Whakarewarewa, Rotorua, New ZealandTel: 64-7-349 4107; Fax: 64-7-349 4157; Email: [email protected]; www.southem.com

Editor and Director: Michael R. SmithAdvertising Sales: Colin Gestro, www.affinityads.com Auckland, New Zealand

[email protected]; Tel: 4-9-444 9158; Mob: 272568014

Cover Photo credit: Jonathan Hansen

Contents

4 A Southem View New publishing provides wider options for readers

5 Southem People Challenges remain for some sectors as Chile’s forestry overcomes challenges Farewell Brice Landman Arauco’s board strengthens corporate structure in new post for former CEO

6 Southem News Australia facing ‘challenging’ plantation future Spending delays dampen construction Chile and NZ joint enviornment approach SA land reform costs balloon Fibria breaks wood transport records Job cuts in South Africa as Sappi restructures Tasmania job losses as report finds business needs time to adapt to changes Sappi Q3 profit drops 20% Arauco inks US$1.5B financing for Uruguay pulp joint venture with Stora Enso China’s forestry sector aims even higher in development

12 Southem Features Tree heroes emerge from the dust of Christchurch earthquakes Carbon Trading: Dodgy deals and government isolationism as foresters dig in over carbon price Foresters take money in arbitrage opportunities Carbon credits and organised crime concerns grow

20 Southem Markets

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New publishing provides wider options for readersBy Mike SmithEditor and Director

A Southem View

It is nearly two decades since this Journal was launched in 1994. In the time since then, the world has become a much bigger place with email

and internet connections and a much, much smaller place because of almost instantaneous accessibility to information.

Recent years have been catastrophic in terms of natural disasters; with significant adverse impacts for a number of countries in the southern hemisphere. However, the rebuilding required presents huge op-portunities for forestry and wood products.

The global financial collapse (or GFC as it has been dubbed) brought disaster of a different kind and pos-sibly just as damaging as what nature delivered. The economic impacts from this financial earthquake have yet to be fully realised but are shaking down the in-dustry.

What hasn’t changed is the need for high quality, independent information and Trade and Media Ser-vices Ltd has secured a strong market with its range of “Southem” publications, as follows:

• The Southern Hemisphere Forest Industry Journal

• Southem Online• The Southern Hemisphere Forest Industry

Yearbook• Southem Country Reports• Forest Information Update

This news and information is increasingly be-ing transmitted digitally. The main channel is our southem.com with subsidiary web sites southernhemi-sphereforestry.co.nz and forestinformationupdate.com providing a window into the services on offer.

The transmission of information through our pub-lications is also changing, reflecting trends in the wid-er publishing world. The rise of social media grabs headlines but the trade publishing market has quietly, but rather rapidly, been converting to digital publish-ing via new ePub or eBook technology. This has seen the trade publishing market segment considerably in-crease its eBook output, according to US publishing services company Aptara. Even though this sector is

still in its relative infancy, already one of out of five eBook publishers generates more than 10% of their revenues from eBooks. Trade publishing of the kind undertaken by TMS Ltd has been more involved than any other market segment in aggressively increasing eBook production.

Southem is part of this change and from this edition we introduce a new version of the Southern Hemi-sphere Forest Industry Journal utilising new “turning page” (or flip book) technology. The technology allows readers to more easily read or download the articles and other material. In the past, the Journal has been a “subscription only” publication. With this edition, we have moved to open the Journal up to a wider audi-ence who appreciate our online e-newsletters, such as Southem Online and FIU.

Benefits will remain for subscribers: an ability to download content from the subscribers’ only section of southem.com being the main one. This will allow us to provide much more information and data than has been possible within the restrictions of the subscrip-tion only publication. Readers will notice the icon at the end of stories or on the top of pages, so subscribers can access a far wider spread of news and information.

We have engaged AffinityAds to help provide pro-fessional advertising services to those wanting to broaden their reach to include the 22,000 recipients of our news and information services. We are excited to have Colin Gestro and the team on board.

The first edition of the Journal was published in November 1994 we hope our loyal subscribers enjoy the benefits the new changes bring to them. At the same time as these changes have occurred, we have ac-quired a wider and wider readership. Early on, read-ers were mostly in North America, or Australia and New Zealand, the rise of online services means readers of our publications span the globe. Just on a quarter remain in North America, but today 22 per cent are in Latin America and a further 19% in UK-Europe and the rest being mostly in southern hemisphere coun-tries. Readers span a broad range of decision-makers in corporatem, government and private sector profes-sional positions.


Southem People

The Chilean forestry industry has recovered from the trials of the past two years but important sec-tors still face very complex prob-lems, according to Fernando Castil-ian Raga, President of the Chilean Wood Corporation (Corma).

Writing an opinion piece for Corma’s web site, Sr Raga said it was necessary to understand the forestry sector was an industry made up of several –sub-sectors, each with a different reality to the other. This made it difficult at times to see beyond the results

posted by the bigger companies in the reality, which have a higher vis-ibility due to larger results in the international markets.

The sector in general has risen back up after the serious financial

Fernando Castil-ian Raga, Presi-dent, Corma, the Chilean Wood Corporation

Challenges remain for some sectors as Chile’s forestry overcomes challenges

The Wood Council of New Zea-land has marked the passing of Brice Landman, member of the Wood Council and Chief Executive of Carter Holt Harvey Pulp & Pa-per.

Mr Landman passed away sud-denly at his home on Thursday the 22nd September 2011.

"Brice was highly esteemed per-son involved in the Wood Pro-cessing industry, and has had significant influence on industry developments throughout his ca-reer" Doug Ducker, chair of the Wood Council said in a statement.

"His knowledge and advice was both keenly sought and provided. We are truly grateful for his contri-bution over the years, and all share in regret at his passing".

Mr Landman was involved in leading both his company and the industry as a whole through a tur-bulent time of change in the pulp and paper industry. Before return-ing to New Zealand, he was also chief executive of UK Paper.

Directors of the Chilean forestry and forest industry group, Arau-co, have moved to strengthen the higher structure of the company’s corporate management by creat-ing the position of Executive Vice President, which will report di-rectly to ARAUCO’s Board. Matías Domeyko Cassel, former Chief Executive Officer of the company, was designated to serve in this new position.

The creation of the Executive Vice Presidency is a result of the significant growth experienced by ARAUCO’s businesses in recent years, in its business lines as well as its international expansion. In-corporating the best international practices for corporate govern-ance as seen in businesses similar to ARAUCO in size and impor-tance was deemed convenient, to strengthen the management and development of the company and its subsidiaries.

TCristián Infante Bilbao is the new Chief Executive Officer. Mr. Infante was previously Corporate Management and Development

Director. He has broad experience in ARAUCO’s lines of business, and in past years he has served as head of subsidiaries in Argentina and Brazil and has had significant participation in the Montes del Plata pulp project in Uruguay.

Arauco’s board strengthens corporate structure in new post for former CEO

M a t í a s D o m e y k o Cassel

FarewellBrice Landman

crisis of 2009, which was made worse by the earthquake at the be-ginning of 2010, and had recovered to a great extent in terms of lost work and the global figures for pro-duction and exports.

However, an important seg-ment – small and medium sized industrial enterprises - and that of forestry services face very complex problems.

http://www.southem.com/index.php?option=com_content&task=view&id=1374&Itemid=65




Southem News

New figures showing the area of Australian tree plantations has shrunk reflect a problem for the nation’s future wood and carbon offset needs, the Australian Forest Products Association (AFPA) said in a statement.

The Australian Bureau of Agri-cultural and Resource Economics and Sciences (ABARES) found the overall area of plantations dropped by 0.6 per cent between 2009 and 2010. It has also reported the small-est area of new plantations estab-lishment since the early 1990s.

“Australia has a major challenge in meeting our future wood de-mands. A population of 35 million by 2050 will require 7.1 million new dwellings,” said CEO David Pollard.

“If we don’t plan now for en-

couraging investment in new tree plantations, we will not be able to domestically supply the wood for homes in the future,” Dr Pollard said.

“There are two other options for Australia. One, we will build future homes with timber imported from countries with often weaker envi-ronmental regulations, or two, we can increase the use of emissions intensive alternatives such as steel and concrete.

“A House of Representatives Committee has been investigat-ing these challenges through the Inquiry into the Australian Forest Industry. The constant pressure on the forest industry to reduce its re-liance on native forest management means new policies to enable long-rotation plantation investment are

desperately needed.“While we look forward to the

committee’s report, it is clear that Australia needs a new national for-est plan to meet the challenge of supplying home-grown wood for the future.

“It is worrying that recent gov-ernment policy decisions will not encourage new tree plantation es-tablishment, such as severely re-stricting commercial plantations from the Carbon Farming Initia-tive. This is ironic considering that forestry is a carbon positive indus-try sector with great potential to re-duce emissions, while at the same time supporting jobs in regional communities,” he said.

Australia facing ‘challenging’ plantation future

NZ Environment and Climate Change Minister Nick Smith and Chilean Environment Minister, María Ignacia Benítez, recently met to reaffirm a commitment of both countries to work coopera-tively on environmental issues.

“Chile and New Zealand have many geographical and climatic similarities. We both sit on the earthquake-prone Pacific rim of fire, have long mountain ranges, extensive coastlines, active geo-thermal areas, and forests with re-lated plant species,” Dr Smith said in a statement.

“Our Government agencies, research and science institutes, universities and businesses work closely together and, through the Trans Pacific Strategic Environ-ment Cooperation Agreement, we have a programme spanning cli-mate change, renewable energy and fresh water management.”

“Both New Zealand and Chile are members of the 32-country Global

Chile and NZ joint enviornment approach

The Chilean Construction Chamber has reduced from 11.3 to 9.5% its growth projection in this sector for 2011, due to delays in the public spending, El Mercurio re-ported.

However, the reported noted that the major companies in the sector were experiencing better levels of activity and have assured work, at least, up to 2013.

Contracts for works – indicat-ing a backlog in the industry – were estimated to be worth about US$5 billion, based on total data obtained of the main construction companies in the country: Sal-faCorp, Besalco, Socovesa, Claro Vicuña Valenzuela, Belfi, Ingevec, Moller & Pérez-Cotapos, Echever-ría Izquierdo e Icafal.

In most of the cases, the amounts outstrip the same period last year and they are the highest to have been registered for the companies.

Spending delays

dampen construction Research Alliance that is seeking the best ways to reduce agricultural greenhouse gas emissions. New Zealand also has significant expe-rience reporting on greenhouse gas emissions and that’s why we are sharing our expertise with Chile through a climate change inven-tory project,” Dr Smith said.

The Ministers discussed future opportunities for both countries to work together.

“I welcome the opportunity to deepen the strong relationship between New Zealand and Chile which will have flow-on benefits for our economies and the environ-ment,” Dr Smith said.




Southem News

South Africa’s Department of Rural Affairs and Land Reform has requested from National Treas-ury an additional 2.3 billion rand (US$277 million) for the current financial year, to shore up its land restitution programme, Business News has reported.

According to the department's acting director general, Moshe Swartz, the current allocation of 2.6 billion rand (US$314 mil-lion) would allow for 360 backlog claims and only 90 new claims to be finalised.

“It is expected that in the outer years (of the three-year Medium Term Expenditure Framework) it will not be sufficient to settle all targeted claims,” Swartz is re-ported as telling the Parliamen-tary Portfolio Committee on Ru-ral Development and Land Affairs recently.

He is quoted as saying should

the 2.3 billion rand be approved then this would allow the depart-ment to settle approved claims and those claims where offers had already been made, and then do further research on new claims.

Swartz said the approval of ad-ditional funding for restitution would ensure that no further shift-ing of funds was done with the Land Reform Programme.

SA land reform costs balloon

The Argentine company Papel-era Rio Quequen has become the first recycled paper-maker in the country to achieve FSC certifica-tion. The company was certified via SCS Argentina. The company focuses on the market for corrugat-ed paper, Kraft paper and paper for making tubes.

Chilean native wood manufac-turer Maderas Tantauco has pre-sented a project to the to the En-vironmental Impact Agency (SEIA in Spanish) a project for the build a hydroelectric power station in Chonchi, in the Region of Los La-gos, Diario Financiero reported.

The project suggests a total in-vestment of US$12.5 million and will have an installed power of 6.17 MW, with what the company pro-jects will an annual energy genera-tion of 22.77 GWh.

Whose land is it? (Source: SA Tour-ism)

Chile native wood company hydro plan

August was a record-making month for the Aracruz Unit of the Brazilian group Fibria.

Records for wood shipments via the Terminal of Caravelas (BA), reached important levels.

Two new records were recorded for the volume of eucalypt wood carried in August.

In the historical daily record 32,077 cubic metres was transport-ed, surpassing by 694 cubic metres the previous record, registered in July 2008.

Already the monthly record of 2011 reached 783,395 cubic me-tres, exceeding the previous high, achieved in July this year with 780,248.19 cubic metres.

The daily record covers all wood carried in the plant in only one day with the contributions from road, railroad worker and marine

transport systems.The volumes had been carried

through to an average distance of 250 km, evidence of the logistical complexity involved, the company said in a statement.

Fibria breaks wood transport records

FSC tick recycled paper company

New timber impregnation tech-nology from Australia is being de-scribed as being “revolutionary”. The technology is being promoted as a way for to meet demands from timber processors for an improved and environmentally friendly way to preservative-treat their products. Invented by Queensland scientists, including those from Carter Holt Harvey the New Zealand based for-est industry group, the technology was recently picked up by global timber preservation giant Osmose for further development.

Timber treatment ‘revolution’





Southem News

South Africa’s Sappi Ltd an-nounced an operating profit ex-cluding special items of US$60 million in the quarter ended June 2011 compared to US$75 million in the same quarter 2010.

In a statement, the company commented on plans to restructure the paper and packaging business of Sappi Southern Africa.

The restructure was underway in order to improve profitability, in conjunction with the approxi-mately US$340 million conver-sion of the Ngodwana pulp mill to chemical cellulose production are progressing.

In its results’ presentation, the company said its Southern Africa performance was unfavourably im-pacted by extended annual shuts at Ngodwana and Saiccor during the quarter.

The regional domestic markets suffered as a result of the strong lo-cal currency which led to increased competition from imports.

Included in the special items was US$6 million for the quarter for a plantation fair value adjustment and Black Economic Empower-ment charges.

Job cuts in South Africa as Sappi restructures South Africa’s Sappi has sig-

nalled “significant” job cuts un-der a newly announced restructure plan. The paper and packaging group says the strategy behind the restructure of its Southern African operations is aimed at adapting to changing customer needs and to match its assets to profitable mar-kets.

Sappi said in the statement it was implementing further cost re-ductions at both administrative and production levels, after already closed the 47-year-old Adamas mill in Port Elizabeth

“We expect that these measures will lead to a significant additional reduction of jobs during the first

half of the 2012 financial year,” the company said in a statement re-ported in Engineering News.

Sappi expected to realise savings and benefits of about R250-million (US$31 million) a year, the report said It also sees savings of about R100-million (US$13 million) a year as a result of avoided mainte-nance capital expenditure.

The restructuring of its South-ern African business forms part of an updated strategy to deal with tough market conditions and the continued declining trend in the demand for graphic paper.

Sappi Q3 profit drops 20%

The forest industry in the Aus-tralian island state of Tasmania needs time and certainty to transi-tion to a new future, a long-term study by the Australian National University and the Cooperative Research Centre for Forestry (For-estry CRC).

The study which began in 2006 found that job losses in Tasma-nia's forest industry are accelerat-ing. Job numbers in the industry halved over the past three years.

ANU Research fellow and leader fo the CRC for Forestry's Commu-nities project Dr Jackie Schirmer told there are 3,500 jobs left in in-dustry, down from 7,000 in 2008.

While the job losses are spread across the state, some regions are experiencing greater losses than others.

In terms of the industry restruc-ture underway through the Heads of Agreement now being negotiat-ed by government, Jackie Schirmer says the industry needs to be given

time to adapt."Give them enough time to adapt

to changes, all the changes need to be implemented over a period of time that lets business and workers adapt.

They also need to be given the resources to do that. Currently no banks will lend to a forest industry business because there is such an uncertain future".

"If the changes proposed go ahead there will be a lot of busi-nesses that will need to exit the in-dustry.

But some of those could actually stay as an operating business and diversity outside the industry if given the opportunity".

See link below to download more details and the report.

Tasmania job losses as report finds business needs time to adapt to changes



http://www.southem.com/administrator/index2.php?option=com_content&sectionid=15&task=edit&hidemainmenu=1&id=1372


Southem News

Companies affiliated to the Chil-ean forestry group Arauco have signed nearly US$1.5 billion worth of deals to finance a pulp project in Uruguay.

Arauco (or Celulosa Arauco y Constitución S.A) recently notified Chilean securities authorities of the fund-raising.

The group said it had earlier this year announced its subsidiary Inversiones Arauco Internacional Limitada and Finland’s Stora Enso approved the “Montes del Plata” project.

This includes the construction of a state of the art pulp mill with a guaranteed capacity of 1.3 annu-al tons, a dock and a power plant fueled by renewable resources. The project will be located in Pun-ta Pereira, in Uruguay’s Colonia department.

Arauco’s Uruguayan affiliate companies has now signed a loan contract with Banco Interamerica-no de Desarrollo termed IDB Facil-ity Agreement for US$454,000,000, and a loan contract with a number of financial entities termed Finn-

vera Guaranteed Facility Agree-ment for US$900,000,000 in order to finance the “Montes del Plata” project (of which the company owns 50% shares), the announce-ment said.

This Google map image shows the location of the planned pulp project being built jointly by Chile’s Arauo and Finland’s Stora Enso.

Arauco inks US$1.5B financing for Uruguay pulp joint venture with Stora Enso

China's forest industry is grow-ing faster yearly and forestry re-sources are being utilised more rationally and effectively than ever but yet the country still aims to implement further adjustments, according to the head of the state forestry administration.

China Daily reported the latest statistics from the State Forestry Administration (SFA), indicate the total output value of the forestry industry reached 1.66 trillion yuan (US$255 billion) in the first eight months of the year, up 9% from the same period last year.

"Recent years have witnessed significant growth in the indus-try. Last year, the output value of forestry surpassed 2 trillion yuan, which was quite a breakthrough for us," said Jia Zhibang, head of the SFA.

In China, forests are defined as woods covering an area of more than 1 mu (667 square metres) with a crown density -- the amount of sunlight blocked by plant material -- at or above 20%, according to the SFA.

Coming together with the rising output value in the sector is the im-

provement in its structure. Accord-ing to the SFA, the ratio of the pri-mary industry, secondary industry and tertiary industry in the sector was adjusted to 39 to 52 to 9 from 52 to 41 to 7 in 2005. The weight of the latter two industries kept grow-ing over time.

The SFA said growth in second-ary industry was mainly boosted by wood and bamboo products while forest tourism helped to shore up the tertiary industry.

China’s forestry sector aims even higher in development




Southem News

It is really a tale of two forest industry expos – one in New Zealand and the other in Argentina.

Although vastly different, the two countries’ forest industries expos had similar under currents to some extent.

The New Zealand edition has struggled to get off the ground again, after initially being cancelled by the previous organisers in 2010 due to the impact of the economic recession.

The Argentine event was coming off previous highs, at a time when wood product exporters have found the going very hard.

Nevertheless reports indicate companies are buoyant about prospects and were positive about the opportunities presented by both events.

The New Zealand expo’s business project manager Sandra Kai Fong said the event had exceeded expectations, according to the event’s business project manager.

Forest Industries Expo 2011 was

held in Rotorua between 5 and 7 September as an international showcase of forestry and forest industries.

Included in the event were a series of tech clinics and a conference. As well, the event was started with the launch of a forestry and wood processing strategy for the Bay of Plenty, a key industry region nationally.

Sandra Kai Fong told the Journal the level of machines sold and the number of people through the gates had exceeded expectations.

Totals included the following:

• 2,200 people through the gates over the three days of the expo

• 80 at the conference• 470 at technical clinics• 110 exhibitors

As far as deals done were concerned, she said that the potential top deal was for NZ$10 million, with a couple of NZ$1 million and another couple in the mid-hundreds

of thousands of dollars.Visitor numbers were somewhat

impacted by the event being held mid-week to cater for a wood handling competition the previous weekend and Rugby World Cup events the following weekend.

However, it was not only about the numbers but also the quality of visitors and sales inquiries, Kai Fong said.

“From the exhibitors I spoke to, they were getting good quality visitors.”

She said the expo had had a bit of a hiatus where it did not proceed two years ago, when forestry had gone through a dip.

The economy is not exactly on a high, although log exports are much higher with sales to China being strong, so what is the difference?

Sandra Kai Fong said this time the expo was tied in as part of the Rugby World Cup event being held in New Zealand from 9 September which in part was showcasing New Zealand business.

As well as the heavy duty

The sun always shines at forestry expos in this tale of two eventsForestry and forest industry events in New Zealand and Argentina yield positive results but some troubling undercurrents still remain.

Visitors to the USNR and Skookum stand at Rotorua viewed an innova-tive beam structure (right).Big rigs are always popular at indus-try events (below).Southem pics


Southem news

harvesting and pruning equipment, the organisers wanted to make sure to show the full range of services the sector could offer.

Meanwhile, in Argentina, the forest industry shrugged off talk of recession to meet in the last week of September for the Feria Forestal staged at Posada in the province of Misiones, the country’s main forestry region.

At the launch, the provincial governor, Maurice Closs, was quoted by La Nacion as highlighting the readiness of refunds to forestry companies in sector currently exporting but avoided referring to sawmillers who are exporting due to concerns over a local tax on products.

T h e f a i r a t t r a c t e d 3 5 0 Argentinean companies as well as from neighbouring nations like Brazil Chile, Bolivia, Paraguay and Uruguay.

In the report, Lerer highlighted the sustained growth of the forest industries in recent years, especially with the application of the law 25,080 for promotion of plantation forests, sanctioned in 1999. At the moment there are 15,200 companies operating, offering direct and indirect employments to nearly 500,000 people.

While Chile, with a smaller but better exploited land area, sell US$6,000 million a year, given the highly value added of its production, Argentina export revenues amount to only US$1,200 million annually, since of the 24 million cubic meters

of wood available annually, only 12% are used.

“Forest industry development is fundamental to our country, whose land presents advantageous conditions, allowing forests to grow faster than the international average,” said Adrián Lerer, president of the Argentina Forestry Association (AFOA).

The manager of the Chilean-owned Alto Paraná, Pablo Mainardi, said that the company, owner of plants in Misiones and in the capital province of Buenos Aires, planned new investments totalling US$50 million in Argentina.

He indicated that US$10 million will be destined to new pine and eucalypts plantings; another US$10 million in conversions aimed at environmental improvements and better operational security, and the rest for two specific projects: the first, being increasing the output of fluff pulp used in diapers, and the other, adding value to the melamine board factory.

One aspect of the Argentine forest fair was that for the third year running, it included a section for the country’s huge cattle ranching sector.

A statement from the fair management said the purpose of the two sector shows running together was to show mixed systems of production, alternating the breeding of animals with the growing of trees.

Numbers visiting the fair were not known but organisers said they expected them to be more than 100,000 visitors

‘It was not only about the numbers but also the quality of visitors and sales inquiries - Sandra

Kai Fong, organiser of the Rotorua

event.’

Timber protection has become a popular topic in recent years, so this Kop-coat display drew a few visitors at the NZ Forest Industries Expo 2011 (above).(Southem pic)

Visitors are welcomed at the Posada, Argentina Feria Forestal (Above).Pic: FAIMA

This chainsaw stand was one of a number outdoor events attracting visi-tors in Rotorua (above).


Studies being carried out in Christchurch, New Zealand, will not only find out more about the impact of earthquakes on tree growth but also

the role trees play in protecting communities during such devastating events.

Dr Justin Morgenroth, a lecturer at the NZ School of Forestry, University of Canterbury, is undertaking research into how earthquakes in September last year and February 2011 affected trees in Christchurch.

Dr Morgenroth, who received his PhD in the past year, has been involved in lecturing at the university for a few years, mainly in the geo-spatial aspect of forestry.

Lives were lost, buildings crushed like empty tin cans but some unlikely heroes have emerged from the devastating earthquakes in Christchurch, New Zealand – trees grown below hills may have saved lives. Mike Smith reports on how the NZ School of Forestry at the University of Canterbury is following up this history-mak-ing event to measure the impact on tree growth and how trees may help protect com-munities from future disasters.

Tree heroes emerge from the dust of Christchurch earthquakes

“I’ve always had a bit of a soft spot for understand-ing tree growth in difficult or challenging environments,” he says,

Urban forestry has always been a strong side interest, because there is no more chal-lenging environment than taking a tree out of its natu-ral environment and planting it in the middle of a concrete jungle.

This led him into the current research following the Christchurch earthquakes when a “new normal” was established for the city.

Justin Morgenroth

Southem Feature



The New NormalMore on the tree heroes later but first, some back-

ground.On 4 September 2010, Christchurch experienced

a magnitude 7.1 earthquake. Since that first earth-quake, Christchurch has experienced a further 7,000 aftershocks, including a 6.3 magnitude earthquake on 22 February this year, and a double impact of a 5.7 magnitude earthquake followed one our later by a 6.3 magnitude one on 13 June 2011.1

To further underline the extent of the damage, it should be noted that the series of earthquakes has re-sulted in this being the largest ever insurance claim for an urban area worldwide. Insurance council esti-mates have put the cost of the earthquakes at NZ$15 billion and rising. A new government estimate of NZ$7.1 billion included with 30,000 houses suffer-

1 Source: Justin Dr Morgenroth. Earthquakes, Tree and the New Normal. Poster.)

ing damage costing more than NZ$100,000.Colleagues at the Christchurch City Council invit-

ed Dr Morgenroth to go along on tours with them to view the damage to trees that they had to respond to.

“I jumped at the opportunity.”A survey of 98% of Christchurch parks has shown

there are about 65,000 trees, and those have all been inspected over-and-over again since the earthquakes. Initially, the inspection process is quick, pin-point-ing those trees with obvious damage or learning, so it was possible to inspect hundreds in a day.

As result of the inspection process, the council has removed about 400 trees, which Dr Morgenroth says is not a drastic number and only about 50% more than normal annual removals.

Although the numbers may not be huge, it was im-portant to note that a lot of the damage may be con-centrated. One small city park, for instance, might have lost 30-40 trees or virtually all of its canopy cover.

Sand volcanoes and liquefied soil at McHaffies Reserve (right). Photo credit Justin Morgenroth

Christchurch is renowned internationally for the beauty of its parks and reserves (left).Trees stretch across much of the city to the Pacific Ocean (right).Photo credits Christchurch City Council

Southem Feature


Direct Tree DamageTree damages spans the entire city, although it re-

flects those areas more damaged by earthquake im-pacts than others – for example, the north and west-ern suburbs were less damaged than those in the hills and eastern suburbs.

In the hills, a lot of trees were damaged by falling rocks and landslips resulting from the earthquake. Some impacts resulted from what could be called “good damage”, in that the trees were planted with a specific protection purpose to minimise downhill damage due to rock slips.

A kilometre long shelterbelt of pines and mac-rocarpa in an area called Morgans Valley stopped a great deal of rock fall from damaging the property below it.

“So tree damage up there was mostly from large rocks or boulders often slamming into stems and snapping them off altogether.”

On the flat, much of the damage was due to what is called “liquefaction”, a now common term for the impact of an earthquake on soils. As Dr Morgenroth explains: “During violent shaking, sandy soil par-ticles realign and settle in a more compact manner, reducing the pore volume. This subsidence squeezes water out of pores and upwards towards the soil sur-face. Sand volcanoes eject sand upwards, where it is deposited onto the surface. The resulting soil profile is stratified comprising a settled, compacted lower layer and a loose upper layer.”

Resulting changes in soil properties may affect hydrology, aeration, and soil chemistry, so effects are likely on root development and function.

Liquefaction was so extensive and widespread that houses and cars sunk into the unstable earth. The

danger from the phenomena has led to large areas in eastern Christchurch from being classified as “red zone” where houses cannot be rebuilt due to the con-dition of the land. In some cases, houses are found to be stable but have been “red zoned” due to the risk of liquefaction from the soil below.

“Trees were no different. They sunk as the liq-uefied soil lost its structure and its ability to hold things up.”

While people usually didn’t think about trees weighing anything, trees do weigh a tremendous amount and they sunk. However, the trees didn’t often sink evenly across the root plate, so there was differential slumping resulting in a severe lean and real stress on one side of the root system.

“In some cases, if it was a large tree there would be more weight pulling or leaning downwards, in which case there was more force, more tension on those structural roots. In some cases, they just buck-led, delaminated, and let go in which as the trees fell completely over.”

A data set from the city council has categorised trees as being “juvenile, semi-mature, mature or over-mature” rather than by age group but it does provide an indication of size and age. Most of the damaged trees were found to be in the “mature or over-mature” groups, as larger trees succumbed to liquefaction or differential settling.

Soil Damage ImpactsThe areas where large-scale liquefaction has oc-

curred will present a long-term challenge for trees in that the rooting environment has changed drastically for them, Dr Morgenroth says.

The vents which opened up in the earth during liquefaction pushed up a layer of fine sand on to the surface of the soil. The fine layer of sand on top of the soil can be as much as 40-50 cm deep.

“So basically, you have half a metre of very fine sand sitting on top of the soil surface.”

Roots do not enjoy growing at depth, Dr Morgen-roth says, and they typically grow near the soil sur-face to take advantage of rainfall and optimal soil aer-ation environment, and nutrients. So as roots shift upwards they will encounter a new environment, one which is very strongly different to the old environ-ment in which they grow.

“Whether it’s good, bad or neutral is something only time will tell I suppose.”

However, it was possible to make guesses at how the new environment will impact tree growth.

The fine, sandy texture of the new soil is not ex-pected to have great water-holding ability but, be-

Tree leaning and soil liquefaction at Hagley Park, Christchurch. Photo credit, Jonathan Hansen.

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cause it is very fine, it might hold water very well. Another feature is that there is virtually no organic matter in the liquefied soil layered on top of the top soil. Nil organic matter will contribute to the soil properties, such as the pH, nutrient inputs, physical structure and how roots are able to function within the soil.

Measuring History as it HappensIn cooperation with the city council, Dr Morgen-

roth has launched a case study in McHaffies Reserve, a small reserve containing just 13 eucalypts rang-ing in DBH (diameter at breast height) from 50-175 cm. The site was characterised by substantial lique-faction, with loose sand deposited by sand volcano es measured and modelling showed the extent and depth of the deposition. In some areas, 45cm of loose sand was deposited over the subsided original grade.

The question being asked in the study is: How will the Eucalyptus trees respond to the drastically modi-fied soil environment.

“It was important for me to get out there right away and intensively sample the soil within McHaf-fies Reserve. I needed to understand what this new soil was; what kind of beast I was dealing with.”

Once the sampling was done, analysis has been un-dertaken to measure those things best known to have an impact on plant growth – organic matter content, moisture holding ability, the ability of the soil to hold nutrients, and pH. This research will involve monitoring the trees year-after-year as they grow.

“History has shown us that following an earth-

Mass soil movementon the Avon River. Photo credit, Tim Easterbrook.

quake there’s a period of declining growth but be-cause those are only backward looking studies many, many years after the fact, we don’t know what caused that decline in growth, what caused the decline in growth and what changes were there in the environ-ment that resulted from that decline in growth.”

So the study was set up to look at short-term changes in function or physiology, and try to explain how that might result in long-term growth patterns.

When it is suggested to Dr Morgenroth that he is really, in a way, measuring history as it happened, he says: “My interest has always been looking at trees in a difficult environment and this just falls into that. It’s taking a live organism, changing the en-vironments around it completely and seeing how it responds.”

For the most part, trees grew in the one environ-ment and to have such a dramatic change would put their plasticity to the test.

Tree Heroes ExploredDuring this southern hemisphere summer, work

will be undertaken on the protection values trees provide during earthquakes, as highlighted by Mor-gans Valley, mentioned earlier. Undergraduate sum-mer students have been brought on to do some rock fall modelling and look at how forests might be used in protective capacities.

“It’s an aspect a few of us staff members here (at UC) have latched on to and said ‘what a positive way to use trees’ and we would like to learn a bit more about it really.”

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Protection forests are quite common the world over, Dr Morgenroth says, in alpine communities in Europe and there was no reason why they shouldn’t be used to greater effect in New Zealand.

“They (trees) were used very well here in this par-ticular instance. That’s the reason that Morgans Val-ley community remains there today, because of the combination of a protection and a forest they used.”

The oldest trees are 80 years old and at the time Morgans Valley was a single farm homestead pro-tected by the original pines. However, as a condition of selling off land for subdivision, the council said more protection forest needed to be planted, so that the area downhill would not be affected by rock falls, a known characteristic of the area.

In this case, the far-sighted condition insisting on trees planted above the sub-division saved the com-munity from potentially deadly rock falls.

Unusual Tree Loss on Seaside SpitAnother study being undertaken involves a bit of

a mystery surrounding trees on a land surrounding an estuary to the east of Christchurch. The South Brighton spit separates Christchurch from the Pacif-ic Ocean and pines and macrocarpa trees are planted around the estuary. Although most likely planted as commercial plantation, over the years this has devel-oped into a recreational area for the city.

The forest suffered a great deal of tree loss dur-ing the earthquakes. Hundreds of pines had to be removed, many due to the trees tipping over. How-ever, many trees appeared to be dying for no particu-lar reason as pine needles started to brown off.

The council approached Dr Morgenroth with the idea that there was a salinity problem. The LiDAR data the council had collected showed the land in the area of the estuary had actually dropped by 40 cm. This suggested that all the estuary water had more potential to come inland and pollute the soil with salt.

In an effort the test whether the land was suffering from salinity, the university researchers measured the electrical conductivity of the soil, a standard test, but found that the levels were nowhere near high enough to cause any sort of damage.

“So we threw out that idea and came to the tenta-tive conclusion that after the earthquake, that area was inundated with water and the combination of the drop in land and the liquefied soil, which really holds on to the water at the beginning before it de-waters, it was just soaking with water and remained that way for weeks. So during the growing season, the pines were sitting with wet feet. Knowing that radiata pine isn’t a particularly big fan of wet feet, it was suggested this may have been the reason for this slow decline and council have taken this on board.

The Google map (left) shows the centre of Christchurch City to the west and the green triangles illustrate some of the parks throughout the city. Morgans Valley is to the south-east, running up into the Port Hills. The Brighton spit area runs along the eastern shoreline, with the estuary entry opposite Sumner.

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The long shadows of protectionism and crime are starting to fall over the carbon markets many forestry companies are hoping reap a

bonanza from as southern hemisphere plantations mature.

Some of the shadows may be of the foresters own making, but others have come from external factors

The external factors include the following:• New restrictive regulations, and • concerns over organised crime.Governments, including those in Australia and

New Zealand, have signalled a move to ban the trade in industrial Certified Emission Reduction units (CERs). This follows concerns that a flood of cheap CERs may, in New Zealand’s case, undermine the price for New Zealand Units (NZUs). At the same time, the Australian Government has issued a state-ment on the risk that carbon credits could be used for money laundering purposes as they could be bought and traded using criminal proceeds to disguise the true origin of the funds.

Richard Hayes of Environmental Intermediaries & Trading Group Ltd, who has previously highlight-ed aspects of the NZ Emissions Trading Scheme (NZ ETS) in the Journal, says concerns over the impact from a flood of industrial CERs do pose quite a high risk to the market. However, he does raise concerns that artificially managing the market with a ban on industrial CERs raises the spectre of government control.

Carbon PricesThe industrial CERs come from the Clean Devel-

opment Mechanism of the Kyoto Protocol, under which developed countries can sponsor a project in a developing country so there is an emission reduc-tion activity. If that emissions activity did not occur, the owner receives CERs. Government concern sur-rounds the types of projects called industrial process projects, involving two areas:• Nitrogen which has got a global warming po-

tential of 310 times the amount of CO2; and• hydro-fluoro carbons which have a global

warming potential of 20,000 times a ton of C02.Recently some projects under this banner have

been launched on a large scale, so that 60-70% of the CERs creat-ed under the Clean De-velopment Mechanism are classified as being industrial process-type CERs. The units from these projects were be-ing sold en masse in the European Union and the European ETS for compliance purposes and were achieving a price of anywhere between 14 and 20 Euros.

“The EU became aware quite quickly that people were altering the fundamental way their processes were working in order to generate these credits, and the credits themselves were so cheap to create at the order of 10 Euro cents each, that it was massively profitable just to create these credits and not to cre-ate the actual industrial process they were supposed to be a by-product of. So the result of that was that the EU simply clamped down on that and they’ve banned them from the EU from the end of the first commitment period which is the end of 2012.”

Hayes says this is going to mean a lot of these cred-its will be looking for somewhere to be sold, and cur-rently this mean one of just three markets:• Japan• The New Zealand ETS• The potentially emerging Australian ETS

“So there’s a lot of concern in the New Zealand market that we might become a dumping ground for very cheap CERs and, therefore, undermine the fundamental construction of the NZ ETS,” says Hayes. The NZ ETS is based on the fact the govern-ment wants the price of carbon in the marketplace to change emitters’ behaviour, so reducing New Zea-land’s emissions, and not necessarily reducing emis-sions elsewhere. One corollary in the whole process driving the planned change in New Zealand, at least, is that under the Kyoto Protocol there is a theoretical limitation to the extent to which a CER can be used in terms of a country’s ability to meet its obligations.

Richard Hayes

Dodgy deals and government isolationism as foresters dig in over carbon price

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Hayes says he is yet to see that mentioned.“Certainly, the idea of having any amount of very

cheap credits flooding into the market, given the New Zealand market is quite thin, probably is quite a high risk.”

Government and Forestry ReactsAs noted in the previous Journal, two recent in-

stances exemplify how the New Zealand price for car-bon units can be dictated by the price of CER units.

“But I think you’ve also got to look at the fact that this is a functioning market, and just because the in-ternational price of carbon has dropped, to suddenly try to cut the New Zealand price of carbon from the international price is probably a short-term fix. It is probably from a long-term perspective a little ques-tionable.”

This is particularly so, he says, given the fact that most of the credits are coming from timber or forest plantations planted between the mid- to late-1990s. Most of these trees are expected to be harvested around 2020, in what is called the “wall of wood”, and expected to see an upsurge in consequent emis-sions from the forestry and forest industry sector of the economy.

“So what at the moment amounts to a very plenti-ful source of carbon credits are post-1999 Kyoto for-ests is, in another seven to eight years time likely to become a significant liability. I think if you start fid-dling with the ETS every time there’s an unwanted external influence or even an internal unwanted in-fluence, it tends to send messages to the market that the scheme is not reliable, and tends to cause prob-lems with the price.”

The majority of EU carbon price reductions had been triggered by three factors:• The first being the global financial crisis• The second, and more recent, concern over

some of the regulatory structures in Europe, which probably triggered a July 2011 price drop.

• The third, that Greece’s sovereign debt is leav-ing the banks at risk and has altered the ex-change rate in favour of NZUs.•

One of Hayes’s clients has raised concerns about a proposal in the New Zealand ETS revision proposal to have a compulsory pooling of forest-based carbon credits of about five, so that for every 100 NZUs that foresters are issued, five are held back by the govern-ment as an insurance pool.

“Clients are saying ‘hold on a minute – we can go and buy that insurance on the commercial market for less than half the price the government is going to pay’. So they characterise it along the same lines the supplementary pricing schemes and other instru-ments we were more familiar with in the late 1970s and early 1980s.

The Supplementary Minimum Price (SMP) Scheme was introduced to guarantee prices to meat and wool producers at a level appropriate for income adequacy and for the encouragement of increased farm production and export earnings. The scheme was subsequently abandoned in the free market re-forms of the later 1980s.

“When one responds to these unexpected external influences, one always goes back to look at what has perhaps worked before as a response. And the sort of response we are seeing generically is typical of past responses.”

Nevertheless Hayes says it is important to note that the European Union is excluding the industrial class of credit and it probably does logically follow that countries with similar scheme in the South do the same.

“I think if we were trying to exclude them and the Europeans were saying they were okay, then that would be more of an isolationist and a sort of arbi-trary approach.”

However, it was important government deliver definitive regulatory statements as quick as possible otherwise people would be unable to plan.

“We’ve already seen a lot of volatility in carbon price and I think the less information there is in the market and the less certainty the more likely we are to end up with volatility.”

While a carbon price similar to that proposed in Australia took an element of risk out of the scheme, the free market, if it was left to operate commercially, probably gave a “true” carbon market and allow peo-ple to invest against that carbon price. Foresters in New Zealand are not prepared to sell units for under $20, Hayes says. He has yet to find anybody to ex-plain the relevance from a computational viewpoint where that number came from. “But foresters aren’t interested in a price under $20 so it will be interest-ing to see how that affects the dynamics of the mar-ket. A lot of forest owners are sitting on their hands with units in their EUR accounts and not interested in selling around the $14-15, so time will tell.”

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As one whose company has to operate within the scope of the NZ ETS and is also fully involved in the international carbon credit marketplace, Richard Hayes has a good overview.1

Hayes says that the NZ review committee’s pre-liminary report had made the comment that only 25% of the expected forest-based carbon credits had already been issued.

“I believe from the other numbers that I’ve seen that, for example, the number of participants in the NZ EUR that a lot of foresters have stayed away from registering.”

There were two types of foresters – • Those managing pre-1990 forests subject to

compulsory registration, who are entitled should they register by the end of the year for compensation for a change of land use.

• Post-1989 foresters who are effectively able to opt into the ETS and are not required to do so.

“It appears that effectively neither group has opted in, in any great volumes at this stage.”

Hayes says from a supplier’s perspective, if every-body had opted in, it could be expected that there was going to be a surplus pre-2012 of forest-based credits in comparison with the expected volumes of credits that needed by the various emitters.

1 Rugby in heaven while world holds breath over global climate change. Southern Hemisphere Forest Industry Journal. Vol. 17 No. 2. June 2011.

“Of course, that dynamic has changed completely as soon as the price of international credits has come down below the $25 threshold.”

Certified emissions reduction credits (CERT cred-its), where credits are earned from a new technology project or emissions reduction strategy in a develop-ing country, are permitted in the NZ ETS.

“So last year in December, when these CER credits dropped below NZ$20, from the point of view of sup-ply, there was effectively an infinite supply of credits of that type in the NZ ETS and certainly they were cheaper than NZUs and they dragged the price of the NZU down.”

The CER-type of credits can be bought on an op-tion basis and are traded in hundreds of thousands a day and millions every month and were available for purchase every day for delivery on 31 March 2012.

“So you don’t even need to pay for them and have holding costs from, say, today until 31 March.”

The CER credits had brought a completely differ-ent element into the market and Hayes says he be-lieved many emitters bought a large number of CERS in December 2010 and a large number were sold when the price of CERs went above $25 again and the market for NZUs crept up and peaked around $22.

“Those emitters were simply cashing up their CERs and buying NZUs from $18, $19, $21, making themselves an arbitrage profit.”

The role of organised crime in carbon markets is increasingly coming under the spotlight. The Australian Crime Commission (ACC) was recently moved to issue a media release regarding the issue under the heading “Organised crime and carbon trading schemes”.

Michael Drew, a professor of finance at Griffith University in Queensland, was reported as saying organised crime groups were “deeply engaged in money laundering in the global carbon market” and that carbon tax fraud had become “one of the most profitable scams” across Europe.

Professor Drew said making the carbon market a prime target for criminals was the estimate that car-bon trading was forecast to be a US$3 trillion market by 2020 – worth more than the world oil market.1

1 Source: Carbon schemes a Mafia ‘honeypot’. Greg Stolz, The Daily Telegraph, September 29, 2011.

Foresters take money in arbitrage opportunities

The ACC noted in its statement “Organised crime is motivated by profit, and criminals look to exploit markets where there is money to be made.

“There is some risk that carbon credits could be used for money laundering purposes as they can be bought and traded using criminal proceeds to dis-guise the true origin of the funds. Carbon credits pose similar money laundering risks to other finan-cial products which represent value such as securities and derivatives.”

In March 2008, the ACC produced a classified Dis-cussion Paper for stakeholders on the topic of emis-sions trading. While the overall level of risk assessed at that time was not high, it was assessed that any ma-jor defrauding of this national scheme could adverse-ly impact participating parties and the community.

Carbon credits and organised crime concerns grow

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Source: Chile Government data.

Chile exports and prices

Chile Lumber, Woodchips, Plywood Exports Inex (100: 2003)

0.0

50.0

100.0

150.0

200.0

250.0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

2007 2008 2009 2010 2011

Lumber Woodchips Plyw ood Total

Chile Pulp Product Exports ($M)

0

50

100

150

200

250

300

350

400

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S

2008 2009 2010 2011

Chile Paper Product Exports ($M)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S

2008 2009 2010 2011

Chile Panel and Board Exports (US$M)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2007 2008 2009 2010 2011

Plywood Fibreboard

Chile Commodity Prices (US$/unit)

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

500.0

2009 2010 2011

(Cop

per a

nd O

il)

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0

1,800.0

2,000.0

(Pul

p an

d Fi

sh M

eal)

Copper (US$/lb.) Oil (US$/bb.) Bleached pulp (US$/T.M..) Fish meal (US$/T.M.B.)

PINE LUMBER: Pine lumber exports from Chile totalled US$659.9 million in the 12-month period ended September 2011, up 23.2% on the year ended September 2011. WOOD PRICE INDEX: The price index for ex-ported lumber products levelled out in the first two quarters of 2011 but were higher than in the first half of 2010. Total index price in Q2 2011 was 146.2 compared to the high of 152.9 in Q3 2010 but was higher than the 135.1 of Q2 a year earlier. PULP: The value of pulp product exports continued an erratic increase, lifting to US$3,923.5 million in the 12-months ended September 2011 or 24.5% more than in the year ended September 2010. PAN-ELS AND BOARDS: The value of Chile’s exports of panel and board products climbed through the winter of 2011, rising to US$498.6 million in the year ended September 2011, or 12.1% more than in the September 2010 year. COMMODITY PRICES: As illustrated in the graph, commodity prices were generally firmer through the start of 2011 but have trended down somewhat through the middle part of the year. The bleached pulp price was US$719.2 per metric ton in September 2011, or 4% lower than a year previously.

Southem Markets



Source: Statistics New Zealand

New Zealand exports and housingNew Zealand lumber exports (NZ$M)

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

2009 2010 2011

Pine lumber Wood products

New Zealand lumber exports by value trend (US$/M3)

0

50

100

150

200

250

300

350

400

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

2009 2010 2011

New Zealand Building Consents (number by month)

0

500

1,000

1,500

2,000

2,500

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A

2007 2008 2009 2010 2011

(Hou

ses

and

Apa

rtm

ents

)

0

500

1,000

1,500

2,000

2,500

3,000

(All

dwel

lings

)

Houses Apartments All dwellings

New Zealand Log Exports (US$M)

0

20

40

60

80

100

120

140

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

2009 2010 2011

LUMBER AND WOOD: The value of pine lumber exports from New Zealand to the 12-month period ended August 2011 was NZ$714.9 million, or 6.7% less than the previous year. VALUE TRENDS: A lift in value per cubic metre sold over the summer period was followed by a dribbling decline through 2011, dropping to US$279/m3 in August. LOG EXPORTS: Log exports from New Zealand at US$1,252 million rose 10.6% in the 12 month period ended August 2011. HOUSING CONSENTS: Annual numbers for residential build-ing consents issued in the year ended August 2011 were down, with a trending increase put down to work post the Christchurch earthquakes. Building consents issued for houses fell 20% in the year ended August 2011, at 12,428, compared to the August 2010 year.

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Source for data: Australian Bureau of Statistics

Australia trade and housing

0

5

10

15

20

25

30

Jan

Feb

Mar

Apr

May Ju

nJu

lA

ugS

ep Oct

Nov

Dec Ja

nF

ebM

arA

prM

ay Jun

Jul

Aug

Sep Oct

Nov

Dec Ja

nF

ebM

arA

prM

ay Jun

Jul

Aug

Sep Oct

Nov

Dec Ja

nF

ebM

arA

prM

ay Jun

Jul

Aug

2008 2009 2010 2011

Australia Log Exports (A$M)

Australia Paper Product Trade (A$M)

0

50

100

150

200

250

300

350

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

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Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

2008 2009 2010 2011

Exports Imports

Pulp Product Trade (A$M)

05

1015202530354045

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

2008 2009 2010 2011

Exports Imports

Australia Wood Product Trade (A$M)

0

20

40

60

80

100

120

Jan

Feb

Mar

Apr

May Ju

nJu

lA

ugS

ep Oct

Nov

Dec Ja

nF

ebM

arA

prM

ay Jun

Jul

Aug

Sep Oct

Nov

Dec Ja

nF

ebM

arA

prM

ay Jun

Jul

Aug

Sep Oct

Nov

Dec Ja

nF

ebM

arA

prM

ay Jun

Jul

Aug

2008 2009 2010 2011

Exports Imports

Australia Building Approvals (total and private sector by month)

02000400060008000

10000120001400016000

Jan

Feb

Mar

Apr

May Ju

nJu

lA

ugS

ep Oct

Nov

Dec Ja

nF

ebM

arA

prM

ay Jun

Jul

Aug

Sep Oct

Nov

Dec Ja

nF

ebM

arA

prM

ay Jun

Jul

Aug

2009 2010 2011

Total dwellings Private sector houses

WOOD TRADE: Wood product imports at A$1,068 million rose 13.3%% in the 12 months ended August 2011 when compared to the August 2010 year. LOG EXPORTS: Log exports in the 12 months ended Au-gust 2011 reached a total value of A$212 million, or 32.1% more than a year earlier. PAPER TRADE: Af-ter falling through the tail end of 2010, paper prod-uct imports rose during much of the period to August 2011 but the year ended August 2011 figure was down 3.9% to A$2,687 million. PULP TRADE: Pulp prod-uct exports of A$252 million were just 1.9% higher in the year ended August 2011 compared a year earlier. HOUSING STARTS: As illustrated in the graph, housing starts in Australia started to firm up but the year ended August 2011 was down just 1.0% on the Au-gust 2010 year, at 157,342.

Southem Markets



South Africa trade and housing

Sources: Statistics South Africa and Department of Trade and Industry.

South Africa Lumber Product Trade (Rand Million)

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200.0

400.0

600.0

800.0

1000.0

1200.0

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Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

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Jun

Jul

2009 2010 2011

Exports Imports

South Africa Pulp Trade (Rand Miillon)

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

Ja

nF

eb

Ma

rA

pr

Ma

yJu

nJu

lA

ug

Se

pO

ct

No

vD

ec

Ja

nF

eb

Ma

rA

pr

Ma

yJu

nJu

lA

ug

Se

pO

ct

No

vD

ec

Ja

nF

eb

Ma

rA

pr

Ma

yJu

nJu

l

2009 2010 2011

Exports Import

South African Paper Trade (Rand Million)

0.0100.0

200.0300.0400.0

500.0600.0

700.0800.0

Jan

Fe

bM

ar

Ap

rM

ay

Jun

Jul

Au

gS

ep

Oct

No

vD

ec

Jan

Fe

bM

ar

Ap

rM

ay

Jun

Jul

Au

gS

ep

Oct

No

vD

ec

Jan

Fe

bM

ar

Ap

rM

ay

Jun

Jul

2009 2010 2011

Exports Imports

0

1000

2000

3000

4000

5000

6000

7000

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

2009 2010 2011

South African Residential Building Consents (R'000)

Residential Total

LUMBER TRADE: Exports of lumber product in the 12 months ended July 2011 were valued at a total of R6,693 million (US$842 million) or 11.8% lower than in the July 2010 year. HOUSING STARTS: The value of residential building approvals in South Africa rose 8.7% in the 12-months ended July 2011 compared to the July 2010 year, at a total of R27,885 million in value (US$3,505 million). PULP TRADE: The value of pulp product exports for the 12 months ended July 2011 at R5,968 million (US$750 million) were up 14.3% on the July 2010 year. PAPER PRODUCT TRADE: The value of paper product exports for the 12 months ended July 2011 at R4,377 million (US$550 million) down by 9.3% on the July 2010

Southem Markets



NZ Log Price SummaryJune 2011 Quarter and 12-Quarter Average

As at: September 2011

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Generic Log Type &Pricing Point

September 2010

(Quarter)

December2010

(Quarter)

March 2011

(Quarter)

June2011

(Quarter)

12-quarteraverage

EXPORT (NZ$ per JAS m3 f.o.b.)

Pruned 148-219 176-203 179-197 155 - 181 170

Unpruned A-grade 127-144 118-121 132-144 133 - 148 119

Unpruned K-grade1 109-118 106-130 130-148 125 - 145 110

Pulp 103-105 100-120 129-137 110 - 176 97

DOMESTIC (NZ$ per tonne delivered at mill

P1 125-156 130-154 128-147 130 - 152 133

P2 108-127 109-132 110-127 122 - 130 109

S1 97-103 97-100 88-98 99 - 125 94

S2 89-101 92-102 92-103 86 - 105 88

L1 and L2 71-99 73-102 72-103 74 - 115 79

S3 and L3 81-94 80-86 82-92 81 - 92 75

Pulp 44-59 46-58 47-57 48 - 61 51Source: NZ Ministry of Agriculture and Forestry, Senior Analyst, MAF Policy Information & Regions 2 = Korea grade

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shfij vol 17 no 3

Documents

sandra kai fong

jun jul aug

global warming potential

chief executive officer

chilean wood corporation

clean development mechanism

money laundering purposes

report finds business