Clarky's Comment - August 2012, Project Softpower

Project Softpower

An initiative of Taupo District Council (TDC) and New Zealand Trade and Enterprise (NZTE) to engage with elements of the Chinese government to establish a new large-scale wood processing facility near Taupo is getting the attention of Central North Island (CNI) forest owners. PF Olsen, along with other forest managers and owners of CNI forests applauds this initiative. According to Mark Day, TDC's Project Softpower's lead manager, the idea was first introduced by a visiting Chinese official, citing energy constraints in China as the primary motivation. Wood processing requires a lot of electricity and heat energy. China has better things to use its scarce energy resources on than cutting up logs and drying timber.

Concurrently TDC had been developing its own economic development strategy with diversification away from the seasonal tourism sector for job creation as key. Taupo has unutilised geothermal energy and is surrounded by forests. There are two ports at Napier and Tauranga to compete for export of the processed wood products, and a transport differential for forests close to Taupo would favour local processing over log export. The fit seems very logical.

Forest owners are however wanting to ensure that any large scale new wood processing facility:

  1. Is financially sustainable. New Zealand still has a bit of a monkey on its back from the failed Citic investment in Kaingaroa Forest that ended in receivership of the partnership with Fletcher Challenge Forests in 2001.
  2. Has sufficient log supplies available of the grades suited to the products to be produced. So far it is unclear what products are to be produced and therefore what log grades would be needed. It is therefore impossible to determine the availability of those grades.
  3. Supports internationally competitive wood residue processing. There are residue processing facilities at Napier, Ohakune, Kinleith, Kawerau plus a small scale facility at Taupo. With the international trend towards larger scale for pulp and paper manufacture and the emerging bio-refinery opportunity we must take care not to cut off options to expand existing facilities.

The sensible question has been asked "If it makes commercial sense to saw up export grade (primarily large knot industrial grade and smaller diameter non-structural) logs in New Zealand rather than in China, why are our existing sawmills not inundated with enquiry and working 2 or 3 shifts to produce and sell timber cut from such logs to China?"

Clearly more information and study is needed, but it is great to see TDC's initiative getting the attention and support of New Zealand Trade and Enterprises, New Zealand government officials and Ministers and the Chinese government.

Forest owners have endorsed increased on-shore log processing as a cornerstone of the Woodco Forest Industry Action Plan. If you were designing a strategy from scratch of how New Zealand Inc. can get the best out of our plantation forests, it would certainly not be to export half the volume as unprocessed logs.