The end of the woodchipping era is near.
In mid May VicForests announced that the Eden based woodchip giant SEFE will stop buying east Gippy woodchips and logs at the end of this year. Clearly they were in shock and can’t seem to put a positive spin on this – besides to say they at least now have ‘certainty’ – about the industry’s uncertain future.
The announcement was clearly intended to be buried under the budget.
Industry players interviewed on ABC radio all presented badly and the export woodchip company’s announcement has clearly been a ‘body blow’ and shock to them all.
When asked if they will be taking any logs or sawmill waste from EG mills the mill manager Peter Mitchell said “Not, not … from certain sawmills we’ll be stopping their supply to us but others we’ll continue …. perhaps". And when did you first hear about this decision? "Umm - that’s really something I’ll keep to myself actually - I don’t think this is worth sharing with anyone else.”
Reading between the lines it looks like this could collapse the entire EG industry. Very likely no alternative customers exist to buy the 200,000 tonnes of ‘waste’, but they are talking up the possibility to placate the remaining industry people.
Woodchips and waste are the bread and butter of the East Gippsland industry. No market = no industry.
The reason for the decision by Nippon’s shareholders to stop buying EG wood is due to:
- structural shift in traditional markets, the Tsunami and decommissioning of mills
- Increase in plantation chip supply from Vietnam and Taiwan,
- Change in ownership of MIS plantation schemes – ramping up of export woodchips from Aussie plantations.
No one could be drawn on how many jobs might be lost as a result (the fact is not many in the big scheme).
They claim there WILL be an industry in EG, they just need to find ways to sell low grade tree trunks. A mill owner said he might have to close down if there were no markets for his waste.
Asked if the export chip mill will remain open for NSW customers – the answer was "Talk to SEFE about that". One person admitted they have just 7 months to find a large market for the woodchips and a lot of hard work needs doing. The biomass push has gone nowhere for the past 3-4 years.
However NSW has just passed legislation allowing the burning of native forests for electricity generation to be classed as ‘renewable”. This allows the industry to gain financial credits, making it more viable. They will also be able to cut forests down that were previously unsuitable for paper making – such as the darker species. We need to keep ahead of this possibility.
This cyberletter addressed to 30 or so energy retailers and fuel companies around the country needs to keep circulating and being signed. Please sign and pass it on as widely as possible.
The sawlog industry has been dying for the last 20 years as pine sawn timber has now taken over the building market. It looks like this could be the end (if we can knock out biomass). Woodchipping has provided more employment to Asian paper factories than in our own region since 1970.
This announcement has huge implications right across eastern Victoria. Nippon also owns the Australian Paper factory in the Latrobe Valley. This lost $26.5M in 2013 and $20M in 2012. Native forest logging is becoming a millstone around the neck of this company.
Read VicForests media release (12th May 2014)
Read the Herald Sun article