Australia’s battered forestry sector and timber industry is finally starting to emerge from the financial wilderness it was cast into nearly a decade ago following the spectacular collapse of managed investment scheme timber plantation companies such as Gunns, Timbercorp and Great Southern. New figures released by the federal government show the timber industry has enjoyed four years of consecutive growth, with the value of wood product exports growing 9 per cent in 2016-17 to AU$3.4 billion.
Nowhere is the change more evident than in the AU$1.1bn woodchip sector, once the favoured target of environmental groups such as the Wilderness Society because of the perception pristine old-growth forests in places like Tasmania were being pillaged to supply woodchips to Japan to be made into toilet paper and nappies. These days, the woodchip sector is fast becoming an unlikely paragon of the new green economy, with the potential to play a major role in carbon sequestration, farm viability and the generation of renewable energy from biomass.
Over the past five years, it has transformed itself on the back of vast, fast-maturing blue gum MIS (managed investment scheme) plantations across Tasmania, South Australia and Victoria into an environmentally acceptable industry no longer reliant on the logging of native forests.
Tony Price, chief executive of newly listed company Midway, Australia’s largest woodchip processor and exporter, admits it has been a long and bumpy ride and many companies have not survived. “It’s been tough. We had the GFC, the collapse and chaos of MIS, a glut of blue gum and a high Australian dollar — a perfect storm that has resulted in most of the industry not being here any more,” said Mr Price, a veteran of the forestry sector.
“But now we are experiencing an industry resurgence as demand for wood products — and woodchips particularly — grows and supply shrinks. These days it’s all about being sustainable, having a certified product and making sure you have a social licence to operate in the long term.” Midway, which owns wood processing facilities and loading wharves at Geelong, Portland and Brisbane ports, floated on the ASX last December with its majority owners, the Gunnersen and McCormack families, retaining a 55 per cent stake.
Mr Price, a former Australian Bluegum Plantations boss and ex-Rio Tinto executive, said the company now had a market capitalisation of about AU$180m, seven major customers in Japan and China, and was exporting three million tonnes of woodchips annually. More than 90 per cent of Midway’s shipments are of woodchips from blue gums grown mainly in former MIS plantations spread across Victorian, SA and Tasmania farmland, with the chips derived from thinned trees or smaller trunks after more valuable hardwood sawlogs have been extracted.
Mr Price said end users in China — which last year bought 62 per cent of Australia’s woodchip stacks — were looking for a sustainable supply chain of plantation-certified woodchips, with healthy prices now hovering around $US152 a tonne for single species Eucalyptus globulus (Tasmanian blue gum).
Source: The Australian