Tasmanian Times

Economy

Contract signed to turn forests into pellets: Is this true?

Tasmanian Times has been told Austrian-based pulping/power generation expert Andritz has signed a contract with a Tasmanian government body – most likely Forestry Tasmania – to provide their machinery to turn Tasmanian native forest into pellets.

The contract is believed to have been signed in the past three weeks, the source said.

If it is true it would mean Forestry Tasmania has agreed to contract to pelletise Tasmanian native forest for electricity generation.

Implications are that this would anable them to buy out Gunns contract to harvest native timber and … give Gunns money towards financing the pulp mill.

All about Andritz, HERE

• Tas Echo:

The deal with Andritz will also forestall possible insolvency by Forestry Tasmania.

There are believed to have been many sleepless nights pondering what to do with an insolvent GBE which is not covered by the insolvency provisions of the Corporations Law.

It is thought that the common law provisions covering Directors’ fiduciary duties will apply.

Without a deal as is proposed, resignations from Directors were considered an imminent possibility.

• Tim Morris:

O’BYRNE REQUESTED BY FORESTRY TASMANIA TO MEET CHINESE CUSTOMERS
But Yet to Detail How They Intend to Use Forest Products Supplied

Tim Morris MP
Greens Economic Development spokesperson

The Tasmanian Greens today called on Economic Development Minister David O’Byrne to disclose the nature of any relationships existing between Forestry Tasmania and the two companies that he met on behalf of the GBE on his recent trip to China.

Greens Economic Development spokesperson Tim Morris MP said Tasmanians deserve to know what Forestry Tasmania is doing in China and whether they are selling, or intending to sell, native forest products, particularly from the High Conservation Value Forests that are currently the subject of the Forest Principles process.

“While Mr O’Byrne was able to reveal was that one company was a Pulp and Paper Mill and the other was a manufacturer of Medium Density Fibreboard (MDF) and is interested in reafforestation with fast growing eucalypts, many other important questions remain unanswered,” Mr Morris said.

“There are piles of logs being aggregated at Bridgewater which are then shipped to China for processing without any adequate disclosure by Forestry Tasmania about the source or destiny, or what it is that these logs are being processed into.”

“Tasmanians have a right to know if these logs are being sourced from areas of High Conservation Value Forests identified through the Statement of Principles process.”

“Tasmanians also have the right to know that if these logs are not being sourced from contentious forest areas, whether by exporting these whole logs, jobs that should be created in Tasmania processing them here, are being exported.” Mr Morris said.

Follow today’s Gunns Ltd share price

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20 Comments

20 Comments

  1. Garry Stannus

    June 22, 2011 at 4:56 pm

    #17 How much is a ton of bricks in the new tonne units? (grin again) And if you burnt a tonne of new bricks, would you get …?

    Thanks for your reply, I’ve got this mental picture of you walking happily along a big city street, whistling nonchalantly, thinking of carbon trade-offs and digging for victory, while 20 stories above your head a building crane has let slip a tonne of scientific bricks, which are at this very moment, hurtling down at the usual rate of acceleration. You’d better move quick, J.A!!!!!!!!!!

  2. Garry Stannus

    June 22, 2011 at 12:55 pm

    Thanks Dana, you have made it clearer.

  3. Clive Stott

    June 22, 2011 at 12:48 pm

    As I asked in another post, what is the calorific value of heavy fuel waste and how much does it cost to turn the wet wood FT propose to use into pellets?
    Is this why domestic consumers are being asked to pay more for their power?

  4. J A Stevenson

    June 22, 2011 at 12:15 pm

    Garry, I know nothing about science, leaving school at 12 to dig for victory, but presume that when plants capture the carbon part of carbon dioxide they compress it leaving the oxygen to float away. When carbon is burnt it combines with the oxygen producing co2.
    I also presume that we are discussing weights, not volume. It which case the insulating atmospheric layer becomes increasingly thicker, trapping more of the suns heat.
    Watch this space, if I have got it wrong the scientist will descend on me like a ton of bricks.

  5. Garry Stannus

    June 22, 2011 at 11:31 am

    I must say, I don’t understand this excerpt from the article:

    “Implications are that this would enable them [FT] to buy out Gunns contract to harvest native timber and … give Gunns money towards financing the pulp mill.”

    I’ve looked again at the contract and it gives either party the right to terminate the contract if certain conditions haven’t been fulfilled. There is no mention that I have seen that requires either party to ‘buy out’ the other in the event of the contract being terminated under those conditions (#1). I think I remember that Gunns have a roll-over right, that is, they can on-sell their rights to supply, but, without going into it, I’d guess that FT’s right to terminate (now available) under 3.3 (b) would still prevail, it would be a case of ‘caveat emptor’.

    Pete (#7) I don’t know if contracts have been signed for wood supply to Triabunna, but we do know that FT, Gunns (and presumably Fibre Plus) are not signatories to the SOP agreement. And we should remember that the SOP was as a result of private meetings not sponsored by or involving the govt. As I understand it, whatever the signatories agree on, they then identify the next step as getting the (state?) govt to back up the agreement legislatively. On a minor note, I’m not sure that Barry Chipman is a signatory to the SOP. I read someone’s comment elsewhere on TT to the effect that Barry was present at the signing, but didn’t actually sign. I’m not sure if that’s the case

    John (#8) The WSA contains the following:
    10. USE OF PULPWOOD

    10.1 Gunns may use Pulpwood supplied under this Contract at any of its facilities at its discretion.

    I understand that as meaning that if they want, Gunns can use the pulpwood to mulch Greg L’Estrange’s garden without breaching the contract, if they so desire.

  6. Dana Frost

    June 22, 2011 at 11:10 am

    Carbon links with oxygen to form CO2. The added oxygen, pulled from the atmosphere, adds the extra weight to each molecule. Burning carbon fuels takes away oxygen from our atmosphere, its a double negative. The creation of oxygen was one of the keys to life on earth being as diverse and sustainable as it is. Plants led to animals being possible. As we destroy more plants, it reduces the liveability of the earth in more ways than one, though the heating of the earth is the major and most immediate threat.

    The other great sleeping giant is that as oceans absorb some of the CO2 , acting as it were, to buffer the increase, they become more acidic. Calcium based lifeforms, of which there are a huge number, the core of ocean based life, begin to decrease as acidic water dissolves calcium.

    These are multiple and compounding dangers. Its little wonder the scientific community are so concerned. Conveying this has proven hard, especially as the need is for selfless and very concerted action on a large scale, something we have not seen since World War Two. Of course, this threat is far greater than the Nazis or Japanese ever were.

  7. Garry Stannus

    June 22, 2011 at 10:41 am

    #5 and #11: My science is a bit dodgy. How does burning 1 tonne of wood release 2 or 3.6 tonnes of CO2 into the atmosphere? On the face of it, it’s counter intuitive – it must be time for second coffee, and kick start my grey matter into first gear (grin).

  8. Clive Stott

    June 22, 2011 at 3:19 am

    The chip mill at Eden, on NSW’s SE coast, is one of the more controversial in the country. Each year it exports around 1 million tonnes of our native forests as woodchips, destined for the Japanese market.

    The mill, run by South East Fibre Exports (SEFE – owned by the Japanese company Nippon) currently plans to start producing electricity by burning our forests – which some estimates say will be up to four times as carbon intensive as a coal fired plant. SEFE also has plans to build a ‘pellet plant’, to produce pellets for this form of electricity generation for sale.

    In the last week SEFE have been given the green light for the latter of these projects by their local council.

  9. max

    June 22, 2011 at 2:17 am

    11 # Wood has half the carbon content than coal, but coal is twice as efficient as wood and therefore both have nearly the same high level carbon footprint. Unless plantations are grown specifically for fuel, wood is no better than coal and the power produced is more expensive.

  10. Barnaby Drake

    June 21, 2011 at 11:56 pm

    5.Every tonne of burnt wood releases two tonnes of CO2 directly into the atmosphere.

    Every tonne of carbon burnt, as opposed to wood, releases 3.6 tonnes of Carbon Dioxide into the atmosphere. But then, there is a carbon cost to making the stuff in the first place which should also be added in.

  11. Mark

    June 21, 2011 at 10:00 pm

    Here is a question for Gunns: If you claim the pulp mill will only source plantation timber and not native forest in order to gain FSC standards but the pulp product is manufactured using power generated by native forest sourced fuel (as described), is the pulp mill truly of a FSC standard?

  12. max

    June 21, 2011 at 9:59 pm

    It is a proven fact that cutting trees down for fuel is not carbon neutral unless they are plantation trees purposely grown for this use and even then transport and harvesting has to be factored in. It is also a fact that burning coal is more green house friendly than burning wood because of the efficiency factor. If Forestry Tasmania is going down this back wood path then Tasmania will find it very difficult to meet Australia’s green house targets. If FT hasn’t signed on the dotted line for pellet machines they should back off or we will be paying for another white elephant.

  13. john hayward

    June 21, 2011 at 9:54 pm

    Tasmania seemingly floats beyond the gravitational field of the law. FT appears to float in a legal limbo outside Corporations Law, just as the host of Tasmanian councillors with logging industry interests seem beyond the Local Government Act provisions regarding fiduciary conflicts of interest.

    The lavishly concessional terms of the Wood Supply Agreement would seem to have at least the implied condition that the wood be used for the pulp mill, rather than as a perk for Bob Gordon or the Tas ALP to sell for whatever they can get. The law requires the govt to obtain a market return for public assets they flog.

    This wood is sold to Gunns under the WSA at chip quality prices, graded by them, and con be resold by them for whatever they can get. The price charged to Gunns is supposedly based on world market prices for chips.

    The principle the Tas Govt seems to be following here is the same one invoked in response to the Vatican’s mild protests about (the rise of fascism): ” So it’s illegal. What are ya gonna do about it?”

    John Hayward

  14. Pete Godfrey

    June 21, 2011 at 9:46 pm

    Typical of the troglodyte mindset of FT to look for more ways to use our forests for even lower returns.
    Surely this signing plus the contracts to supply the Triabunna chip mill are in contravention with the SOP.
    Unfortunately the industry have shown that they cannot be trusted.
    Even Barry Chipman who is a signatory to the SOP is now advocating breaking it by refusing to limit native forest logging.
    It is a dud.
    It is definitely time to walk out on the talks.
    Get out right now ENGO’s.

  15. Mike Adams

    June 21, 2011 at 9:32 pm

    All I can see in this is a strong desire on the government’s part to avoid total confusion should, as alluded to in the TT report, the FT directors be forced to resign. They (=Lara and Bryan) wouldn’t know what to do. As it is, there are many questions: where does FT get the timber from; will they use plantation Eucalyptus Nitens; how much will they get for the pellets since there’s bound to be strong competition from cheaper labour costs and currencies than ours; under what terms are they buying the pellet plant from Finland; where do they get the money from for this and for the heralded buying of Gunns’ 20 year agreement; are we due to see another expensive letter of comfort when country schools are to be shut from lack of money, and is this simply staving off the inevitable. As a commentator has already remarked, there’s a state commitment to the status quo. And is the question of wood pellets still a sticking point in the SOP?

  16. J A Stevenson

    June 21, 2011 at 8:10 pm

    Every tonne of burnt wood releases two tonnes of CO2 directly into the atmosphere.

  17. Barnaby Drake

    June 21, 2011 at 7:44 pm

    From Forestry’s open day for the kiddies….

    In the short to the medium term, the only real option is woodchip exports, but into the future, we need to find ways to downstream process some of this pulpwood in Tasmania. We wish Ron and Brendon, owners of Fibre Plus all the best as they take over the mill at Triabunna.

    People, who are having trouble meeting the cost of their heating bills, might be interested in another alternative use for pulpwood residues. Forestry Tasmania recently hosted a visit to the State by American biomass and forestry expert Dave Atkins. Wouldn’t it be fantastic if Tasmanian homes were heated by a smokeless alternative to the increasingly popular wood heaters?

    Until next time,
    Bob Gordon Managing Director
    Forestry Tasmania

  18. AnnoyingO

    June 21, 2011 at 7:19 pm

    That’s the sadness of it, rather than winding things up, financial desperation will cause them to use up forests for more and more dismal returns. Burning trees for power is the ultimate horror, if only the feds would step in and say no. Will this cause a bigger row than the pulp mill?

  19. max

    June 21, 2011 at 4:42 pm

    What will give a lower return than woodchips, it must be pellets and Forestry Tasmania have found away of clear felling Tasmania for a lower possible return.

  20. Garry Stannus

    June 21, 2011 at 3:42 pm

    Both contracts that FT have with Gunns have provisions in them which were added in 2008 and which allow either party to terminate the contract in the event of certain prescribed circumstances. Two of those are non commencement of construction of the mill and/or a halt to construction of more than 180 days. I would think that at least one of these criteria have been met, so either side can call an end to the contracts – if they want to. I am not aware of any requirement for one party to have to pay out the other in such a circumstance. There are some goodwill statements in the Agreements which suggest that negotiations for new contracts to replace those existing would be conducted in a spirit of goodwill and cooperation, but that would be very difficult, you would think, to enforce.

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