Picture: Matt Newton
Securing a Last Hurrah forest peace deal between the 3 ENGOs and the 7 Forestry representatives will ultimately come down to accepting the continued operation of the unprofitable company Ta Ann Tasmania and Forestry Tasmania’s largest customer.
Ta Ann’s long-term wood supply agreements are the main reason for the Signatories continuing to fail to agree.
Tasmania’s small sawmillers might be enticed by offers of voluntary exit packages via $15 million of Commonwealth IGA funding. And reducing their access to forest resource gives FIAT a little more wriggle room to forego a little more HCV public forest to the ENGOs before Ta Ann’s contracts expire in 2027… but FT’s modelling is saying that’s not enough to release 500,000 ha for reserves.
In June 2011 the Industry Signatories came up with their preferred option of 140,350 hectares of new reserves* versus the ENGO option of 572,040 hectares. Forestry Tasmania did the modelling based on their forward projections of available wood supply from (1) native forests, (2) regeneration forests and (3) State-owned plantations. FT remains convinced that after 2030 about 150,000 cubic meters of high quality sawlog would be available from plantations but ‘a rapid transition out of public native forests - as suggested by the ENGO option – there would be no alternative supply of eucalypt sawlogs from plantations managed by FT’. [Reference 1]
Figure from the Forestry Tasmania June 2011 report to the Signatories showing the ~140,000 ha of reserves under the ‘industry’ option [black] and the 570,000 ha ENGO option [black and greycombined] [Reference 1]
* The Tasmanian Liberals 13-point forestry plan of December 2011 committed ‘up to 150,000 hectares of high conservation value forests, including old growth forests such as the Styx, Weld Valley, and Florentine can be locked up’
When it came to the availability of peeler logs for Ta Ann, FT modelling was suggesting a similar scenario. Forestry Tasmania’s modelling stated: ‘The capacity of the current domestic peeler processing industries [Ta Ann] to process and market plantation material is still uncertain’… but ‘after 2030 there is a greater supply of plantation peeler billets’. [Reference 1]
In May 2011 David Ridley from Ta Ann Tasmania made a submission to a Legislative Council Inquiry into public native forest transition. Ta Ann’s submission addressed the main Term of Reference of the Inquiry: ‘The impact of the proposed transition out of public native forest management and harvesting in Tasmania’.[Reference 2]
This Inquiry took place while the forest talks of the 10 signatory organisations were meeting and after 12 Legislative Councillors had declared their public opposition to the process originally set up by Mr Bartlett and Mr McKim after the 2010 State election.
Ta Ann Tasmania
Much of the background to the Sarawak-based company Ta Ann in Tasmania [TAT] – including its long-term wood supply agreement with Forestry Tasmania - is on record. In Tasmania TAT is not a logging company; it is reliant on log supply from Forestry Tasmania. They are a manufacturer of veneer and plywood products using Tasmanian grown eucalypt. They predominantly export flattened leaves of veneer in bulk to their SE Asian plants to make veneer flooring and panel boards for overseas markets.
Gunns Ltd exit from logging public native forests came with a price tag of $38 million; it surrendered its two wood supply contracts for woodchips and sawlogs in October 2011. Thereafter Ta Ann became the largest user of timber from Tasmania’s public forests. Their wood supply agreements [WPAs #855 and #856] with Forestry Tasmania commenced in 2006 but the volume, specifications or price paid for the wood Ta Ann receives from public forests were excluded from these publicly available contracts for ‘commercial-in-confidence’ reasons.[Reference3]
According to Forestry Tasmania’s 2010-2011 report,‘domestic’ peeler logs harvested from native forests were supplied and sold to Ta Ann Tasmania for $60 per cubic metre; a drop from $70 per cubic metre in the previous year. [Reference 4]
Based on John Lawrence’s review of the Ta Ann Tasmania’s 2010 financial statements, he concluded the company is ‘a dog, unprofitable, cash flow negative and completely and utterly dependent on overseas associates’. Direct manufacturing costs including employee wages and payments to FT for supply of peeler logs exceeded income earned by $5 million and its operating cash flow was negative $9 million. [Reference 5]
Despite this worrying financial position, Mr Ridley appeared before the Legislative Council armed with his company’s submission. It sheds some light on the nature of their business, the specifications of the timber and the Ta Ann’s expressed concerns regarding any agreement amongst the Signatory organisations involved in the forest negotiations.
Ta Ann currently has two rotary peel veneer mills in Tasmania - at Smithton and Southwood in the Huon district. The veneer plants were built in 2007 and 2008 using $10.4 million of Commonwealth grant under the Tasmanian Community Forests Agreementand an estimated $68.5 million of funds from other sources. The two plants have access to a total of 265,000 cubic metres of peeler logs from public native forests and plantations and these are delivered to their local log yards for dressing and final preparation as docked 2.1 metre billets ranging from 220 to 700 mm in diameter (average diameter of 390 mm).
Ta Ann’s tells its customers that its Tasmanian operations use ‘eco wood’ products sourced from plantation or sustainably managed ‘regrowth’ forests and promotes its wood products under Tasmania’s overly hyped ‘clean, green’ image.
Ta Ann’s submission highlights the concerns with, what they refer to as, the ‘transition arrangements’of the Signatory negotiations.
Up to 2010 access to the public forests has not been an issue for Ta Ann, their generous wood supply arrangement with the public forest manager, Forestry Tasmania provided them with high quality native forest peeler logs. Any future reduction in the area of public forest available for Ta Ann to obtain their annual wood supply is therefore a significant commercial issue.
The narrow specifications for Ta Ann’s peeler billets and its availability from all forest sources available to Forestry Tasmania is now the reason for yet further rounds of ‘coupe by coupe’ modelling that Forestry Tasmania in July and August 2012.
The Signatories around the table are fully aware of the situation:
• Forestry Tasmania and Ta Ann have joint Wood Supply Agreements for the annual supply of 265,000 cubic meters of high quality peeler billets.
• In 2010 those WPAs were extended out to 2027
• The 10 Signatory organisations to the Statement of Forest Principles Agreement [October 2010] and the two Governments signing the Intergovernmental Agreement [August 2011] recognise the legal standing of those existing WPAs with Forestry Tasmania supplying150,000 cubic meters to the Southwood and 115,000 cubic meters to the Smithton veneer plants. [Add to this the Crown leases and WPAs that were extended after November 2010 to Tasmanian sawmillers as a direct result of David Bartlett’s instruction to Forestry Tasmania.]
What still remains unresolved and/or contentious include the following:
• Clearfell logging in high conservation value coupes has produced the very large part of Ta Ann’s veneer timber supply; the very forests under negotiation. Only a small proportion of high quality sawlog and veneer grade billets are recovered in each of these coupes, leaving large volumes of residue timber that used to be chipped for export.
• Ta Ann Tasmania (TAT) (as well as other sawmillers) has previously rejected timber from plantations because it does not meet their stringent specifications.
• TAT is now the single largest driver of the industrial-scale logging of Tasmania’s native forests.
• Forestry Tasmania’s prospective modelling of the timber estate in Tasmania is suggesting that transition to plantation harvesting to supply Ta Ann is unachievable in the next two decades (2012 to 2031).
Therefore Ta Ann’s wood supply contracts stand in the way of a lasting resolution to the conflict between contested forests and uncontested wood.
(Veneer LogSpecifications]:Forestry Tasmania provides Ta Ann with the right product – i.e.billets with up to 2 dead knots per 2.1m billet length from regrowth eucalypt with high density (strength); 200 to 700 mm in diameter with a solid (not rotten) core.
[From Ta Ann’s submission to the Legislative Council Inquiry April 2011 [Reference 2])
Ta Ann picture taken on 8 February 2012 of ‘a typical regrowth billet’; each annual growth ring has been marked and a pin inserted each decade. [45 years]
Supporting Ta Ann’s market access, the company currently requires Forestry Tasmania to obtain certification for the timber it supplies under the Programme for the Endorsement of Forest Certification [PEFC] for sustainable forest management.
Ta Ann will use ‘billets from suitable plantations that generate long grain veneer of high strength (density), capable of making thin tongue and groove [T&G] plywood’. [Reference 2]Yet Forestry Tasmania claims E. nitens and E. globulus plantations cannot supply any high quality sawlog from 2011-2030 and only 157,000 cubic metres per year from 2031-2050. It also claims these plantations will only supply 102,000 cubic meters per year of peeler billets from 2031-2050 but 617,000 cubic metres per year from 2031-2050. [See images below]
Figure: Forestry Tasmania’s predictions on high quality saw log and peeler billet supply from 2011-2050 based on no sawlog from plantations until after 2031 and only 102,000 cubic metres p.a. of plantation billet logs up to 2031. [Reference 1]
Veneers from unpruned eucalypt plantation has been tested and sent to Malaysia to make veneer-flooring but the product failed because Ta Ann claims (1) excessive knots gave a ‘very low percentage recovery of long-grain veneer’; (2) roughness in laminates caused delamination with gluing and (3) numerous knots created defects in the tongue & groove joints.
In conclusion, the company stated that unpruned plantation billets supplied by Forestry Tasmania do not meet Ta Ann’s wood supply specifications.
However, according to Ta Ann’s April 2011 submission, pruned plantation billets are suitable.
Pruned Blue Gum (E. globulus) produced good veneer density characteristics (over 700 kg/cub meters), but pruned Shining Gum (E. nitens) plantation billets gave mixed results. Some E. nitens had low veneer density (less than 550 kg/m3), low MOE (bending) properties of less than 15 GPa, and poor sheer (pulling apart) properties, and behaves more like Pinus radiata than what Forestry supplies as ‘regrowth’ billets.
According to Ta Ann’s submission ‘some’ pruned E nitens plantation timber appeared suitable, however, mapping and modelling by Forestry Tasmania was needed to ‘help identify suitable pruned pruned E. globulus and E. nitens for the Huon and Smithton mills and allow TAT to include this as part of their billet supply’.
Collated from Forestry Tasmania Eucalypt plantation data [Reference 1]
On Forestry Tasmania’s databases insufficient pruned E. nitens and E. globulus for transition exist in the currently available State forest plantation estate.
Currently Ta Ann uses mature age eucalypts from ancient or long-rotation regeneration native forests. In order to make the transition to plantation timber the company calls for the need to establish new ‘Designer Plantations’ that adopt site-specific silviculture (such as pruning) to provide billets ‘designed’ with suitable veneer properties and with a small knotty core and using suitable eucalypt species that can achieve the right strength and appearance characteristics.
The company believes these designer plantations will take 25‐30 years to deliver a high-pruned stem with a maximum 70 mm knotty core and an average mid-billet diameter of 390 mm. [Some foresters would suggest that 30 years is an under-estimate.]
Ta Ann states in the submission that any plantation resource product needs not only to be the right quality but also of the right piece size, in the right volume, at the right location, available at the right time and sold for right price.
A tall order of Forestry Tasmania to come up with! Supply from aged native forests became the easy option.
Ta Ann’s submission to the Legislative Council expressed the need for ‘sufficient time for transition arrangements’ that included the development of new ‘Designer Plantations’ to supply veneer billets; changes (unspecified) to the Forest Practices Authority rules; agreement from the ENGOs of a supply ‘pathway for their veneer mills’; market support from the ENGOs Signatories for their forest products; durability/conflict resolution for forest ‘blockages’ and on site ‘invasions’; and the use of wood waste as biomass.
While the company referred to the need for ‘protection of areas that need to be protected’ and ‘assistance for affected contractors, workers, industries and regional areas’, Ta Ann’s existing wood supply agreements remain the last high jump to get over in these negotiations.
The industry has set the bar very high indeed.
 - Evaluation of Wood Resource Scenarios relevant tothe Tasmanian Forests Statement of Principles to leadto an Agreement – Final Report to SignatoriesForestry Tasmania6 June 2011
 -‘The impact of the proposed transition out of public native forest management and harvesting in Tasmania’ – Submission to a legislative Council Inquiry into public native forest transition April-May 20011 Ta Ann Tasmania [accessed August 2012]
 – Forestry Tasmania Wood Supply Agreements [accessed August 2012]
 – Appendix 2 Data Tables produced by Forestry Tasmania 2001 [accessed August 201]
 – John Lawrence ‘A dog: the financial truth about Ta Ann Tasmania March 2012
The ride of their lives ... David Bartlett, Nick McKim, Will Hodgman
• Sham upon sham… to the bitter end?
On 10 and 11 November 2010 Mercury journalist, Sue Neales revealed how the newly Green-installed Premier of Tasmania, David Bartlett had double-crossed his new cobber and first Green Minister in Australia, Nick McKim.
Six days before forestry industry groups were to sign the momentous Statement of Principles Agreement with the environment groups, newly elevated Premier Bartlett had written to Terry Edwards, CEO of FIAT telling him he would instruct Forestry Tasmania to renew wood supply contracts with sawmillers and Ta Ann for the next 17 years (2010 to 2017).
Mr Bartlett told Parliament that he stood by ‘every commitment’ he made in his letter to Mr Edwards.
‘As a Labor Premier I will be doing everything I can to provide certainty, at the earliest opportunity, for those working in the timber industry and living in timber communities’, Mr Bartlett said.
‘I will be focused on country, family-owned sawmills, with names like Britton, McKay, Torenius and Kelly, who deserve as much certainty [about the future] as we can provide’. [Hansard, 10 November 2010]
As already revealed on Tasmanian Times, this two-faced behaviour allowed Mr Bartlett to pretend to be co-operating with his Green ministerial colleague, Mr McKim, to resolve the long-running war in the forests and at the same time provide a guarantee of long-term wood supply from native forests to local sawmillers and Ta Ann.
At the time Mr Terry Edwards suggested the meaning of Bartlett’s letter was plain and clear. He believed Mr Bartlett’s letter pledged that wood-supply contracts extended to 2027 would hold precedence over the State of Principles Agreement to end all logging of public native forests.
Mr Shawn Britton of Britton Timbers and Mr Edwards believed that Mr Bartlett’s letter effectively set the transition period out to 2027.
Mr Edwards said that Mr Bartlett had committed the Government to ‘rock-solid’ and ‘iron-clad’ promises that Forestry Tasmania could immediately negotiate extension of access to native timber for sawmillers to 2027.
The Tasmanian Greens must really have wanted to stay in power with the Labor Party to have dismissed such treacherous deception. At the time Greens leader Nick McKim maintained that Mr Bartlett’s 8 October letter promised nothing to FIAT or to sawlogging companies.
‘There is no commitment’, Mr McKim insisted and he denied any division between the Greens and Labor on the issue.
But Bartlett’s double-crossing letter of 8 October 2010 to Mr Edwards confirmed that the Statement of Principles Agreement was the first of a series of shams designed to continue forestry business-as-usual whist extracting millions of dollars of tax-payers money.
Furthermore, the grossly naive and unrepresentative ENGOs had been duped into signing that detestable State of Forest Principles Agreement which was crafted to expand the monoculture, chemical dependent plantation estate to feed a stinking pulp mill to which the ENGOs had given ‘in principle’ support.
By November 2010 the forest industry had already squandered over $220 millionin taxpayer grants provided by the 2005 Tasmanian Community Forest Agreement.
In July and August 2012 saw the latest stalling tactics to the forest agreement on the pretext that even more modelling from Forestry Tasmania was required; all part of the ongoing sham.
And then last week FIAT destabilised the negotiations even further by briefing media on correspondence between the Liberal leader, Mr Will Hodgman and the chairman of FIAT. Mr Hodgman’s letter requested an opportunity to meet the FIAT Board to discuss the Liberals’ alternative plan for Tasmania’s forests.
Which Signatory group will be the first to walk away from this forest agreement?
Place your bets!
• Meanwhile in Canada ...