Climate change whacks a worthy target – the CHIPMILL

Friday, June 17, 2016

Mother Nature dealt a 17m ‘Monster wave’ to the Eden woodchip mill’s loading facilities and jetty on 5th June. The east coast low that delivered this hit could be defined as an ‘Act of God’ meaning there might be no insurance payout.  Two massive chunks were taken out of the jetty, the pylons gone and the conveyor belt damaged. It might take 6-12 months to be rebuild and repaired. The chipmill has been making a loss for years and its sales have dropped. 

After 45 years of operations as the Japanese-owned Daishowa and then a name change to South East Fibre Exports (SEFE), the mill was sold to a new Australian owned company, Allied Natural Wood Exports (ANWE) late in 2015. This is not a good start for the new owner and its plans.

Since commencing operations in 1970, the mill was responsible for exporting over 35 million tonnes of chipped trees to the international paper making industry. The miles of clearfelled forest and wildlife would be unimaginable!  Millions of tonnes of stored forest carbon have been spewed into the atmosphere over the mill’s life – adding to climate change, which delivered this catastrophic storm.

So where to now? Local sitting member Peter Hendy has rushed in promising a new gold plated jetty worth many millions. But even if this pre-election promise in the bellwether seat of Eden Monaro is ever realised, it could take many months or a year. What do the workers and logging contractors do meanwhile without a cash flow? Will the mill stockpile – and if so where? Will the workers be paid when there’s no income? What will the NSW government foresters do instead? It’s been suggested that an alternative loading jetty be used for smaller ships, and the chips be trucked over to this wharf – at enormous cost no doubt.

The nearest purpose built woodchip loaders are too distant - Geelong at 650kms away and the old Boral facility at Newcastle, 720 kms away.  Transport wouldn’t be viable. The conveyor belt and loader alone might have cost about $5 million 20 years ago (some recall it being built as part of another handout under the RFAs). The wharf rebuild would be much more. Other wharfs were damaged on the NSW coast that weekend, so will this private company be favoured when so many public jetties and other facilities need to be rebuilt?

Our NSW friends at Chipstop tell us that the total value of plant and equipment was calculated at $10.5 million in the company’s most recent Annual Financial Statement. Some are saying the cost of a rebuild would be more than that. And info from ASIC documents suggests that ANWE borrowed heavily to buy the mill and we suspect there are penalty rates to be paid if they don't make repayments on time.

As this export woodchip mill takes about 90% of all logs that are cleared from the region’s forests, it’s hard to imagine the industry powering on just to keep a trickle of logs going to a couple of sawmills.

From an ANWE media statement:

"The need for action is urgent, as the loss of capacity to export woodchip from the ANWE facility has coincided with a period of very high woodchip stock levels, with three vessels scheduled to be loaded over the next 6 weeks. At this juncture the company is unable to take delivery of harvested feed stock from either Forestry Corporation of NSW or VicForests.”

And from Ross Hampton CEO of the industry lobby group Australian Forest Products Association (AFPA)  

With the East Gippsland RFA and the Eden RFA nominally expiring in 2017 and 2019 respectively, there is increasing uncertainty around the future of the native forest industry in the southeast of the state … the disruption to the ANWE woodchip loading facility at Eden provides significant short-term challenges to the forest industry in the southeast of NSW.”

Categories: 

Subject: