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A reason to diversify forestry markets

Australia’s largest forestry investment company says drought in China that forced the temporary closure of one of the world’s biggest paper processors, in Rizhao, earlier this year is reason for Australia to diversify forestry export markets. Source: ABC Rural

The closure of the paper pulp mill caused shipments of Tasmanian woodchips to be diverted on their way to China and also raised questions on how it would affect the global market price for woodchips.

The CEO of New Forests, Australia’s largest forestry investor, David Brand said increasing pressure on China’s climate is a good reason to diversify Australia’s forestry export markets.

“From our perspective it does raise the question of whether we should be diversifying our markets and making sure we have several markets we can trade into and not be overly reliant on any one,” he said.

Australia exports 90% of its blue gums as wood chips and 23% of its pine as timber.

New Forests is Australia’s largest forestry investment company, managing almost $3 billion forestry assets around the world.

Mr Brand said a key component to longevity and success for the company is keeping abreast of consumer changes and being adaptable to change.

He said there were new markets emerging in Europe, including flourishing bio-markets.

“As a manager you’re just continuously re-targeting, asking what are the market trends, and where do we position our business,” Mr Brand said the low Australian dollar was also making Australia’s forestry exports more competitive, displacing supply from North America and counteracting the economic slow down in China.

“At the moment it’s balancing, so in other words, the demand is probably lower but we’re getting more market share, so from our perspective we’re holding our own,” he said.

“And as China starts to recover – as it inevitably will – we expect the export market demand will increase again.”

Mr Brand is also supportive of the industry’s calls for a dedicated Minister for Forestry, which was abolished a couple of years ago.

“It would be beneficial, because really when you think to the future a lot of what the world is evolving to is kind of a bio-economy, where we’re substituting oil and coal and other fossil fuel based systems for more renewable materials and energy systems so forestry has an expanding role to play in the economy and Australia could be a world leader in that.”