December COOPERATIVE RESEARCH CENTRE FOR FORESTRY College Road, Sandy Bay, Tasmania Private Bag 12, Hobart, Tasmania 7001 Australia

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1 Consultant report Growth in blue gum forest harvesting and haulage requirements in the Green Triangle Jon Lambert December 2006 COOPERATIVE RESEARCH CENTRE FOR FORESTRY College Road, Sandy Bay, Tasmania Private Bag 12, Hobart, Tasmania 7001 Australia

2 GROWTH IN BLUE GUM FOREST HARVESTING AND HAULAGE REQUIREMENTS IN THE GREEN TRIANGLE Woollybutt Pty Ltd September 2006

3 ABOUT THE AUTHORS Jon Lambert (BforSc), Woollybutt Pty Ltd, Portland Victoria. Jon Lambert graduated from the University of Melbourne in 1994 to work as a Trainee Forester with Boral Timber Tasmania where he gained a broad introduction to forestry operations such as timber harvesting, native forest management, and joint venture eucalypt plantation development on private land. Jon established Woollybutt Pty Ltd in May 2005 where he initially provided a range of inventory services before becoming involved in hardwood plantation establishment and management in Woollybutt is currently Victoria s largest manager of intensively managed hardwood sawlog plantations. Despite the companies focus on hardwood sawlog investments, Jon has continued to provide consulting services in the area of hardwood management, emergency management training and forest inventory to a broad range of companies across Australia. In 2003, Jon formed Woollybutt Technologies to undertake forest research on behalf of Woollybutt Pty Ltd. Of particular interest was the harvest of Woollybutt s hardwood plantation resource. In 2004, Jon was awarded a Churchill Fellowship and travelled to Scandinavia and Spain to investigate techniques and technologies for the harvest of smallscale resources. Jon is a member of the Institute of Foresters. David Quill (BScFor), Eumeralla Consulting, Mount Gambier South Australia. David Quill is regarded as one of Australia s leading consultants on forest harvesting. David graduated from the Australian National University in 1972 and has over thirty years experience in forest and forest industry management. David is a member of the Association of Consulting Foresters of Australia, the Institute of Foresters of Australia and the Commonwealth Forestry Association. David s experience was initially with SA Woods and Forests Department where he was involved in the establishment and general maintenance of Pinus radiata plantations in the lower south east of South Australia. David then moved into the harvesting area of forestry with the SA Woods and Forests Department prior to resigning and taking a position with Softwood Holdings. David s brief with this Company was to initiate the mechanisation of harvesting operations in Pinus radiata thinnings. This evolved into the development and management of the largest corporate owned harvesting and haulage operation in Australia. David then progressed to Resources Manager for CSR Timber in the Green Triangle Region, managing all operations associated with the growing and harvesting of forest products for the Timber operations, including the management of a 24,000 hectare plantation estate, and the harvesting and haulage of 900,000 tonnes per annum of timber products. He successfully exported over 100,000 cubic metres of forest produce in the form of log and pulpwood from Portland in David has been Chairman of the Logging Investigation and Training Association, Board Member of the SA Forest Industries Training Council, Member of the Logging Industry Regulations Drafting Committee, Board Member of Green Triangle Plantations Committee, Chairman of Forest Owners Conference and has travelled extensively through North America, Asia and Europe where he researched timber industry issues. David commenced work as a consultant in April 1998 and has worked in a number of countries in that role, specialising in harvesting. His consulting experience with the harvesting industry includes work on a variety of major projects for large Australian and international companies.

4 EXECUTIVE SUMMARY This report has been undertaken to explore the evolving Green Triangle blue gum wood chip industry. Specifically, this report has aimed to identify the industry s needs for harvesting machines, haulage units and labour/skills in the next 14 years ( ). The Green Triangle s blue gum resource is estimated at approximately 151,000 hectares; approximately 126,000 hectares of this estate is owned by managed investment schemes. The current market capacity in the Green Triangle is 200,000 tonnes per annum via the Port of Portland. With upgrades, this facility could export up to 1 million tonnes per annum. Wood flow modelling of the current resource, using a range of market and prospectus parameters, has estimated that an annual sustainable yield of approximately 3.73 million tonnes will be produced from the Green Triangle by Four main systems of harvest could be considered to process this resource. These are: (i) Cut-to-length with debarking at the stump, (ii) Cut-to-length with debarking at the forest edge, (iii) In-forest chipping with debarking at the stump, and (iv) In-forest chipping with debarking at the forest edge. Jobcost modelling has identified the in-forest system with debarking at the forest edge to be at least 7.5% cheaper per tonne than the other systems. The total capital expense of each system ranges from $1.7 to 2.8 million. Assuming 3.73 million tonne of blue gum were to be harvested per annum, there would be a total requirement of between 166 and 249 machines or 37 and 62 systems. Transport of blue gum resources in the Green Triangle region is unlikely to be undertaken by rail in the short to medium term (if ever). Road transport currently handles approximately 4 million tonnes of forest products per annum in the region by semi-trailer and B-double units. If 3.73 million tonnes of blue gum forest products were to be harvested per annum, it would result in an additional 138,148 semi-trailer or 93,250 B-double deliveries on Green Triangle roads. The Port of Portland currently receives approximately 90,000 trucks per annum. A move from semi-trailers (the current chip transport units) to a more efficient haulage system, such as double road trains, would reduce the number of trucks by 40%. Public education would be a crucial component of a decision to introduce double road trains. Modelling has identified an average transport cost of just $10.59 per tonne for chips delivered by double road train in comparison to a maximum cost of $16.41 per tonne for pulp logs delivered on a semi-trailer. Loading, unloading and scheduling of trucks have also been identified as important components of haulage efficiency. Three categories of harvest operator skills have been identified in this report. Category A is considered the highest level of skill and requires the efficient use of single grip harvesters. Category B operators have mid-level skills which are used in the operation of forwarders and loaders. Category C operators have low-level skill requirements for the use of grapple skidders or excavator loaders. The system of in-forest chipping with forest edge debarking has been identified as the least demanding on operator skills and the lowest in total training costs. A 44% reduction in the number of truck drivers can be achieved when comparing semitrailers to double road trains. A driver of a semi-trailer is likely to average 136 tonnes per day in the Green Triangle blue gum industry. In comparison, a driver of a double road train will achieve 245 tonnes per day. Assuming an annual haulage of 3.73 million tonnes of chips, the difference between the least efficient transport system (semi-trailers) and the most efficient transport system (double road trains) is 53 drivers.

5 Essentially, the labour requirement for the annual harvest and haulage of 3.73 million tonnes of blue gum in the Green Triangle will be between 246 for the most efficient combination of harvesting and haulage, and 389 workers (plus the labour requirements to chip the cut-tolength logs) in the least efficient combination of harvesting and haulage. The current Green Triangle harvest and haulage labour force is estimated to be 284 workers. The peak requirement for training is likely to occur in the year It is difficult to accurately assess the total training cost in forest harvesting and haulage in the blue gum industry. There is a clear need for the blue gum industry to undertake significant planning for the harvest and haulage of its resource. A collaborative approach is required to coordinate such planning given the broad number of stakeholders. In particular, the need to introduce a more efficient haulage system, such as road trains, will require a coordinated approach to educate the public on the benefits these introductions will deliver. Further planning will also be required to provide training facilities and services that help the region meet the skills demand in the immediate future. Without a coordinated regional approach to recommend and support systems of harvest and haulage, the industry will be unlikely to meet the skills and infrastructure requirements needed. Furthermore, the demands of the blue gum industry may place significant pressure on the harvest and haulage sector of the existing Green Triangle Radiata pine industry.

6 CONTENTS 1 INTRODUCTION 9 2 GREEN TRIANGLE BLUE GUM RESOURCE AND FUTURE WOOD FLOW Geographic Resource Blue Gum Resource Area and Ownership Predicting the Wood Flow Section 2 Summary 28 3 HARVESTING NEEDS Blue Gum Harvesting Systems Cut-to-length Systems with Static Chip Mills In-Forest Chipping Summary of Harvesting Systems Harvesting System Cost Comparisons Processing Costs Capital Investment 43 Section 3 Summary 43 4 HAULAGE NEEDS Blue Gum Haulage Systems Current Forest Product Haulage Systems In the Green Triangle Log Haulage Chip Haulage Future Forest Products Haulage Rail Road Road Log Haulage Road Chip Haulage Haulage System Cost Comparisons Transport Costs 59 Section 4 Summary 61 5 LABOUR NEEDS Labour and Skill Requirements for Harvesting Labour and Skill Requirements for Haulage 66

7 5.3 Predicting the Total Harvesting and Haulage Labour Requirements for the Green Triangle Blue Gum Industry Training Costs Harvesting Haulage 73 Section 5 Summary 74 CONCLUSION 76 APPENDIX TO SECTION 2 77 Acknowledgements for information and data 77 Assumptions for Figures Assumptions for Figures APPENDIX TO SECTION 3 79 Acknowledgements for information and data 79 Assumptions for Table Assumptions for Section APPENDIX TO SECTION 4 80 Acknowledgements for information and data 80 Assumptions for Table Assumptions and Model Information for Table Semi-trailer haulage of logs 81 Assumptions and Model Information for Table B-double haulage of logs 87 Assumptions and Model Information for Table Double road train haulage of logs 93 Assumptions and Model Information for Table Semi-trailer haulage of chip 99 Assumptions and Model Information for Table B-double haulage of chip 105 Assumptions and Model Information for Table Double road train haulage of chip 111 APPENDIX TO SECTION Assumptions for Table REFERENCES 118

8 PICTURES, FIGURES AND TABLES Figure 1.1 The Green Triangle Region 9 Figure 1.2 Labour demands for a blue gum plantation over the life of the plantation 10 Figure 2.1 Green Triangle Plantation Resource and Planned Market Destinations 11 Table 2.1 Green Triangle Blue Gum Resource by Establishment Year 13 Figure 2.2 Green Triangle Blue Gum Resource by Establishment Year 14 Figure 2.3 Rainfall Distribution, Green Triangle Region 15 Figure 2.4 Green Triangle Wood Flow with 10 Year Harvest Figure 2.5 Green Triangle Smoothed Wood Flow Figure 2.6 Average Clearfall Age of Resource by Year after Wood Flow Smoothing 22 Table 2.2 Green Triangle Wood Flow Data 23 Figure 2.7 Green Triangle Smoothed Wood Flow (10% Decreased Growth) 24 Figure 2.8 Average Clearfall Age of Resource by Year after Wood Flow Smoothing (10% Decreased Growth) 25 Figure 2.9 Green Triangle Smoothed Wood Flow (10% Increased Growth) 26 Figure 2.10 Average Clearfall Age of Resource by Year after Wood Flow Smoothing (10% Increased Growth) 27 Table 3.1 Steps required to produce chips via CTL and IFC harvesting systems 30 Picture 3.1 Cut-to-length system with at stump processing working in blue gum 31 Picture 3.2 Hardwood spiral rollers used to remove bark 32 Picture 3.3 Excavator-based single grip harvester 33 Picture 3.4 Rubber-tyred purpose built Timbco 820 harvester 33 Picture 3.5 Western Australian site harvested by an at the stump cut-to-length system showing high levels of utilisation 34 Picture 3.6 Excavator-based boom-mounted feller buncher 35 Picture 3.7 Grapple skidder with whole trees 35 Picture 3.8 Single grip harvester at forest edge 36 Picture 3.9 Blue gum site post harvest with cut-to-length forest edge processing system showing extremely high levels of utilisation (below left) 36 Picture 3.10 Blue gum residue accumulation at forest edge (above right) 36 Picture 3.11 Rubber-tyred single grip harvester and a tree-length forwarder. 37 Picture 3.12 Track-mounted chipper and tree-length stems loading into van 38 Picture 3.13 Hydroax 711 feller buncher 39 Picture 3.14 Timberpro 630 rubber-tyred boom-mounted feller buncher 39 Picture 3.15 Combined self-loading flail debarker and chipping unit 40 Picture 3.16 Excavator-fed flail debarker and separate chipping unit 41 Table 3.2 Comparison of blue gum harvesting systems 41 Table 3.3 Total number of machines and capital investment required to process 3.73 million tonnes of blue gum chip per annum 43

9 Figure 4.1 The current VicRoads heavy haulage vehicle classifications 44 Figure 4.3 Road train configurations 45 Figure 4.3 Axle Spacing requirements for Tri-Tri B-doubles 46 Picture 4.1 Council truck restrictions can exist on minor roads in the Green Triangle 47 Figure 4.4 Existing Green Triangle rail network 48 Table 4.1 Transport requirements for 3.73 million tonne of blue gum chips 49 Figure 4.5 Approved B-double routes, VicRoads Information Bulletin, May Figure 4.6 Approved B-double routes, SE South Australia, source SA Dept for Transport, Energy and Infrastructure, June Picture 4.2 Highlighting the slippery nature of hardwood pulp logs 53 Picture 4.3 Rear gates installed for the cartage of hardwood logs 54 Picture 4.4 Fully loaded road train with 12 metre hardwood plantation pulp logs 55 Picture 4.5 Fully loaded road train with 5-6 metre hardwood plantation pulp logs 55 Picture 4.6 Fulghum Radial crane at Gunn s Hampshire Mill, Tasmania 56 Picture 4.7 B-double tipping platform Thunder Bay, Ontario 57 Picture 4.8 Road train carriage being discharging on the new facility at Albany, WA 58 Picture 4.9 Road train being weighed out at the new facility at Albany, WA 58 Table 4.2 Haulage cost for weighted average lead distance of 120 kms 59 Figure 4.7 Comparison of Haulage Costs Per Lead Distance 60 Table 5.1 Harvesting Labour Requirements and Productivity Rates 63 Table 5.2 Harvesting Skill Requirements per System 65 Table 5.3 Haulage Labour Requirements and Productivity Rates 66 Figure 5.1 Green Triangle Blue Gum Haulage Labour Requirements Table 5.4 Matrix of Total Harvesting and Haulage Labour Requirements per 3.73 Million Tonne of Blue Gum Resource 68 Figure 5.2 Harvest & Haulage Labour Efficiencies 69 Table 5.5 Training Centres For Forest Workers 70 Figure 5.3 Comparison of Harvest System Training Costs in the Green Triangle Region Table 5.6 Training Costs and Licence Prerequisites for Haulage Systems 73

10 1 INTRODUCTION The Green Triangle Region of South Australia and Victoria (Figure 1.1) represents 17% of Australia s plantation estate and nearly two thirds of Australia s wood production i. The principal plantations in the region are radiata pine (Pinus radiata) softwood plantations managed essentially for solid wood products, and blue gum (Eucalyptus globulus) hardwood plantations managed to produce wood chips. The radiata pine industry has been established for over a century and has been stable in area and wood production for a number of years. Hardwood plantations of blue gum were first established in the region in 1988 under a scheme with Kimberly Clark Australia, but then developed rapidly with the commencement of Managed Investment Scheme operations in Figure 1.1 The Green Triangle Region The total area of radiata pine, according to industry sources, is 166,000 hectares ii, and the total area under blue gum plantations, as detailed in this report, is 151,000 hectares. Blue gum wood chip plantations have significant fluctuations in activity at the beginning and end of rotations. Figure 1.2 demonstrates the change in labour requirements at these points in the rotation. In particular, Figure 1.2 identifies a substantial increase of activity during harvest, which is the subject of this report. Woollybutt Pty Ltd, September

11 Figure 1.2 Labour demands for a blue gum plantation over the life of the plantation Labour (days / yr / 100ha) Year Establishment Maintenance Road construction Inventory Harvesting Transport Chopper rolling A recent survey conducted by the Logging Investigation and Training Association, based in Mount Gambier, revealed that the Green Triangle pine industry is currently comprised of 176 harvesting plant operators, utilising more than 180 pieces of specialised harvesting machinery. In addition, the forest industry utilises 108 truck drivers and approximately 100 haulage units iii. This report aims to explore the evolving Green Triangle blue gum wood chip industry. Specifically, this report identifies the industry s needs for harvesting machines, haulage units and labour/skills in the next 14 years ( ). Woollybutt Pty Ltd, September

12 2 GREEN TRIANGLE BLUE GUM RESOURCE AND FUTURE WOOD FLOW 2.1 Geographic Resource Figure 2.1 shows the distribution of both the softwood and hardwood plantation resources within the Green Triangle region. The red circles indicate existing and proposed markets at the time of writing. Figure 2.1 Green Triangle Plantation Resource and Planned Market Destinations The only hardwood market destination indicated on the map that is currently being utilised is the Port of Portland, which is a loading point for export woodchip (circled in Figure 2.1). A receival facility was commissioned in the Port in November This facility was jointly developed by Graincorp and Mitsui Corporation Australia, with a designed annual capacity of approximately 1,000,000 tonnes per annum. This facility is currently accepting woodchips at an annualised rate of 110,000 tonnes and has a maximum capacity, until further upgrades, of 200,000 tonnes per annum iv. During 2004, a proposal to build two pulp mills in the Green Triangle was put forth by a consortium of private investors backed by an alliance of companies that includes Timbercorp, Orica, CellMark, Andritz and Silcar. The proposed mills are to be constructed at sites 3 kilometres north of Heywood, Victoria, and 8 kilometres south of Penola, South Australia (circled in Figure 2.1). Media information suggests that these pulp mills will be of similar design and capacity, with each proposing to utilise 700,000 tonnes per annum of blue gum from commencement of operations. Both mills plan to use a mechanical process to grind the wood into fibre for manufacture into pulp. The most recent forecasts suggest that the Woollybutt Pty Ltd, September

13 proposed Heywood pulp mill is unlikely to be fully commissioned before The approval process for the Penola pulp mill is yet to be finalised. The Green Triangle blue gum resource may also create the potential for the establishment of a sawmill for processing hardwood logs, or alternatively the diversification of an existing softwood mill to this purpose. There are also significant enquiries from South East Asia for the establishment and development of export roundwood resources from the Port of Portland. Ian Sedger from Pentarch Forest Products, Australia s largest exporter of roundwood material, believes that blue gum roundwood volumes exported through Portland could be 100,000 cubic metres JAS 1 by 2007 increasing to 300,000 cubic metres JAS by 2010 and beyond 2. Part of this volume may well be made up of green sawn lumber. 2.2 Blue Gum Resource Area and Ownership The resource area information used in this report has been generated from data supplied by the respective organisations that established plantations. It should be noted that, with regard to ownership, the situation has been somewhat complicated by the financial failure of some companies and transfer of ownership of others. For example, the demise of Australian Plantation Timber (APT) in 2001 resulted in the estate initially being managed by Intergrated Tree Cropping (ITC), some of the land ultimately belonging to Great Southern Plantations, and most of the standing forest being managed and harvested by ITC. The information on the plantations therefore, may not reconcile precisely with data generated from other sources, but is an accurate reflection of the current standing blue gum estate. In addition, the authors have sought information from the Green Triangle Regional Plantation Committee, site preparation contractors and planting contractors, as well as individual owners of plantations. The areas originally established for the Kimberly Clark trials were obtained from Kimberly Clark Australia, and the yields from these areas were obtained from the harvesting contractors who carried out the work. The total area statement has been presented in Table 2.1 and Figure 2.2. These figures have been adjusted to deduct sections harvested, and include areas re-established, where either coppice management or replanting was undertaken. Note that the areas stated are the most accurate information that could be sourced, but will be an understatement given the likelihood that some plantations will have been overlooked. A significant amount of research was undertaken by the authors to accurately develop ownership and area details for all the blue gum plantations. Relevant sources of all information and data are outlined in Appendix 2 The purpose of this report is to predict the harvesting and haulage needs in the Green Triangle through to the year Therefore predictions on the establishment of future resource need to be made through to the year 2012 (assuming a 8-12 year rotations). Currently, the two most active establishers of blue gum in the Green Triangle (Great Southern Plantations v and Timbercorp vi ) are targeting a continuance of steady plantation establishment in the region. A number of factors may, however, determine their future expansion. These are as follows: 1 JAS Japanese Agricultural Standard 2 Exported roundwood specified as logs up to a large end diameter of 30cm. Woollybutt Pty Ltd, September

14 Table 2.1 Green Triangle Blue Gum Resource by Establishment Year PLANTING YEAR MAJOR MIS COMPANIES (Hectares) MINOR FOREST GROWERS (Hectares) Note: MIS are Managed Investment Schemes OVERALL TOTAL AREA BY YEAR (Hectares) ,244 1, ,026 3, ,343 3,832 6, ,617 3,587 15, ,672 3,554 44, ,091 3,370 34, ,272 2,026 17, ,559 1,475 5, , , , ,681 TOTAL 126,318 25, ,436 Woollybutt Pty Ltd, September

15 Figure 2.2 Green Triangle Blue Gum Resource by Establishment Year 50,000 45,000 40,000 Private Growers MIS Companies 35,000 30,000 25,000 20,000 15,000 10,000 5, Year of Establishment Woollybutt Pty Ltd, September

16 Figure 2.3 Rainfall Distribution, Green Triangle Region Green Shaded Area Current Radiata Pine Resource Source: Green Triangle RPC Woollybutt Pty Ltd, September

17 Land availability The single greatest determinant of tree growth is rainfall. It is well accepted that in addition to adequate soil depth, blue gum requires annual rainfall in excess of mm to achieve commercial growth rates. Figure 2.3 suggests that the Green Triangle region has a restricted area of land in the required rainfall zone, and within reasonable distance to current and proposed markets. Furthermore, a large percentage of this land is already dedicated to plantation, state forest or national park. Land Prices Information from the Valuer General s Department of South Australia indicates that in the local government areas of Grant, Kingston, Naracoorte, Robe and Wattle Range, the median land price for rural properties has effectively doubled between June 1999 to June Similar increases have been experienced in Victoria. Further increases in land prices could severely jeopardise the financial viability of plantation projects. Limitations due to Government Planning and water restrictions To date, Government policy has encouraged the development of plantations in rural Australia, but as the areas under plantation have increased, the pressure on land and natural resources has required a review of the Government s attitude towards these projects. In Victoria, investigations are continuing with regard to the relationship between ground water and plantations, but in South Australia the Government has defined a threshold area. The area includes 59,000 hectares of expansion, which accounts for industry expansion for another years; approximately 45% on the 2002 forested and planned area. The 59,000 hectares of expansion has been divided into two sectors, softwood (28,000 hectares) and hardwood (31,000 hectares). Sustainability of Managed Investment Schemes (MIS) As a result of the most recent Federal Budget, the taxation arrangements for plantation forestry are once again under review. In summary, the operation of the twelve month prepayment rule for forestry MIS will be continued until 30th June 2008, but there are many issues of the overall MIS investments which are being examined by the Government in the meantime. Results of the sales of MIS projects up to 30th June 2006 indicate that although agribusiness schemes increased by 11%, the investment in timber MIS has reduced by 9%. With regard to hardwood woodchip projects, the sales demonstrate a 24% reduction over the previous year. Extent to which land will be re-established following harvest This area is not known, but in the main, under the structure of Managed Investment Schemes (MIS), the company developing the project owns the land, and would logically be reluctant to convert it to any other form of agriculture, given their vested interest in forestry, and the costs of conversion. Of all the areas established to plantation blue gums under the Kimberly Clark afforestation scheme (1988 to 1995) that have been harvested, the majority have been reestablished to a subsequent rotation. A review of Prospectuses of the major forestry companies, who have established plantations in the Green Triangle, and subject of the Resource Statement above, reveals that almost all schemes referred to subsequent rotations on the same land. Therefore it can be assumed that the current resource is unlikely to shrink. Woollybutt Pty Ltd, September

18 Potential for ports other than Portland to expand viable establishment areas Timbercorp Limited have actively investigated the option of establishing a port on the South Australian coast, as an alternative to Portland, to reduce transport costs of wood products from plantations in the western portion of the South Australian resource. The option of establishing a port at Robe was seen to be the most appropriate, but was abandoned due to public pressure. A second alternative at Cape Jaffa was examined by Timbercorp, but was also abandoned. The authors investigations through Ports Corp, South Australia, revealed that to establish a woodchip export facility at Cape Jaffa would not only require the construction or upgrading of significant lengths of public road, but would require a jetty or loading facility in excess of 1,500 metres to achieve a draft of 11.8 metres - the minimum required for current woodchip vessels. Predictions made on wood flow in the Green Triangle over the next 14 years have taken into consideration the above factors with respect to further plantation expansion from 2006 to 2012 (and therefore harvested within the period ending 2020). A complete list of the assumptions has been provided in Appendix 2. In general, it has been assumed that the area of establishment will continue to expand at an even rate of 10,000 hectares per annum from This is likely to be undertaken almost entirely through two major managed investment schemes. Beyond 2010 it is assumed that re-establishment activities (second rotations) will cease the expansion onto new sites. These assumptions suggest a sustainable total blue gum resource of approximately 200,000 hectares by the year Predicting the Wood Flow Several recent reports have made predictions on the increased wood flow in the Green Triangle. Reports such as the Limestone Coast Plantation Timber 2005 and Beyond vii, have made broad long-term predictions of sustainable annual wood production in the region of between 5 and 8 million tonnes to 2039 (including softwood). A study by the Green Triangle Plantation Committee, Future Wood Flows Across the Green Triangle Region viii, indicated an annual harvest of potentially more than 3.7 million tonnes of blue gum wood chips between 2009 and This report suggested a longer-term average harvest of 3 million tonnes. A submission by the Port of Portland to the Federal House of Representatives in 2005 ix, suggested a range of average annual yields and consequent truck deliveries. Commencing in mid-2008, this submission suggested annual wood yields of between 2.2 and 3.8 million tonnes to be exported through the Port of Portland. Each of the reports mentioned above have made wood flow projections with a range of assumptions and objectives. Although not dismissive of these projections, a more thorough wood flow analysis was required for the purpose of this report. In particular, the authors of this report have identified a total blue gum resource of 151,436 hectares in the Green Triangle at the end of This is 15,000 hectares more than the nearest estimate from other reports for the same period. In addition, the other reports have not accounted for the complexities in wood flow modelling and other specific growth and market parameters that have been explored in this report. Furthermore, the other reports have not been privy to the growth and yield data made available to the authors of this report through previous consultancies. Predicting the blue gum wood flow for the Green Triangle is a complicated task given; (i) the multiple ownership of the resource; (ii) the uncertainties in the market destinations; and (iii) the lack of detailed growth data. For this reason, the authors have presented alternative examples of wood flow for the region. The first, presented in Figure 2.4, provides a representative flow of blue gum resource from the Green Triangle if all plantations were to be strictly harvested 10 years after establishment (those plantations already exceeding 10 years of age are assumed to be harvested in 2007). The growth rates used to predict this wood Woollybutt Pty Ltd, September

19 flow have been collected from the individual companies and landowners, where reliable data exists. In the absence of reliable data, a regional average growth rate of 14.7 cubic metres per hectare per year was used 3. All assumptions used to predict the wood flow are listed in Appendix 2. Figure 2.4 is purely a mathematical representation of the estimated resource yield if all plantations were to be harvested at age 10. From a wood flow perspective, this outcome would be totally unworkable. The most obvious reason would be the fact that the region only currently has the capacity to export 1 million tonnes from the existing port facility, of which only 200,000 tonnes is currently viable until further upgrades are undertaken x. Major development will be required to increase the existing export capacity or to build domestic markets. This fact alone would put significant pressure on the projected spike in supply from 2009 and 2012 a result of the boom in MIS blue gum plantations in the region from (Figure 2.2). In reality, no forest industry could cater for such an erratic supply of product in such a short space of time. The main reasons that the wood flow outlined in Figure 2.4 would be unlikely to ever occur are that: Market demand, rather than supply is more likely to drive the process; Shipping availability could not cater for the fluctuations in resource; Harvesting contractor availability would physically limit the processing ability; The impact on roads, ports and infrastructure would be immeasurably high; Manpower and training issues could not be achieved in such a short timeframe, and Population and demographic issues would limit the number of suitable operators. 3 This data was collected from over 700 hectares of blue gum harvested for Kimberly Clark in the Green Triangle from Woollybutt Pty Ltd, September

20 Growth in Blue Gum Forest Harvesting and Haualge Requirements in the Green Triangle Figure 2.4 Green Triangle Wood Flow with 10 Year Harvest Year Woollybutt Pty Ltd, September

21 It was therefore necessary to create a regional wood flow that is smoothed to take into account the factors discussed above. Areas by age class, an average MAI by forest owner and a series of silvicultural and management assumptions (Appendix 2) were provided to Pöyry Forest Industry (Pöyry). These data were used to construct a regional woodflow model in the Forsight 4 modelling system. A series of smoothed wood flows from the region were generated based on the following assumptions and constraints: (a) A model objective of maximisation of net present volume using a discount rate of 9%; (b) A harvest age range of 8-12 years for the MIS companies, and 8-20 for private growers. Harvest age constraints were however relaxed for the first few model periods to allow for a realistic ramp-up in annual harvest levels; (c) Annual harvest levels of 200,000 m 3 in 2007, 500,000 in 2008 and 1,000,000 in These were based on the assumption that the existing Mitsui facility can export these volumes; (d) (e) (f) The Heywood Pulpmill is assumed to be fully operational in 2010 enabling the regional supply to be increased to 1,700,000 tonnes per annum, and A steady ramp up of supply will then proceed from 2011 onwards as new export facilities and/or domestic markets are developed. From 2013, annual harvest levels will be smoothed into perpetuity. The smoothed wood flow graph in Figure 2.5 estimates that the sustainable level of hardwood supply from the Green Triangle region will be 3.73 million tonnes per annum from 2013, with the assumptions above and those outlined in Appendix 2. Figure 2.6 outlines the average age of harvest required per year to achieve this wood flow. It is clear from both Figure 2.5 and Figure 2.6, that private wood will most likely be held over and grown on to enable this wood flow to be achieved. This is because the MIS resource is largely constrained by 8-12 year harvest requirements outlined in their prospectuses. The difference between the 10-year harvest wood flow graph in Figure 2.4 and the smoothed wood flow graph in Figure 2.5 is significant. Not only does the smoothed wood flow provide for a steady increase in flow and a sustained ongoing flow, it also produces a higher volume of wood over the 14-year period by growing on a proportion of the resource. Table 2.2 indicates the total volume of wood to be approximately 1.1 million tonnes higher over the 14 years in the smoothed wood flow scenario. Wood flow is heavily impacted by the growth rate of the resource. Pöyry s woodflow model assumes linear growth, using a range of forest-owner specific MAI s provided by Woollybutt. Given the limited blue gum inventory and growth data available on the Green Triangle blue gum resource, a series of sensitivity analyses were tested (Figures 2.7 and 2.9). Figure 2.7 suggests that if MAI s are reduced by 10%, the sustainable level of hardwood supply from the Green Triangle region over the period from will be reduced to 3.35 million tonnes per annum. Consequently, this will reduce the total supply over the 14-year period ( ) from million tonnes to million tonnes (Table 2.2). Figure 2.8 demonstrates the average age of harvest required per year to achieve this wood flow. Alternatively, Figure 2.9 demonstrates that the sustainable level of hardwood supply from the Green Triangle region over the period from will be increased to 4.12 million tonnes per annum if MAI is increased by 10%. This will increase the total supply over the 14-year period ( ) from million tonnes to million tonnes (Table 2.2). Figure 2.10 presents the average age of harvest required per year to achieve this wood flow. 4 Forsight A licensed product of Stewart Murray (Singapore) Pty Ltd. Woollybutt Pty Ltd, September

22 Figure 2.5 Green Triangle Smoothed Wood Flow ,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , Year Ending June 30 MIS Companies Private Growers Woollybutt Pty Ltd, September 2006 Wood flow data generated by Forsight valuation model, Nick Ping Pöyry Forest Industry 21

23 Figure 2.6 Average Clearfall Age of Resource by Year after Wood Flow Smoothing Model Period (year) Woollybutt Pty Ltd, September 2006 Wood flow data generated by Forsight valuation model, Nick Ping Pöyry Forest Industry 22

24 Table 2.2 Green Triangle Wood Flow Data Year Total Ten Year harvest (x10 6 ) Smoothed wood flow (x10 6 ) Smoothed wood flow (x10 6 ) 10% reduced growth Smoothed wood flow (x10 6 ) 10% increased growth Woollybutt Pty Ltd, September 2006 Wood flow data generated by Forsight valuation model, Nick Ping Pöyry Forest Industry 23

25 Figure 2.7 Green Triangle Smoothed Wood Flow (10% Decreased Growth) 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , Year Ending June 30 MIS Companies Private Growers Woollybutt Pty Ltd, September 2006 Wood flow data generated by Forsight valuation model, Nick Ping Pöyry Forest Industry 24

26 Figure 2.8 Average Clearfall Age of Resource by Year after Wood Flow Smoothing (10% Decreased Growth) Model Period (year) Woollybutt Pty Ltd, September 2006 Wood flow data generated by Forsight valuation model, Nick Ping Pöyry Forest Industry 25

27 Figure 2.9 Green Triangle Smoothed Wood Flow (10% Increased Growth) 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , Year Ending June 30 MIS Companies Private Growers Woollybutt Pty Ltd, September 2006 Wood flow data generated by Forsight valuation model, Nick Ping Pöyry Forest Industry 26

28 Figure 2.10 Average Clearfall Age of Resource by Year after Wood Flow Smoothing (10% Increased Growth) Model Period (year) Woollybutt Pty Ltd, September 2006 Wood flow data generated by Forsight valuation model, Nick Ping Pöyry Forest Industry 27

29 Figures 2.5, 2.7 and 2.9 present the potential wood flows achievable based on the assumptions listed above and in Appendix 2. It should be noted that the above-described exercise and woodflows represent potential woodflows based on the available data and assumptions. Several factors may however further influence these woodflows and should be noted for completeness. MIS companies may not be able to extend their maximum harvest age beyond 12 years (outside of prospectus conditions) in the initial years to enable a smooth ramp up in supply; The private growers are not likely to grow their resource on to fit in with MIS flows (as Figures 2.5, 2.7 and 2.9 demonstrate), particularly those such as Nippon Paper (Green Triangle Treefarm Project) and WA Plantation Resources (Southern Plantation Forest Pty Ltd - a subsidiary of the Marubeni Corporation) who will be exporting regular quantities for their own use; Given the above, some owner-based smoothing of woodflows requires further investigation. All MIS and private growers (other than landowners) are likely to be pursuing their own smoothed wood flow arrangements, therefore creating significant complexity in the regional wood flow predictions; Smoothed woodflows need to be evaluated in terms of impacts on production (contractors), budgets/cash-flows of companies and mill requirements; A proportion of the resource is likely to be coppiced from stumps rather than replanted, effectively increasing the likely yield for at least the first rotation (given the 1-year lag assumed in this report); The suggested ramp up in supply may be unachievable given the timeframe needed to develop domestic markets or to expand export infrastructure; The growth rates of subsequent rotations are likely to increase, but have not been factored into this modelling exercise. In reality, with improvements in genetics, site preparation, nutrition, weed management and pest management, increased yields would be expected, as has been the case in the Green Triangle softwood industry. The magnitude of increased growth is difficult to predict, and Generic yield information and linear growth have been assumed. Further data and models are required to validate whether the current assumptions and data are realistic. Section 2 Summary The total area of blue gum resource planted in the Green Triangle by the end of 2005 is estimated at 151,436 hectares. The current blue gum wood chip market capacity in the region is 200,000 tonnes via the Port of Portland. With upgrades, this facility will have a maximum capacity of 1 million tonnes per annum. Two pulpwood mills are planned for the Green Triangle - one near Heywood in Victoria and the other near Penola in South Australia. Each will have an annual capacity of approximately 700,000 tonnes of wood chips. Expansion of the current blue gum estate is likely to continue at a rate of approximately 10,000 hectares per year until re-establishment of existing sites begins to occur for large areas in Woollybutt Pty Ltd, September

30 A standard 10-year harvest regime would not be possible given the large variations in age-class in the current resource. Modelling to produce a smoothed wood flow predicts a sustainable yield of 3.73 million tonnes of blue gum chip per year from the Green Triangle region by Woollybutt Pty Ltd, September

31 3 HARVESTING NEEDS 3.1 Blue Gum Harvesting Systems Harvesting of blue gum plantations commenced in the Green Triangle with deliveries of chip to Kimberly Clark in Initially these operations used single grip harvesters and forwarders in a cut-to-length system (CTL). Eventually this system was replaced by in-forest chipping (IFC) operations, which were active until the closure of the Kimberly Clark hardwood pulp digester in Following the completion of the Mitsui Graincorp chip receival facility in Portland, harvesting (using in-forest chipping operations) resumed in November With the assumption that blue gum resources in the Green Triangle are to be utilised almost entirely by the pulp or paper industry, there are two generic types of harvesting systems applicable. The raw material of woodchips can be generated either through a static chip mill or by in-forest chipping. Table 3.1 outlines the steps involved to produce woodchips from each system. Table 3.1 Steps required to produce chips via CTL and IFC harvesting systems CTL & STATIC CHIP MILL Operation Machinery Harvest Single Grip Harvester Extract Forwarder Load Forwarder or Loader Haul Skel Trailers Unload and Store Radial Crane or wheeled loader Unstack and Feed Radial Crane or wheeled loader Chip Static Chipper Transport Chip Vans (road or rail) IN-FOREST CHIPPING Operation Machinery Harvest Single Grip Harvester or Feller Buncher Extract Forwarder or Skidder Chip and Load Mobile Chipper Transport Chip Vans Table 3.1 demonstrates the reduced number of steps and handling procedures required to produce woodchips from an in-forest chipping system. This factor ultimately improves the efficiency of the entire process. Note: The data used in the description of the different systems outlined below was sourced from studies of operations in Western Australia, Tasmania and the Green Triangle Region. Although it is accepted that different contractors working in different forest conditions may achieve varying results in operational situations, the authors believe that the figures provided below are representative of the generic systems Cut-to-length Systems with Static Chip Mills Material for a static chip mill, due to the rigid transport legislation in Australia, will require a cut-to-length harvesting system. In this system, the maximum permissible trailer length for normal every-day road transport operations determines the maximum length of the product. Further explanation of this concept is detailed in Haulage Needs in Section 4, however in essence, the system requires that the product be cut within specified lengths, rather than be transported as a full tree length. Woollybutt Pty Ltd, September

32 Cut-to-length harvesting systems are either configured such that trees are cut-to-length at the stump, or at the forest edge. (a) Cut-to-length at stump. As Picture 3.1 shows, this operation involves a single grip harvester (which can be mounted either on rubber tyres or steel tracks) utilising a harvesting/processing head on a knuckle boom crane in combination with a forwarder to extract and load logs onto trucks. The harvester has the ability to fell, delimb, debark, measure and cut the finished product to length. The debarking is achieved by the use of specialised spiral rollers that break the bond between the bark and the cambium through the application of pressure (Picture 3.2). This action, in combination with the delimbing knives, can remove the bark in less than three passes provided the wood is freshly harvested. Picture 3.1 Cut-to-length system with at stump processing working in blue gum Woollybutt Pty Ltd, September

33 Picture 3.2 Hardwood spiral rollers used to remove bark Depending on the manufacturer, single grip harvesting heads can process trees at a lineal speed of up to 7 metres per second. In general, they are capable of productivity up to 150 stems per hour. Harvesting trials undertaken by Timbercorp in the Green Triangle during 2001 found that, for single grip harvesters operating in blue gum resources, the production in tonnes per hour is directly related to the average stem volume provided this does not exceed 0.22 cubic metres. Above 0.22 cubic metres, the tree height (equating to the length of the stem) begins to reduce single grip harvester efficiency xi. After the logs are cut-to-length and debarked, the harvester stacks them ready for extraction. Extraction is achieved by forwarder, either 6x6 or 8x8, with a payload varying from 14 to 18 tonnes, depending on specification and manufacturer. Forwarder productivity is influenced by terrain, stocking, distance to landing, carrying capacity and operator skills. The vulnerability of single grip harvesters is stem size. Simple arithmetic suggests that machine productivity will increase from 14 tonnes per hour in average stem volumes of 0.12 cubic metres, to 30 tonnes per hour in stem volumes of 0.25 cubic metres if the operator continues to cut 120 stems per hour. Experience and observation reveals that productivity between 22 and 30 cubic metres per hour is a reasonable expectation xii. A cut-to-length harvesting system comprised of two harvesters and one forwarder, can reasonably be expected to produce 60,000 tonnes per annum 5. A reasonable capital cost, based on discussions with machinery suppliers for this system, would be $1.42 million to $1.75 million, depending on machinery specification. Harvesters, for example, can be mounted on modified excavators, specialised imported harvester bases on steel tracks, or specialised rubber-tyre based tractors (see Pictures 3.3 and 3.4 below). Forwarders, as mentioned above, can be 6 or 8 wheel drive with varying carrying capacity. 5 Based on the authors observations of operations in the Green Triangle, Tasmania and South-West Western Australia Woollybutt Pty Ltd, September

34 Picture 3.3 Excavator-based single grip harvester Picture 3.4 Rubber-tyred purpose built Timbco 820 harvester Manpower requirements of the cut-to-length system are also an important component. A normal system will be comprised of two harvesters, a forwarder and a loader, and assuming that the loading can be done by the supervisor, total operator requirements become four per system, for the annual capacity of 60,000 tonnes. Operator skill requirements for cut-tolength systems are generally considered high across the range of machinery involved. Utilisation is extremely high in cut-to-length systems (Picture 3.5). Modern harvesting heads used in blue gum pulpwood stands in Western Australia (WA) have recently demonstrated their ability to process stems down to below 3-4cm xiii. Although in-forest systems (detailed below) use the same harvesting heads, the tendency is for the ends of the trees to snap more often due to the long, full tree lengths being processed, potentially reducing the utilisation of the site by placing a high level of dependence on the seeking out and extraction of snapped sections. Woollybutt Pty Ltd, September

35 Picture 3.5 Western Australian site harvested by an at the stump cut-to-length system showing high levels of utilisation (b) Cut-to-length at plantation edge The cut-to-length at plantation edge system involves the use of a high-speed feller-buncher, which cuts down trees using an accumulator head - and lays them on the ground in bundles for subsequent extraction. These felling machines can either be a drive to tree or boom-mounted setup. The drive to tree setup uses a disc or shear mounted directly on the front of the machine to fall each tree. In contrast, the boom-mounted machine (Picture 3.6), as the name infers, has a felling head mounted on a knuckle boom crane. This removes the need for the machine to travel to every tree, enabling the operator to fell up to five rows in a single pass. The fallen trees are snigged along the ground using a grapple skidder (Picture 3.7) to the forest edge for subsequent processing. This processing is carried out using single grip harvesters, usually excavator based, as described in the section above. However, in this case, the harvesters break the stems out of the transported bundles, delimb, debark and dock the logs to transportable lengths stacked along the roadside. Typically, this system requires one feller-buncher, one large capacity grapple skidder, three single grip harvesters and a loader. The operation could be expected to reliably produce 90,000 tonnes per annum. This system will require a total of five operators, however, the operator skills levels will not need to be as high as for a cut-to-length operation that processes at the stump. Woollybutt Pty Ltd, September

36 Picture 3.6 Excavator-based boom-mounted feller buncher Picture 3.7 Grapple skidder with whole trees Woollybutt Pty Ltd, September

37 Picture 3.8 Single grip harvester at forest edge The fundamental differences between the cut-to-length system that processes at the stump and that which processes at the forest edge, are the number of machines and the required skill level of operators. With the cut-to-length at forest edge system, the utilisation of a fellerbuncher has removed the main source of downtime with single grip harvesters, i.e. felling. The system also significantly decreases the overall operator skill level required on site. In addition, the process provides an extremely clean coupe post-harvest, which may provide some conveniences for site preparation in subsequent rotations (Picture 3.9). On the down side, however, the cut-to-length at forest edge system removes the entire tree from the stump and transfers all the non-commercial material (leaves, branches and bark) to the forest edge for subsequent disposal (Picture 3.10). This potentially leaves a nutrient imbalance for the next rotation - given the nutritional value of eucalyptus bark and foliage. Picture 3.9 Blue gum site post harvest with cut-to-length forest edge processing system showing extremely high levels of utilisation (below left) Picture 3.10 Blue gum residue accumulation at forest edge (above right) Woollybutt Pty Ltd, September

38 3.1.2 In-Forest Chipping In-forest chipping, as the name infers, utilises a mobile chipper to produce accept grade chips at the forest edge. If the fundamental objective of logistical efficiency is to handle the largest piece size the least number of times, in-forest chipping must be considered as preferential to any other system. In-forest chipping can be performed either by debarking the stems at the stump using a single-grip harvester, or alternatively, by debarking the stems with a chain flail delimber and debarker at the forest edge prior to chipping. (a) In-forest chipping, debarking at stump The system of in-forest chipping with debarking at the stump was developed by Eumeralla Pty Ltd and AFM Pacific in 1998, for Timbercorp Limited. The system was designed to meet stand characteristics defined by Timbercorp. In essence, the system uses single grip harvesters to fell, delimb and debark full tree lengths at the stump and position them for subsequent extraction. From this point, a purpose built tree-length forwarder (Picture 3.11) transports the stems to the forest edge for stockpiling. Finally, the full-length, debarked trees are chipped using a purpose built chipper at the roadside. The single grip harvesting head is pivotal to the success of this system. The head must be capable of a high feed rate, good debarking ability and reliable performance. Also of considerable importance is the forwarding of full-tree lengths. If the primary goal is to reduce the number of log pieces handled, full tree length extraction is highly desirable and provides for high efficiency in the system. Furthermore, this process avoids using skidders, which would otherwise create site disturbance by dragging stems with crowns removed. A specialised forwarder is required to undertake the task given that conventional forwarders are limited by payload and load length (maximum 7-8 metres). The forwarder in this system (Picture 3.11) was specifically developed to carry full-length trees of variable length, with the ability to self-load and unload. A full payload of between 25 and 30 tonnes can be loaded in eight to twelve minutes. The productivity of the extraction machine over an average 200- metre lead distance was found to be in excess of 75 cubic metres per hour xiv. Picture 3.11 Rubber-tyred single grip harvester and a tree-length forwarder. Woollybutt Pty Ltd, September

39 The final stage in the system utilises a self-propelled, track mounted chipper that provides the opportunity to work along a stockpile of stems, eliminating the interdependence between extraction and chipping. This machine is based on a Trelan Model 23, unique to in-forest chippers in that it uses a slant disc assembly. Chippers of this nature have acquired a reputation for producing the maximum number of acceptable grade chips. The machine travels along the stockpiled material at the forest edge, self loads using a knuckle boom crane, to feed into the chipping disc, and directly loads the finished chip into a waiting van (Picture 3.12). Since the stems presented to the chipper are in full tree length and are delimbed and debarked, productivity of chipping can be maximised both in terms of volume and quality. The only limitation - assuming there is a stockpile of harvested wood in front of the chipper - is the rate at which chip vans are made available to be filled. Note that an operator is required to drive the off-road prime mover (6x6 or 8x8) used to ferry vans from the main haul roads to the chipper. Standard prime movers then transport the vans to and from the market/port, improving haulage efficiency by removing loading delays. On the down side, this operation is capital intensive and heavily reliant on optimising the mechanical availability or up-time of the single grip harvesters. The performance of this system is sub-optimal in stands where the standing volume is below 220 tonnes per hectare, or average stem volumes of 0.22 cubic metres xv. Picture 3.12 Track-mounted chipper and tree-length stems loading into van Woollybutt Pty Ltd, September

40 (b) In-forest chipping, debarking at forest edge The system of in-forest chipping with debarking at the forest edge is currently being practiced in the Green Triangle Region by Tabeel Trading. In addition, it is used extensively by ITC in Albany and Bunbury Treefarms in Bunbury. The resource being harvested in the Green Triangle is producing woodchip for Mitsui Corporation Australia and is being exported through the Port of Portland. In this system, trees are felled and bunched using a drive to tree feller buncher (Picture 3.13). The feller buncher operates along a single row, felling trees using a disc head saw and accumulating up to five trees at a time in the felling head of the machine. Once the felling head is full of accumulated trees, the machine reverses the length of the tree and lays it down in the outrow. The operator then drives over the fallen trees to collect a further head full of stems. The reversing process is repeated until an accumulated stockpile of up to fourteen trees - or an equivalent height that can be traversed by the wheeled feller-buncher is reached. At the conclusion of each row, the machine reverses over the full length of the row and commences the next row, providing bunches of trees laying in the same direction for ease of extraction. Picture 3.13 Hydroax 711 feller buncher Picture 3.14 Timberpro 630 rubber-tyred boom-mounted feller buncher Woollybutt Pty Ltd, September

41 As an alternative, the felling can be carried out by a boom-mounted feller buncher, which gives the ability to process multiple rows at a time. These can be carried out by machines with a rubber-tyred base (Picture 3.14) or an excavator base (such as the Tigercat 622). In the case of the boom-mounted machines, productivity could be expected to be in the order of 400 trees per hour felled and bunched, while in the drive to tree configuration, this would be reduced by as much as 25%. The fallen trees are skidded from the stump to the processing point using grapple skidders. These machines can usually haul between 12 and 16 stems at a time depending on the average tree volume. At the roadside, or processing point, trees are delimbed and debarked using a chain flail delimber/debarker. A number of different variations of these machines have been tried over the years, but the most successful in the author s opinion is a machine such as the Petersen DDC5000. This machine uses three rotating drums fitted with steel chains, one of which is contra-rotating to the other two. The chain flail delimber is usually fitted with a self-loading crane that picks up stems from the heaps deposited by the skidders and feeds them into the throat of the debarker. Note that an operator is required to drive the off-road prime mover (6x6 or 8x8) used to ferry vans from the main haul roads to the chipper. Trees are usually fed at the rate of a maximum of four at a time, again depending on stem volume, and fed through the debarker at a rate of approximately 30 metres per minute. These chain flail delimbers can either be stand alone units without a crane (Picture 3.14), stand alone units with a crane, or self-loading units combined with a chipper (Picture 3.15). Once the trees have passed through the flailing process they are fed directly into a chipping disc, which converts the whole stems into woodchips. These chips are then blown directly into the back of a road transport van. These vans are usually a fully enclosed trailer, which is linked to a truck for road haulage. In the main, these vans are approximately 80 cubic metres and have the ability to carry 27 green metric tonnes of woodchip - as the maximum legal payload. The combined flailing and chipping unit has the ability to load to capacity one of these vans in approximately 30 minutes. Picture 3.15 Combined self-loading flail debarker and chipping unit Woollybutt Pty Ltd, September

42 Picture 3.16 Excavator-fed flail debarker and separate chipping unit 3.2 Summary of Harvesting Systems The four generic systems described above can best be summarised in Table 3.2 below. Note that the annual output in green metric tonnes (GMT) per annum has been sourced from observations by the authors of operations currently performing in south west Western Australia, the Green Triangle Region and Tasmania. It is important to note that, with the exception of the in-forest chipping debarked at stump operation, all other systems are capable of efficiently operating in stands of less than 180 cubic metres per hectare, or average piece sizes of 0.18 cubic metres. Table 3.2 Comparison of blue gum harvesting systems Harvesting System Cut-to-length System In-Forest Chipping Debarking System At stump At forest edge At stump At forest edge Output (tonnes/annum) 60,000 90, ,000 90,000 Capital Cost of Equipment $1,703,800 $2,367,200 $2,846,800 $2,121,000 Number of Machines End Product Chip logs Unscreened Chip Operator Skills Level High Medium High Medium Output per operator (tonnes/annum) 15,000 15,000 20,000 22,500 Woollybutt Pty Ltd, September

43 3.3 Harvesting System Cost Comparisons Processing Costs Table 3.2 provides a summary of the four generic harvesting systems with relevant outputs. The outputs are derived from actual industry figures, confirmed by more than one operation in each generic type. It is appropriate, therefore, that each of the operations be compared on a like to like basis. To perform this comparison, the authors examined a number of different financial models used for forest harvesting operations, and it was decided to use the JobCost program developed by the Logging Industry Research Organisation (LIRO) in New Zealand. This program has been used by the authors for a number of years, and has been modified to cater for mechanised harvesting operations with the deletion of reference to motor manual systems. A full list of assumptions used in the modelling process is listed in Appendix 3. Outputs from the JobCost modelling suggests that in-forest chipping operations can produce unscreened woodchip (end product) into the back of a trailer at a 1% lower cost per green metric tonne than cut-to-length operations. This is a significant figure considering that the cutto-length systems require further costs to convert to the end product. Within the cut-to-length systems, the model suggests that forest edge processing is 10% less expensive than at-thestump processing, while comparison of the two in-forest systems reveals that debarking at the forest edge is 7.5% cheaper than debarking at the stump. Specific rates per tonne have been kept confidential. While these results indicate powerful reasons why one system could be preferred over the other, a number of factors need to be taken into consideration: 1. Modelling will only give trends in costs, rather than absolute values, and for this reason the absolute values have not been quoted. There is no doubt that there will be significant variation between one similar operational type and another, depending on machinery types and operator skills, management and forest; 2. Cost savings illustrated by one operation could well generate increased downstream costs, for example, although cut-to-length at the stump is more expensive than cut-tolength at forest edge, all the organic matter and nutrients are retained on site, whilst the alternative system amasses this material at the forest edge. The same can be said for comparison of the two in-forest chipping systems, with the exception that the biomass can be returned to the stump with insignificant impact on operational costs (given that it is contained in set piles rather than well-spread rows that are not otherwise revisited by the forwarder/skidder Picture 3.8), and 3. The choice of system will often be dictated by the end market where, for example, the trading company (or chip buyer) may be insistent on chips being sourced from a static chip mill in order that tighter controls can be maintained on production to meet shipping schedules or other objectives. Woollybutt Pty Ltd, September

44 3.3.2 Capital Investment Depending on the system or combination of systems used in the Green Triangle, there will be a significant capital investment required. Table 3.3 provides an outline of the total number of machines (harvesters, forwarders and chippers) that would be required to process the estimated 3.73 million tonnes of blue gum chip per annum, under each of the harvesting systems discussed. The total capital investment is estimated to be between $81.67 and $ million. A list of all assumptions used for Table 3.3 can be found in Appendix 3. Table 3.3 Total number of machines and capital investment required to process 3.73 million tonnes of blue gum chip per annum Harvesting System Cut-to-length System In-Forest Chipping Debarking System At stump Debark at forest edge Debarking at stump Debarking at forest edge Number of Machines Total Cost $106,061,550 $81,668,400 $106,470,320 $88,021,500 Section 3 Summary There are four main systems of harvest that can be considered for blue gum chip production. These are: (i) Cut-to-length with debarking at the stump, (ii) Cut-to-length with debarking at the forest edge, (iii) In-forest chipping with debarking at the stump and (iv) In-forest chipping with debarking at the forest edge In-forest chipping systems significantly reduce the number of steps and handling procedures required to produce wood chips in comparison to cut-to-length systems. Systems that debark at the forest edge reduce the skill level requirements in comparison to at the stump debarking systems. The system of in-forest chipping with debarking at the forest edge is not suitable for lower yielding forests. Specifically, it requires volumes in excess of 180 cubic metres per hectare or piece size average over 0.18 cubic metres. Cut-to-length systems are 1% more expensive per tonne in comparison to in-forest chipping systems. This does not include the additional cost required to convert the logs into chip. The system of in-forest chipping with debarking at the forest edge is 7.5% cheaper than the in-forest system that debarks at the stump. Total capital investment of the four harvesting systems ranges from $1.7 to $2.8 million. The total number of machines required to process 3.73 million tonnes of blue gum chip is between 166 and 249 or between 37 and 62 systems. Woollybutt Pty Ltd, September

45 4 HAULAGE NEEDS 4.1 Blue Gum Haulage Systems Road Transport operations are heavily legislated by both State and Federal Governments. In the main, the State and Federal Government Transport Regulations are similar. The main issue that will affect the transport of forest produce in the Green Triangle will be the suitability of specific roads for different truck configurations. To gain an understanding of the differing truck configurations referred to in Legislation, a broad description is included below. Figure 4.1 has been extracted from an information bulletin prepared by VicRoads to demonstrate the wide range of heavy haulage vehicles. These vehicles effectively fit into three categories - rigid frame, single articulated or double articulated. Single articulated trucks are generally known as semi-trailers, and double articulated trucks are known as B- doubles. Figure 4.1 The current VicRoads heavy haulage vehicle classifications Source: Vic Roads Bulletin, May 2005 Woollybutt Pty Ltd, September

46 Figure 4.3 Road train configurations 32m double road train 36.5m double road train 53.5m triple road train Source: SA Dept Transport, Energy and Infrastructure Website Road trains are used on specific dedicated routes in all states of Australia. In most cases, these routes are associated with extremely low-density population. In the Northern Territory however, road trains are used extensively throughout the regional areas, as well as in the urban areas. Road trains effectively follow a theme as presented in Figure 4.2, whereby the length and the load carrying capacity of the vehicle is directly proportional to the number of axles on which the vehicle travels. Essentially, the statutory requirements surrounding the mass limits, or the allowable masses of road transport vehicles, centre on the number of axles (without going into details of tyre sizes, etc). Eventually, a truck s load limitation becomes vehicle length, which is a major impediment in built up areas. This is best demonstrated in B-double vehicles. The purpose of B-double design is to allow the truck to bend in the middle, therefore enabling it to follow the radius of corners without crossing over to the line of oncoming traffic. This increases the maximum length and load capacity of trucks on certain routes, without significantly decreasing their ability to negotiate existing roading infrastructure. Figure 4.1 clearly shows that, in the simplest case, for a rigid truck with two axles, the mass on the steer (or front axle) is 6 tonne, and the mass on the rear (or load-bearing axle) is 9 tonne. The exception to this is where road friendly suspension is used (this is referred to in detail below). In addition to the general categories shown in Figure 4.1, there are further qualifications with regard to axle spacings, both between and within the axle groups. This factor rigidly determines the specification of heavy haulage vehicles. Reference to Figure 4.1 also shows the two categories of general mass limits and higher mass limits, the later referring to road friendly suspension. Road friendly suspension includes both air and steel suspension types, and is designed to reduce the impact of laden axles on road pavement and bridge structures. This is achieved by ensuring the load is more evenly distributed on the wheels and by reducing the dynamic impact of axles. Vehicles do not require road friendly suspension on all axle groups to obtain an increase in mass. However, the increase in mass is only given to the axles with road friendly suspension fitted. The use of road friendly suspension requires accreditation to the Mass Management Module of the National Heavy Vehicle Accreditation Scheme. Translating Figure 4.1 into practical terms for haulage, each configuration refers to a mass limit, or a gross vehicle combination mass. This is the total mass of the unit that is permitted to travel along roads, fully laden. From the point of view of efficiency of haulage for forestbased product, the critical issue is to reduce the tare weight or basic weight of the trucks and trailers, therefore maximising payload. A typical tri-axled semi-trailer with a bogey drive prime mover will have a tare weight of 15.5 tonnes when configured as a Skel log trailer. With a maximum gross vehicle combination mass of 42.5 tonnes, this limits the maximum payload to 27 tonnes in this configuration. Woollybutt Pty Ltd, September

47 In the case of a B-double unit, and referring to a tri-tri B-double (see the bottom of Figure 4.1, column 1), the gross vehicle combination mass is 52.5 tonnes, and a typical tare weight for a unit of this nature would be 22.5 tonnes, providing an opportunity for a maximum payload of 40 tonnes. Double road trains, although not represented in Figure 4.1, provide for a maximum payload of 54 tonnes. Figure 4.3 Axle Spacing requirements for Tri-Tri B-doubles Source: Vic Roads Bulletin 2005 The advantage of operating a B-double can clearly be seen in Figure 4.3 above. Effectively, the payload is increased by approximately 50% in comparison to a semi-trailer. However, the unit remains to be operated by one prime mover and one driver, and effectively reduces the traffic over the roads by 33%. This was the main argument that was used for the introduction of B-doubles in the Green Triangle Region in Current Forest Product Haulage Systems In the Green Triangle Log Haulage The majority of logs hauled (predominantly softwood) in the Green Triangle Region are carried on B-double units, with a combination of tri-tri B-doubles and bogey-tri B-doubles. Many of these units are constructed so that the second trailer is carried on the back of the first trailer when empty and folded down for loading and haulage of material. This is done to reduce the wear and tear on tyres. Information sourced from Auspine, Green Triangle Forest Products and Forestry SA indicates that 82% of all material hauled in the Green Triangle is on B-double units of various types. The balance of the material is carried on single articulated or semi-trailer skeletal trailer units. Semi-trailer units are employed in situations where the log lengths being harvested are incompatible with the trailer lengths in B-double units. Particular examples of these are recovery logs and export grade logs that are cut to 3.7 metre lengths, as opposed to 5 or 6 metres lengths in most other markets. Other products, such as short length preservation products, may also require semi-trailer transport. Furthermore, there are situations where Woollybutt Pty Ltd, September

48 semi-trailers are required because council regulations restrict the use of B-doubles due to road surface or bridge limitations (Picture 4.1). Picture 4.1 Council truck restrictions can exist on minor roads in the Green Triangle It must also be noted that the use of B-doubles requires a slightly better standard of road than semi-trailers. This is not so much to carry the gross vehicle combination mass, but to physically get the vehicle moving. This is particularly the case in heavy sand or natural surface roads in wet conditions Chip Haulage The Green Triangle currently transports approximately 1 million tonnes of softwood chip for export via the Port of Portland xvi. These chips are transported in vans with a semi-trailer configuration. To date there has been no transport of chip via B-doubles, despite recent upgrades to the receival facility that enable B-double unloading. 4.3 Future Forest Products Haulage Rail For several years the public have been led to believe that rail could provide a solution for the impending increase in haulage of forest products in the Green Triangle. Currently there are no operational rail lines in the south east of South Australia. Existing broad gauge lines between Mount Gambier and Wolseley (183 kilometres), Mount Gambier and Millicent (50 kilometres) and Mount Gambier to Rennick (18 kilometres) were decommissioned in 1995 when the Adelaide to Melbourne Gauge Standardisation project was completed, and the network was isolated from Portland and the interstate mainline xvii. In Victoria s South West, the Port of Portland is serviced by standard gauge line from Ararat, which links into the national rail network. For rail to be a viable transport medium there would need to be standardisation of the current lines from Penola to Heywood (shown dashed in Figure 4.4) and the development of a railhead facility for wood chips at Penola xviii and possibly other sites along the line. Woollybutt Pty Ltd, September

49 Talks between the Victorian and South Australian governments on the upgrade of the existing Green Triangle rail network have broken down in recent months. This suggests that any use of rail for forest products transport is highly unlikely to occur in the short to medium term (if at all). Figure 4.4 Existing Green Triangle rail network Brown line existing standard gauge rail line Red dashed line decommissioned broad gauge line Road Road haulage will play a major role in the future expansion of the forest industry in the Green Triangle Region. The flat terrain and ready access to materials suitable for secondary road construction make the roading costs in the region cheaper than any other forest region in Australia xix. Irrespective as to whether rail is adopted as a transport medium, road transport will be required to short haul material to markets and from locations within the forest to any projected railhead. The only practical way that the cost and impact of road haulage can be reduced is to increase the efficiency of the road haulage units. Apart from the introduction of fast loading and unloading practices, improving the efficiency of road haulage units is best achieved by increasing the actual loads hauled for each transport unit. There has been a steady progression in this trend since the 1960s. Initially logs were hauled to sawmills using ex-military rigid framed trucks. Single articulated semi-trailer units where then adopted and in 1989 B-doubles were first introduced in Gippsland, Victoria. The implementation of B-doubles in the Green Triangle occurred in 1990, effectively resulting in payloads being increased by 50%. Road trains are the next logical step in the progression towards a more sophisticated and more efficient haulage system in the Green Triangle. Woollybutt Pty Ltd, September

50 The current annual harvest of pine products in the Green Triangle region is relatively constant at about 4 million tonnes xx. This is primarily delivered to Mt Gambier, Tarpeena, Nangwarry, Dartmoor and Portland. Based on the information generated in Section 2 of this report, the volume of forest-sourced material hauled throughout the Green Triangle Region will increase to approximately 7.73 million tonnes by the year Using a weighted average of 120 kilometre haulage distance 6 and considered estimates on loading and unloading times, Table 4.1 outlines the number of trucks required to transport the estimated 3.73 million tonnes of annual blue gum chip from 2013 (Figure 2.5). A full list of the assumptions for Table 4.1 can be found in Appendix 4. Table 4.1 Transport requirements for 3.73 million tonne of blue gum chips Semi-trailer B-double Road train Truck units (pulplog) Truck units (chip) No. Trucks/year (chip) 138,148 93,250 69,074 No. Trucks/day (chip) No. Trucks/hour (chip) Note: variations between truck units for pulplog and chip occur through variations in loading and unloading time. See Appendix to Section 4, Assumptions for Table 4.1. Table 4.1 suggests that, under either of the harvesting systems, a move from semi-trailers (the current softwood chip transport vehicles) to B-doubles would reduce the physical number of trucks by approximately 25%. Furthermore, a move from semi-trailers to road trains would reduce the number of trucks by approximately 40%. The Port of Portland currently receives some 2.45 million tonnes of product per annum by road, without consideration of new mineral sand exports of 300,000 tonnes per annum due to commence in the near future xxi. To add a further 3.73 million tonne of blue gum chip export from Portland would require an additional 138,148 semi-trailers or 93,250 B-doubles every year. The Port of Portland currently handles approximately 90,000 truck visits per year xxii. Significant pressure will be put onto Green Triangle roads and road haulage services to meet this projected wood flow. The current practices of utilising semi-trailers and B-doubles with the associated limitations of Gross Vehicle Combination Weight need to be revisited, and the industry needs to pay careful attention to the implementation of a more sophisticated, more efficient haulage system such as double road trains. Road trains are not currently legalised for road transport in the Green Triangle. Their implementation would require planning for the development of suitable infrastructure, changes in legislation and delivery of public awareness. In reality, public education would be the most crucial component of a decision to introduce double road trains into the Green Triangle. The fact that the load per axle is unchanged (in comparison to semi-trailers or B-doubles) and the number of trucks is significantly reduced, presents a strong case for their introduction. Assuming both proposed pulp mills (Heywood and Penola) were to be constructed and operational by the year 2013, current forecasts of 700,000 tonnes per annum per mill would still require the Port of Portland to accept the balance of 2.33 million tonnes per annum. In addition, 700,000 tonnes of this resource will still be required to travel to Heywood, avoiding only 30 kilometres of common road for export deliveries. Furthermore, the pulpwood product from both mills is planned for export, essentially being transported into the Port for export anyway, albeit at a reduced mass (approximately 50%). 6 The weighted average lead distance to Portland for 53,844 ha of MIS plantation resource planted between 1998 and 2001 in the Green Triangle Woollybutt Pty Ltd, September

51 Seasonal impacts are also likely to be more pronounced in the blue gum industry than the existing softwood industry. A recent report by the Limestone Coast Regional Development Board, on the needs of the Green Triangle plantation timber industry xxiii, suggests that the blue gum industry does not have the proportion of free-draining soil types suited to winter harvesting as currently enjoyed by the softwood industry. Therefore it should be recognised that the figures provided in Table 4.1 on the daily truck deliveries are underestimates of the maximum likely transport requirements for the blue gum industry in summer peak periods. The use of double road trains in Western Australia should be used as a model for other parts of Australia to increase the payload for road haulage systems. It is significant to note that double road trains are used extensively on secondary roads throughout WA. In many cases, these roads are natural surface gravel that often require little more than spot filling and grading for maintenance xxiv. Implementation of haulage units such as double road trains require significant levels of planning and lobbying between industry leaders and the Government at all levels. The industry, in conjunction with road transport authorities, needs to carefully research what is required to change the public awareness of combination vehicles and the advantages that they offer in terms of increased payload, reduced truck movements, lower capital outlay and reduced labour requirements. Even without major changes to the current transport system, at the very minimum, a review of existing B-double routes is required. The current blue gum resource differs from the pine resource in that it is more widely dispersed (see Figure 2.1) across the region. As a result, it is likely to utilise a greater proportion of the current road network and involve regular movement through towns like Mt Gambier, Casterton, Heywood and Hamilton xxv. Figures 4.5 and 4.6 present the current B-double routes in Victoria and South Australia. Woollybutt Pty Ltd, September

52 Figure 4.5 Approved B-double routes, VicRoads Information Bulletin, May Woollybutt Pty Ltd, September

53 Figure 4.6 Approved B-double routes, SE South Australia, source SA Dept for Transport, Energy and Infrastructure, June 2005 Woollybutt Pty Ltd, September

54 4.3.3 Road Log Haulage Configurations of trucks for the haulage of hardwood cut-to-length logs are, in essence, equivalent to those currently used in the softwood industry. However, there is an essential difference with the load. In the blue gum industry, piece size is generally much smaller. This is simply because the majority of blue gum plantations are harvested between 9 and 13 years of age, generating a much smaller piece size than that in the pine industry. This smaller piece size, in combination with the slippery nature of debarked hardwood logs, (see Picture 4.2) creates significant challenges in terms of securing loads to trucks. Picture 4.2 Highlighting the slippery nature of hardwood pulp logs The harvesting of hardwood plantations has been practiced for a number of years in Tasmania and Western Australia, where instances of logs falling from trucks have created the need for legislative change to the Forest Codes of Practice with respect to log trailers. This has been legislated in Tasmania. Clause 12.3 of the Forest Safety Code (Tasmania) 2002 refers to the Statutory requirement for rear load restraining guards to be fitted to log trucks carrying debarked Eucalypt treefarm logs, and gives explicit direction as to the engineering requirements, nature of fitment and specifications thereof. This has been as a consequence of the slippery nature of the logs and the inability of conventional restraining systems to secure loads. This practice is also under review in Western Australia. Inspections of operations in Western Australia by the authors revealed that a number of contractors had already installed rear gates to trailers, as shown below. Woollybutt Pty Ltd, September

55 Picture 4.3 Rear gates installed for the cartage of hardwood logs Another issue with respect to load containment is the practice of crowning 7. There is a need to legislate against this practice, as in South Australia, as well as addressing the issues of the minimum number of binders to each load. Other road users, in areas where there is significant log transport, often complain about the debris that separates itself from log loads during transportation. This is usually passenger bark, which is often inadvertently loaded with the logs - unless operations are rigidly supervised - and becomes dislodged during transportation. The haulage of hardwood pulp logs in Western Australia is mainly carried out using double road trains. On these trucks, loads are either configured in short lengths of up to six metres per bay (Picture 4.5), or where practicable, depending on tree height, contractors have adopted the practice of loading trailer lengths of up to 12 metre logs as a preferred length (picture 4.4). In the later case, the tops of the trees are cut to 5-6 metre lengths and loaded on other trailers to maximise utilisation. Maximising load length in this manner significantly reduces the risk of partially contained logs becoming dislodged from the load, as well as reducing both loading and unloading time. 7 Crowning is the practice of stacking the middle logs above trailer height Woollybutt Pty Ltd, September