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Sawmill's bid to chop timber shortages

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In part four of InDaily’s special report on the national timber shortage, a Mid North sawmill operator aims to build a second facility closer to Adelaide to cut structural timber and capitalise on fire-affected wood from Kangaroo Island if he can secure government support.

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Special Report: South Australia timber industry

The plant would produce enough structural timber to build about 500 homes a year, initially, with the ability to ramp up production if affordable timber supplies could be secured.

Structural timber shortages are threatening to derail the state’s housing boom created by the Federal Government’s HomeBuilder Scheme, which was launched more than 12 months ago in response to the coronavirus pandemic.

Morgan Sawmill Jamestown employs about 75 people but says those jobs are at risk after it lost a contract with Forestry SA to source sawlogs from the Adelaide Hills, which ended on June 30.

It has received a one-year extension of a contract for preservation logs, which are used primarily to make vineyard posts. However, it says this is not significant enough to allow for long-term planning.

The Jamestown mill is not set up to process building industry-grade structural timber.

Traditionally it has used local timber from the nearby Bundaleer and Wirrabara forests to make a range of products including vineyard posts, packaging timber, pallets and timber for outdoor structures such as pergolas.

The company has begun bringing in fire-affected timber from Kangaroo Island despite the high transport costs of trucking it the almost 400km, including a stint on the SeaLink ferry from Penneshaw to Cape Jervis.

It has also lodged an expression of interest (EOI) for $2 million in State Government funding to help it build the plant at Dublin, about 65km north of Adelaide

The EOI process was opened on June 25 and applicants had until July 15 to submit their case.

Primary Industries and Regional Development Minister David Basham said several bids had been received for the fund, which are still being assessed.

The  Federal Government announced in May 2020 the $15 million Forestry Transport Assistance scheme to subsidise the transport of fire-affected timber following devastating bushfires in SA, NSW and Victoria in the 2019-20 summer. But it was only made available to Victoria and NSW after they agreed to match funding.

Basham flew to Canberra last month vowing to raise the issue of SA’s inclusion in the scheme with his federal counterparts but an announcement is yet to be made.

Morgan Sawmill owner Luke Morgan said he was also hoping to access the transport subsidy scheme to reduce the cost of transport.

He said transporting the KI timber to Dublin instead of Jamestown would also slash costs.

“At the current price with the KI log, it’s too expensive for me to take too much of it because I’m losing money cutting it, so the more I cut the more I lose,” Morgan said.

“I’m just in protection mode at the moment hoping the freight subsidy comes through and then I can ramp up.”

Listed company Kangaroo Island Plantation Timber says it has about 300,000 tonnes of pine logs available to be shipped.

The logs would produce about 100,000 tonnes of structural timber, enough to build about 10,000 homes and ease shortages.

There were 11,655 building applications to construct new homes in SA in the 12 months to the end of May. This was up more than 40 per cent on the 8260 applications lodged in the 12 months to May 2020.

Morgan said he would invest $4.1 million to upgrade his equipment and build a second plant in Dublin with an initial capacity of 50,000 tonnes a year from the beginning of next year. This investment would include $2 million in State Government funding.

“Within three months I’ll be double shifting my mill and doing structural timber for building and then at the start of next year I’ll have the new facility set up in Dublin to work with my existing mill in Jamestown to cut framing,” he said.

“If I get the freight subsidy and the grant I’ll do both.

“I do produce structural timber but it is graded for outdoor pergolas so I’ve got the kilns and the treatment plant already but to do the structural timber for the building industry I need a machine grader.”

Under the plan, enough structural timber would be produced each month to build about 40 houses.

Morgan said the initial Dublin capacity of 50,000 tonnes was for a single shift and could be increased.

“I’ll use KI timber for that and set the mill up to cut framing as the main cut and I’ll also get other products because there are edges of the log you need to utilise.

“With the ferry being the only way of getting the log over from KI at the moment, there’s no point setting up for more than that because I’m not going to be able to physically get more than that.

“The freight subsidy, if it does happen, is only for fire-affected timber and it is only for two years so I need to have myself set up within two years to be able to run without that freight subsidy.”

KIPT is also working on plans to barge logs from Kingscote and American River but those proposals are awaiting final approvals.

It also plans to build a $40 million port at Smith Bay but that plan, which has been declared a major project by the State Government, is also awaiting approval and won’t be ready until at least 2024.

Assistant Minister for Forestry and Fisheries Jonno Duniam confirmed he had discussed the $15 million Forestry Transport Assistance scheme with Basham but would not say what the outcome was.

“As a government, we are committed to supporting the forestry industry, including on Kangaroo Island,” he said in a statement to InDaily.

“I will continue to work with him (Basham) and South Australian Government, alongside other interested states and territories, as this is a national issue.

“In December 2020, we announced that Kangaroo Island Plantation Timbers would receive $1,010,000 in grant funding as part of the $40 million Forestry Recovery Development Fund Program, to support businesses impacted by the bushfires.”

Basham said the State Government was “exploring all possible options to boost supply” amid strong demand from the building industry.

“This includes maximising the amount of sawmill quality log available to local processors, lobbying the Federal Government for industry access to the Forestry Transport Assistance scheme and a $2 million Expression of Interest process aimed at manufacturing additional logs into structural timber for local South Australian home builders,” he said.

The State Opposition is expected to raise questions in budget estimates this afternoon about why the State Government was not included in the Forestry Transport Assistance scheme and what response Basham had from Duniam when he flew to Canberra last month.

“We also want some guarantees that any additional timber processed because of the funding will be supplied to SA builders, and especially the small companies that are currently facing threats to their viability because of the shortage,” Shadow Minister for Forestry Clare Scriven said.

The State Government last month announced Nuriootpa-based KSI Sawmills would build a new $4.5 million sawmill near Murray Bridge as a result of the 10-year supply agreement with ForestrySA.

The new sawmill is expected to help KSI more than double current annual production to about 60,000 cubic metres but not until 2023.

However, its new tender will predominantly be for lower grade logs from plantations in the Adelaide Hills, which will be turned into products for the local packaging industry.

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