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Hills forests face the axe as timber tenders aim to boost local supply

Business

Forestry SA has announced new contracts for the long-term supply of timber from state forests in the Mount Lofty Ranges, while a plan to use bushfire-affected timber from Kangaroo Island to fill building industry shortages continues to gather dust.

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Demand for timber has increased as a result of a housing building boom, putting pressure on local supply.

Similar booms interstate have also limited the ability of local builders to access structural timber from outside of South Australia.

Successful tenderers include:

Morgan Sawmill’s previous sawlog contract, which runs out on June 30, has not been renewed.

Owner Luke Morgan said the one-year extension of the preservation log tender was not significant enough to allow for long-term planning but “it’s better than nothing”.

Preservation log is generally used to make vineyard posts.

Morgan is hoping to work with Kangaroo Island Plantation Timbers in its efforts to shift an estimated 4.5 million tonnes of fire-affected timber off the island before it rots.

The listed company wants to transport about $250 million of the wood onto the mainland for local structural lumber markets and sawmills as well as export markets.

However, a deal to send enough KI timber to Morgan’s Sawmill in the Mid North to build 10,000 homes is reliant on federal and state government support to help meet high transport costs and to upgrade sawmill equipment to produce structural timber suitable for the local building industry.

Without the deal, which emerged last month, Morgan’s says its business is at risk while KIPT says the timber will likely be shipped off to India.

Morgan said he had received a letter from Primary Industries and Regional Development Minister David Basham saying that he was still working on the request for funding.

He said a deal with KIPT could sustain his sawmill for a number of years.

“At least he’s still looking at it for me because that ForestrySA sawlog supply agreement represents 80 per cent of the logs that I get for my sawmill so I’ve only got 20 per cent of my supply from the end of the month, which is not going to run a sawmill,” Morgan said.

“So I’m really hoping I can get something happening with an alternate log supply and the one that I’m really pushing for is the KI one. There are other private plantations around but we’ve got to prioritise that because if we don’t do anything about it, it will be gone.”

The state government says the new tenders will increase ForestrySA’s direct contribution to SA’s regional economy by 50 per cent.

ForestrySA chief executive Julian Speed said the volume of local logs being processed in regional South Australia would now increase significantly.

“Whilst market demand plays a role in allocation of ForestrySA’s logs, we are particularly pleased to be able to award increased volumes to the domestic wood processing sector,” he said.

“ForestrySA has developed some strong and very rewarding customer relationships which are now proving beneficial for the long term.”

The Timberlink sawmill in the small South East town of Tarpeena has been awarded the 10-year sawlog supply to feed into its recently expanded sawmill.

The town also beat metropolitan Melbourne in December for the right to host Timberlink’s $59 million hi-tech laminated timber plant, which is due for completion in 2023.

The Australasian timber products manufacturing business is owned by investment funds managed by New Forests and has sawmills at Bell Bay (Tasmania), Blenheim (New Zealand) and Tarpeena that manufacture plantation structural pine products.

Nuriootpa-based KSI Sawmills says it will 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.

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.

Basham said some KSI products will meet structural grade and be consumed by the local building and construction industry, while residue materials will support Adelaide Hills-based agriculture.

“In a strongly competitive national and global market for timber, it is exciting to see local sawmills successfully secure supply contracts with ForestrySA,” he said.

“No logs of sawmill quality will be exported as a result of this tender, in a strong sign of ForestrySA’s support for the local industry.”

Master Builders SA CEO Will Frogley said the tenders and the announcement about the new sawmill was welcomed but the local building industry needed a solution that delivered more structural timber in a shorter timeframe.

“Master Builders SA welcomes the announcement but Kangaroo Island remains the only feasible option to address the current severe shortage of structural timber,” he said.

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