TIMBER UPDATE APRIL 2022
Bunnings places ban on Russian timber
Bunnings has ordered suppliers to cease the purchase of Russian timber after recently taking a strong stance against Russia’s invasion of Ukraine. The decision comes in the wake of recent declarations by global forestry bodies on timber exports from Russia and Russian ally Belarus, according to a recent Commercial Real Estate report.
While Bunnings claims Russia is not a major timber source for the Australian building and home improvement market, the Big Box did admit that the ban, alongside existing constraints could see a further shortage of composite laminated veneer lumber, or engineered wood product, in the near future.
Bunnings Director of Merchandise told The Australian Financial Review that the decision was made in-line with its timber policy, “which requires us to exclude source material under specific circumstances, we’re working with the industry to source suitable alternatives where necessary.”
If the Federal Government additionally imposes sanctions on Russian imports, the risk to the Australian timber supply chain could worsen, according to the report.
The increasing price of timber and metal has already hit the hardware industry hard, with costs surging at the fastest pace in 16 years, according to the report. Demand has also been exacerbated by rebuilding demands from the Queensland and New South Wales floods, along with the Federal Government’s HomeBuilder scheme.
According to the report, conflict timber declarations by Geneva-based Programme for the Endorsement of Forest Certification and Bonn-based Forest Stewardship Council affect buyers with strict procurement policies, whether it is a retailer such as Bunnings or a government.
Industry figures reported that Russian timber imports now account for $80 million or three per cent of Australia’s timber imports. Russian imports also account for more than one-fifth of the country’s imports of laminated veneer lumber (LVL), the composite material used for structural components such as lintels, I-Joists used in floors, and the formply used for the moulds that concrete is poured into for large commercial projects, according to the report.
On a global scale Russia remains the largest timber exporter – wood processed into beams and planks – and the seventh-biggest exporter of forest products worldwide, with exports worth $US12.2 billion ($16.3 billion) last year.
“There is a range of materials we do import from the region. If the Australian Government was to make any decision around sanctions of products – timber is one of those things – then Australia would have a pain point in terms of supply,” Housing Industry Association Chief Executive for Policy Kristin Brookfield said in the report.
The Australian Timber Importers Federation (ATIF) recently wrote to Trade Minister Dan Tehan warning of a 10-20 per cent job loss across the supply chain should Russian timber imports be blocked. The ATIF is yet to receive a response.
“If there was a major interruption to Russian supplies of LVL and I-Joists, it is estimated that this will disrupt more than 60,000 detached housing starts,” ATIF Chairman Nils Koren said in the letter.
The ATIF also pointed out in the letter that both the loss of direct exports from Russia and shortages from Europe-based suppliers and manufacturers who sold products to Australia made out of Russian timber, would also cause disruptions.
One local manufacturing source said the loss of Russian raw material to global supply chains had – when shipping costs were included – triggered a tripling in price in March alone. According to the report the conflict timber declaration also affected projects seeking Green Star certification.
“As the only recognised timber certification schemes in Green Star, PEFC and FSC have announced that Russian- and Belarus-sourced timbers are now declared conflict timbers and no longer eligible for their standards. This means that Green Star will not be recognizing timber from those regions,” the Green Building Council of Australia Chief Executive Davina Rooney.
In saying this, Ms Rooney also pointed out that Green Star projects would not be significantly affected because Russian timber was generally not used in those projects for structural purposes. It was more likely to be used in internal finishes or cabinets, which gave suppliers time to shift their procurement, she said in the report.
Federal Budget’s forestry initiatives welcomed
The Australian Forest Products Association (AFPA) recently welcomed the Federal Budget’s confirmation of $86 million in funding to establish new timber plantations nationally, but warned more action is needed to ensure Australia can meet future timber and wood fibre needs.
The 2022-23 Federal Budget includes the $86.2 million grants program announced last month to establish new timber plantations and $4.4 million to strengthen Australia’s illegal logging traceability and timber ID systems.
AFPA Acting Chief Executive Officer Victor Violante said the initiatives were a good start for the industry.
“We commend Assistant Minister Duniam and the Coalition Government for recognising that Australia must urgently grow our timber plantation estate to ensure we have enough timber to build our homes and low-emission buildings, while achieving a circular economy,” Mr Violante said.
“However more action is needed to meet the Federal Government’s goal to plant the one billion additional timber trees by 2030 which Australia needs to meet future timber and wood fibre demand.”
“As we head into the election campaign, we look forward to the Government and opposition announcing more detail about their plans to grow Australia’s vital forest industries, including achieving the bipartisan One Billion Trees goal,” he said.
The AFPA recently released its 2022 Federal Election ‘Plan for Growth’ initiative which outlines what forest industries need from the next Federal Government to build the country, help fight climate change and provide sustainable wood fibre solutions for the future.
“We encourage all sides of politics to build on the Budget’s initiatives and commit to backing industry’s ‘Plan for Growth’ in its entirety,” Mr Violante said.
The AFPA also welcomes Budget measures that improve supply chain resilience, tax incentives for farmers to undertake carbon farming projects and fuel excise cuts to ease transport cost pressures.
“We look forward to seeing the detail of how they will support Australia’s forest industries. Australia’s modern, carbon-friendly forest industries are ready to play a greater role in Australia’s low-emission future, and we need a concerted focus from all sides of politics to maximise our potential,” Mr Violante concluded.
Wind farm plan gets the go ahead
Wind turbines will be built on a tree farm property in Gippsland’s Strzelecki Ranges, after the Victorian State Government recently gave approval for the construction of the Delburn Wind Farm.
Expected to cost between $400 and $500 million, OSMI Australia’s Delburn Wind Farm project was given approval by Victorian Planning Minister Richard Wynne, paving the way for 33 wind turbines to be built in Gippsland, each 250 metres tall, a Daily Telegraph report has found.
However, plans for a Battery Energy Storage System to also be built on the farm was not approved due to fire risk concerns.
“The panel has not supported approval of the BESS at this stage. It is concerned there are issues with detailed design and location and findings to be incorporated from the investigation into the Victorian Big Battery fire (Moorabool). It considers such a proposal in principle may well be desirable, but it should be considered in a future planning process, the report said.
Subject to a 12-day public hearing in October and November last year, the proposal received 436 supporting submissions, 283 opposed and three neutral. OSMI Australia’s Executive Director Development Peter Marriott said in the report that the company was satisfied to receive the tick of approval for the construction of
“Obviously we are pleased to receive these approvals, however as there is a lot of detail for us to work through in the panel report and the approval documents,” he said.
The turbines will be built on freehold land owned by Hancock Victorian Plantations Pty Ltd. The approved project spans 4778 hectares across the Latrobe, Baw Baw and South Gippsland local government areas, with an OSMI Australia spokeswoman saying the project was expected to power 130,000 homes and generate 640,000MWh of energy.
The company also estimated 186 new full-time equivalent jobs would be created during construction, with 24 ongoing jobs created during operation, according to the report.