Solid timber recovery and economics of short-rotation small-diameter eucalypt forestry

This report was prepared for Future Forests Research Ltd (FFR) by Scion.

Authors:

Dean Satchell, Sustainable Forest Solutions, R.D. 1 Kerikeri, Northland 0294. +64 9 4075525

James Turner, Scion, Private Bag 3020 Rotorua 3010. +64 7 3435899

Date: June 2010

Appendix 1: Assumptions in Discounted Cash Flow Analysis
Appendix 2: Prices and values of timber in New Zealand used for estimating board prices
Appendix 3: Timber grading
Appendix 4: Sawmilling methodology
Appendix 5: Glossary of terms
Spreadsheet 1: Kaingaroa Compartment 1194 E. regnans economic value (Microsoft Excel macro-enabled workbook 3.6 MB)
Spreadsheet 2: Optimal rotation and stocking for E. regnans (Microsoft Excel macro-enabled workbook 864 KB)

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Discussion

Limitations of the Economic Analysis

Any economic analysis is influenced by the assumptions used in that analysis, particularly cost and price assumptions. Because of the important influence of these assumptions, the spreadsheets used for the analyses can be provided to enable readers to apply the same analysis using their own price and cost data.

Economic analysis of the “optimal” rotation length and stocking for E. regnans sawlog production was hampered by the lack of a suitable growth model, volume and taper equations, and diameter distributions. These are essential to adequately represent how a stand of E. regnans will grow in terms of tree volume and taper under different thinning regimes through to different ages, to then estimate sawlog volumes and SEDs within a stand.

The results from the economic analysis of the stand used for the sawing study are sufficiently encouraging, with an internal rate of return well above that achieved for a typical radiata pine stand, to suggest that investment in growth model, volume and taper equation, and diameter distribution development is warranted.

Sawmill operational efficiency

The purpose of this study was to set a realistic benchmark with existing technology and minimal outlay from which an emerging plantation industry may springboard. The Woodmizer sawmill used in this trial is a low volume-throughput portable sawmill for use in small scale on-site sawmilling. Saw cuts produce very little wastage because of the thin kerf (3 mm).

Results have been encouraging with this low capital investment sawmill equipment proving cost-efficient and with good sawn recoveries.

Advantages of this strategy include:

1. Low capital investment.
2. Spring is removed from dimensioned boards by first sawing faces, and then edging the resulting slabs with straightening cuts.
3. The quarter-sawn boards produced are comparatively wider and in greater quantity than the back-sawn boards. Market acceptability of reasonable-width quarter-sawn boards is likely due to low shrinkage/expansion across the width of the board in service.
4. Cupping in narrow back-sawn boards is negligible, thus eliminating the need for wasteful over-sizing board thickness to avoid face skip.
5. Boards are sawn to final dimension. In contrast, ripping larger stock down to smaller sizes can result in spring. Furthermore, ripping seasoned larger dimension stock into smaller dimensions can expose internal checks, a serious value-limiting defect.
6. Both internal- and surface-checking is reduced by sawing thin-section material (Washusen and Innes 2008). Internal checking is not likely to be an issue from processing or in service because boards are cut to final product dimensions. Only checks on or near the surface are likely to be exposed in most product applications.
7. By excluding the pith (the centre-line or longitudinal axis) from boards, issues with heart checks and cupping around the pith are avoided.
8. End-splitting of sawn boards is minimised because opposing stresses each side of the central axis (pith) are always isolated into separate boards.

Sawn recoveries, efficiency and product value could potentially be further improved by:

• Including 125 mm boards in the recovery mix instead of 100 mm + fillet-sticks.
• Improved operator experience, skill and sawing accuracy. Familiarity with this sawing technique improves recovery and cost-efficiency.
• Allowing less oversize above the nominal sizes, especially board width which could be reduced by 5 mm.
• Milling logs sooner after felling.
• Further optimising log lengths according to diameters.
• Possibly utilising line-bar carriages to reduce variation along the full length of the sawn product thickness to improve nominal recoveries.
• Using specialised edging machinery in addition to the Woodmizer sawmill for cost efficiency and output gains.
• Using steam reconditioning to recover collapse. The conservative nominal recovery strategy used in this study of excessively oversizing Green-sawn dimensions provides a benchmark from which industry can improve from.
• Milling on-site to reduce log transport costs.
• Targeting 2 × 75 × 25 mm boards instead of 1 × 50 × 50 mm board, especially with larger diameter logs.

It is acknowledged that alternative strategies incorporating scale-efficiency and specialised equipment could produce further cost-efficiency gains. However, large diameter circular saws can have a kerf as great as 6 mm (Washusen and Innes 2008). Improvements in efficiency can compromise recovery, and vice-versa.

Technology improvements in sawmilling and seasoning cold-climate eucalypts are very likely. Hewsaws using symmetrical cutting patterns are being evaluated in Australia for high throughput, cost-efficient cold-climate eucalypt sawmilling (Washusen 2009). Growth stress imbalances are addressed by removing wood simultaneously from around the log, but timber produced is essentially wide back-sawn boards, which may not meet the quality requirements into the future of the higher value appearance market. This equipment requires upwards of 120,000 m³ of small even-diameter logs per year (Washusen and Innes 2008), and thus an established resource. To date this is unproven technology.

Utilisation, product options and towards determining product value potential

The concealed surface grade (AS 2796.2 - 2006) used in this study specifies products intended for use in building and appearance applications, based on the level of feature in each grade. This grade allows for appearance and to some degree also board strength. Although the timber was not graded for furniture components or structural components this grading was undertaken to give a general impression of value rather than to specify an end use. The concealed surface grade was selected for this timber because it was deemed the most appropriate for determining potential value based on the target end-uses (Table 4). Consistent knot defect throughout the timber would severely limit recovery of full clear lengths. The suitability of this grade for the New Zealand market has not been determined, and comparable products from which to base value are currently limited. Much of the Tasmanian oak currently imported into NZ is in long clear lengths and from old-growth forests. Markets can change during a rotation and the biggest challenge for plantation hardwood growers may be to lead the way with new wood product options that offer fresh points of difference.

Table 4: Target end-uses for the products sawn in this study:

100 × 25	Flooring or panelling
150 × 25	Flooring, panelling and joinery
50 × 50	Laminated panels
75 × 25	Laminated timber beams

Short clear cuttings, as a result of new technologies have product options including:

• Laminating and recutting into highly stable furniture components such as drawer sides.
• Finger jointing into longer lengths for glue-laminated structural components.

Presence of internal checking is not likely to be an issue with the target product options (Table 4) unless exposed. The degree to which surface checking meets market resistance is not known for these product options. Exposure of internal checking would depend very much on the product option chosen and level of machining required. The Australian standards AS 2796.2 – 2006 allow for a reasonable level of checking on the surface of hardwood timber but acknowledge that internal checking can only cause downgrade once exposed.

New Zealand grown plantation E. regnans timber is substantially stronger, stiffer and harder than radiata pine when trees are over 25 years old (Miller et al. 2000). However, as age of the tree decreases, wood densities generally decrease also, and basic density can be below 400kg/m³ for young North Island E. regnans (Frederick et al. 1982). The strength and stiffness for a given density, also known as "specific strength" can be higher for lower density eucalypt timber (B. Walford, Scion, pers.comm). Suitability of young, low density New Zealand-grown E. regnans timber for structural applications has not yet been studied, but tests for modulus of elasticity and modulus of rupture from this young low density material are justified.

It was observed that wood density was highly variable between trees milled in this study. This could be related to height-position that logs came from in the tree as it is known that basic density increases with tree height in E. regnans (Frederick et. al 1982). Height-positions were not determined for these logs at the time of harvesting but buttlogs were noted and tests could be conducted on the timber from these to determine whether variations in density were related to tree differences and thus could be included in the criteria for future selection and breeding work.

Table 5: Wholesale prices for 25mm thickness kiln dry native forest ash timber in Australia.
(From Washusen et al 2008)

Width (mm)	Select grade wholesale price ($A/m3)	Standard grade wholesale price ($A/m3)
50	1215	970
75	1360	1005
100	1455	1120
125	1460	1165
150	1510	1190

Appearance products attract high prices (Washusen and Clark 2005). Traditionally, as sawn timber width increases so does product value per m³ (Table 5). Longer timber lengths also command a higher price than shorter lengths. However, technology could play a part in opening market opportunities for producing high-dimensional-stability high-value timber products cost-efficiently using small dimension ash eucalypt stock and jointing with modern adhesives. The product values given for sawn timber dimensions in this study (Table A 1.1, Appendix 1) are based on perceived market potential and target product end-uses (Table 4). It is acknowledged that further market research is required to gain a higher level of pricing accuracy. Product development and careful niche marketing or adequate volumes will be required to capitalise on market potential. Current prices for equivalent timber in New Zealand as a finished, profiled product are given in Appendix 2.

Flooring and panelling

The flooring and panelling product trial produced attractive results. The appearance of this timber and nature of the concealed knots produced significantly more figure on the clear face than seen on equivalent long-run quarter-sawn clears imported from natural ash eucalypt forest in Australia.

Laminated panels

Laminated hardwood benchtops are a potentially high-value product-use for 50 mm × 50 mm timber, and highest grade dry N.Z. eucalypt has a value of $3000/ m³ for this end use (P. King, Kings Fourth Generation Woodworking Company, pers. comm.). Custom made blanks (600mm wide) made from 50 mm × 50 mm hardwood currently sell for $350 - $450 per m² in New Zealand (Chris Vincent, South Pacific Timber, pers. comm.). The total cost of $124.82/ m² for laminated panel blanks in the product trial, based on the timber prices in Table A 1.1 (Appendix 1), compares favourably with market rates of $350 - $450. However, the market for laminated eucalypt blanks is currently quite small in New Zealand (Chris Vincent, pers. comm.).

Finger jointing

Short lengths of clear timber are used for finger-jointing. Finger-jointing is a method of upgrading low-grade material into long lengths of valuable clear straight-grained timber. Its uses include structural applications such as glue-laminated beams, a potential high-value application for E. regnans and other eucalypt timber.

Non-structural uses of finger jointed wood include joinery, furniture, flooring, door jambs, handrails, balustrades and mouldings.

To be suitable for finger jointing, timber must be stable, have few internal defects, machine well, with high production rates and minimal wear on the machine cutter knives. Young low density ash eucalypt timber has not been assessed to determine whether it produces smooth, clean cuts with a minimum of crushing or splintering at the cut surface or face and meets the requirements for finger-jointing.

The cost of custom finger jointing (both structural or micro-joint) with Melamine Urea Formaldehyde Resin (M 7) at Lakeland Timber Processors Rotorua is currently $120/ m³ for 150 mm × 25 mm shooks; $140/ m³ for 100 mm × 100 mm and 50 mm × 50 mm shooks; and $170/ m³ for 75 mm × 25 mm shooks. The length of shooks is normally not much more than 400 mm to avoid jointing issues resulting from distortion. Length must be greater than the width, so even very small lengths are suitable. As a general rule, processing costs do not increase with decreasing lengths although shooks less than 150 mm long may not meet the size specifications of some jointers (Jim Dowman, Jalco Timber Processing Ltd, pers. comm.).

Radiata pine shooks used for finger jointing return approximately $500 per cubic metre for clear 75 mm × 25 mm, 100 mm × 25 mm and 150 mm × 25 mm (Leyton Dowman, Jalco Timber Processing Ltd, pers. comm.). The value given for air-dry Clear Cuttings 30 -59 cm of $600 in Table A 1.1 (Appendix 1) reflects the current value of clear radiata shooks.

Glue-laminated structural members

Glue-laminating can produce larger dimension timber products than possible with sawn timber, and can utilise lower grades of wood by bonding the weakest point of one piece of timber to the higher strength of adjoining pieces. The significant variation in strength and density properties exhibited by ash eucalypt timber (Haslett 1988(2)) can to some degree be cancelled out by laminating timber. Decorative timbers can be used to striking effect, and thin laminates enable the member to be finished with a curve if desired to accomplish striking architectural features. The cost and additional value generated from glue-laminating 25 mm thickness finger-jointed young low density ash eucalypt has not been assessed in New Zealand but may have considerable product potential for strong, decorative and long-span structural beams.

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Disclaimer: This report has been prepared by New Zealand Forest Research Institute Limited (Scion) for Future Forests Research Limited (FFR) subject to the terms and conditions of a Services Agreement dated 1 October 2008.The opinions and information provided in this report have been provided in good faith and on the basis that every endeavor has been made to be accurate and not misleading and to exercise reasonable care, skill and judgement in providing such opinions and information. Under the terms of the Services Agreement, Scion's liability to FFR in relation to the services provided to produce this report is limited to the value of those services. Neither Scion nor any of its employees, contractors, agents or other persons acting on its behalf or under its control accept any responsibility to any person or organisation in respect of any information or opinion provided in this report in excess of that amount.