Hokoroa and Hokoroa North Forests Combined Meeting, 3 December 2017 Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 1 Version 3
Welcome and Introductions • Good afternoon • Historic meeting of the Hokoroa and Hokoroa North Forests • Combined meeting of the two forests as in the past, however with harvesting underway, the common interests of these adjoining forests align, and we need to discuss our proposals to capture the mutual benefits for both • Forest Enterprises Team Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 2
Housekeeping • General Housekeeping • All mobile phones to silent please • Note the location of exits and toilets • In case of emergency, follow our staff in hi vis • Presentation is being recorded • Questions • Questions are welcomed and time slot included at end of each topic Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 3
Event Program • This afternoon is the meeting and Business Session • Tomorrow morning is the Harvest Visit • Harvest visit tomorrow on a working day to see the crew in action • Some of your questions may be best answered during the harvest visit Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 4
Today’s Meeting Program • Session 1 • Matters Impacting on the Harvest (Forest Specific and Gisborne Operating Environment) • Recommended Solution to Maximise your Harvest Return (collaborative harvest) Afternoon Tea (around 2.30 pm) • Session 2 • Combined Harvest Details • Second Rotation and Exit Options • Process from Here • Harvest Reporting and Distributions • Financial Status of the Investment • Other Matters – some of which will be best addressed tomorrow Conclude around 4.15 pm Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 5
Matters Impacting on the Harvest • Forest Specific Matters • Gisborne Operating Environment Matters Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 6
Matters Impacting on the Harvest Forest Specific Matters • Forest specific matters start with a Harvest Plan • The plan is the infrastructure (roads and landings) currently identified as necessary to most cost-effectively harvest the two forests • The plan ignores forest boundaries • The plan ignores age classes • The plan has harvesting underway or planned in both forests this financial year Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 7
Matters Impacting on the Harvest Forest Specific Matters • The plan confirms that we should be able to cost-effectively harvest all of each forest • The plan is dynamic and will change in response to conditions on the ground and issues arising during harvest Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 8
Matters Impacting on the Harvest Forest Specific Matters • The plan involves building a significant amount of infrastructure Hokoroa Forest Hokoroa North Total Harvest Road Distance (km) 14 17 31 Metal (m3) 22565 26728 49292 Metal (loads) 1880 2227 4108 Metal Truck Movements 3761 4455 8215 Roading Density (m/ha) 35 39 37 # Total Planned Landings 48 57 105 • The plan is to build the infrastructure within the forest (invest in own forest not neighbours) Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 9
Matters Impacting on the Harvest 1 Forest Specific Matters • The Harvest Plan identifies options and challenges 3 • Options are good! • Challenges have to be addressed 5 4 • Some of the challenges and options identified are numbered 2 6 Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 10
Matters Impacting on the Harvest Forest Specific Matters • The Harvest Plan identifies options and challenges (continued) 7 7. Cross boundary harvest Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 11
Matters Impacting on the Harvest Gisborne Operating Environment Matters • Having reflected on the Forest Specific Matters impacting on harvest we must then consider the constraints posed by the Gisborne Operating Environment – 1. Regional issues impacting on harvesting 2. Forest Enterprises’ responsibility to all the Gisborne forests we manage Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 12
Matters Impacting on the Harvest Gisborne Operating Environment Matters • Forests were part of the 1990s planting boom • Key advantage for Hokoroa and Hokoroa North Forests is that these forests are two of our older forests in the Gisborne area (so opportunity to get ahead) Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 13
Matters Impacting on the Harvest Gisborne Operating Environment Matters • 1990s boom plantings have to be harvested and sold – and not just Forest Enterprises Investors’ trees! • Where is the increased volume to go? 1. Local Mills – very little opportunity • Wairoa – small quantities • Juken New Zealand seldom buy wood in 2. The extra volume will therefore be exported Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 14
Matters Impacting on the Harvest Gisborne Operating Environment Matters • Forest Enterprises is becoming a major customer of our Gisborne export partner PFP Ltd - • PFP is one of the two largest log export companies in New Zealand • Partnership arrangement with the other major log export company (TPT Forests Ltd) for Wellington export • Open book agency at fixed fee Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 15
Matters Impacting on the Harvest Gisborne Operating Environment Matters • Where are the potential bottlenecks in the logistics chain if all this wood is to be harvested and sold? • Logging contractors • Log Truck contractors • Roading contractors Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 16
Matters Impacting on the Harvest Gisborne Operating Environment Matters • Where are the potential bottlenecks in the logistics chain if all this wood is to be harvested and sold (continued) ? • River Catchment Areas – each colour represents a different river catchment area for planning purposes • Quotas are being introduced for harvesting in many Gisborne river catchments Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 17
Matters Impacting on the Harvest Gisborne Operating Environment Matters • BUT, the greatest bottleneck is the Eastland Port • Currently, Eastland Port (Gisborne Port) is handling approximately 2.5 million tonnes of logs annually • Eastland Port may soon be the second largest log export port in New Zealand • Forest Enterprises is currently exporting from Eastland Port at an annual rate of 180,000 tonnes Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 18
Matters Impacting on the Harvest Gisborne Operating Environment Matters • Capacity of Eastland Port is constrained - • Currently limited to loading one log ship at a time • Limited on site storage - offsite storage is already having to be used (Dunstan Road) • Port’s objective is to be able to load two ships concurrently, and supply the wood from both on-site and off-site storage • The resource consent application has been lodged • Forest Enterprises is working closely with Eastland Port • Providing projected annual woodflows for the next 12 years Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 19
Matters Impacting on the Harvest Gisborne Operating Environment Matters • Forest Enterprises Projected Port Volume assuming expansion - • Current projection is that Forest Enterprises will be able to secure up to 700,000 tonnes per annum of the increased port capacity • 700,000 tonnes per annum is similar to the present capacity of the largest users of the port • Forest Enterprises will be a major customer of Eastland Port Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 20
Matters Impacting on the Harvest Gisborne Operating Environment Matters • Impact of Port Capacity on Forest Enterprises total harvest 700,000 tonnes Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 21
Matters Impacting on the Harvest Gisborne Operating Environment Matters • PLUS, Forest Enterprises cannot plan for the harvest of individual forests without consideration of all the forests we manage in the Gisborne Region • A solution for the Hokoroa and Hokoroa North Forests cannot unreasonably comprise the solution for the other forests we manage Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 22
Forest Enterprises Gisborne Forests Solution • The solution we come up with must - • Maximise the investment return for each forest • Minimise the risks for each forest • Provide options to address the forest specific matters in each forest (addressed earlier) AND • Is also logical for the second rotation • There will be a second rotation with or without some or all of the existing Investors (to be discussed later) Hokoroa and Hokoroa North Combined Meeting 3 December 2017 Slide 23
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