A Kawerau saw miller has signed a deal with a Saudi Arabian customer to more than double its exports to the Middle East country and potentially ship around 1500 containers of processed wood products annually, its chief says.
David Turner, executive director of Tauranga-headquartered Sequal Lumber, said the "significant" deal could result in that business vastly increasing its exports to the Middle East country and the world's largest oil exporter.
But he emphasised arrangements were at a very early stage and he could not name the customer due to commercial sensitivities.
"We have exported into Saudi Arabia for some time and been working the New Zealand Trade and Enterprise who have introduced us to a lot more customers around the globe and in particular in Saudi Arabia," Turner said today.
"This new customer could take around 1500 container loads of logs annually which would more than double the amount we send there," he said.
The deal was signed in November and would move to its next level this year.
"Our first trial shipments were in January and since then, the relationship has grown and I've arranged to meet the CEO in Germany in May. Now, we take the base relationship and build on it," Turner said.
He expects orders to ramp up in the next two years and said around 200 containers were sent in the initial trial run.
Sequal would not be sending unprocessed logs to the client but processed timber, Turner stressed.
"The main source of demand for timber in the Middle East is for the petrochemical industry, with the transformation away from oil and gas. Demand for petrochemical products is increasing. The timber will be used for packaging in the petrochemical industry, to create wood pallets," Turner said.
Those pallets will be used to transport drums and tanks of petrochemicals, he said.
Regional Economic Development Minister Shane Jones today lauded Sequal's deal.
"The timing is perfect, with the New Zealand pavilion at Expo 2020 in Dubai. The fact the timber deal is happening out of Kawerau is a tremendous fillip. Mr Turner is extremely innovative and has an understanding of timber processing for international markets. The Government mantra 'volume to value' becomes a reality when the private sector seizes opportunities like this," Jones said.
Jones and Turner travelled to China together last year, Jones said: "I've met him several times," Jones said, although the minister was not directly involved in Sequal signing the deal.
"David Turner is the next generation of forestry entrepreneur and I doff my cap to what he has achieved in the Middle Least. I love that this is not a story of sending yet more logs overseas," Jones said.
"The huge trade we have with China reminds me that we need to ensure that we penetrate other markets as well. The Middle East is a source of great capital," Jones said.
Sequal says it supplies custom-cut radiata pine lumber, according to size, grade and delivery needs. Its products are used to manufacture furniture, packaging and engineered wood products. Radiata is a durable soft wood that is sustainably harvested, grows fast and is extremely versatile, Sequal says.
Turner said he was this morning meeting with David Parker, Minister of Economic Development and Trade and Export Growth.
Turner praised NZTE's role in the Saudi deal and said the entity was "doing a great job for New Zealand. NZTE is the catalyst."
NZTE said that in 2017, Saudi Arabia was New Zealand's 20th largest export market. This country exports $507m of that country with a population of 33m and a GDP of US$683.8b.
"Saudi Arabia's plan for economic diversification in order to lead the kingdom into a new era of innovations and modernity is bursting with opportunities for New Zealand businesses," NZTE says.