NZTE probes wood fibre supply concerns for proposed $180m Chinese plant in Kawerau

NZTE is concerned about supply at a proposed $180 million Chinese plant in Kawerau. Photo / Ben Fraser

New Zealand Trade and Enterprise, which has encouraged a Chinese company to invest in a $180 million wood processing plant in the Central North Island to boost regional development, is now looking into whether there is enough wood fibre available to supply the plant following concerns from local industry.

China's Guangxi Fenglin Wood Industry Group announced plans earlier this year to establish a plant in Kawerau by 2020 to produce 600,000 cubic metres of panel boards a year and generate 100 new jobs, at an expected cost of $180 million.

However, the Wood Processors & Manufacturers Association of New Zealand has raised concerns that timber mills in the region don't produce enough wood fibre to supply the proposed plant as well as existing big pulp mills of Kinleith in Tokoroa and Tasman in Kawerau, which are owned by Japan's Oji Fibre Solutions. Fenglin's proposed plant is expected to initially produce particle board and later expand to medium-density fibre board (MDF).

The WPMA "very much welcomes" overseas investment in the New Zealand wood processing sector, said chief executive Jon Tanner. However, he noted "it is important that this investment is directed to regions where there is not an already constrained wood fibre supply."

NZTE confirmed to BusinessDesk that it has commissioned Finland forestry consultancy Indufor to provide baseline data on levels of wood fibre available for processing in the region for industry stakeholders.

NZTE general manager of investment Dylan Lawrence said the report will investigate the current and planned harvest levels of timber, the current annual volumes of pulpwood and residues, as well as planned production and consumption levels in the industry.

The report is expected to be completed near the end of this year and NZTE will publish a high-level summary of the findings, Lawrence said.

Fenglin's planned investment in Kawerau was hailed as a huge benefit to the district by Mayor Malcolm Campbell when it was announced in April, who noted the area had traditionally faced a shortage of job opportunities.

Fenglin told BusinessDesk it is confident that there is sufficient wood supply for the new development.

"Fibre supply for the new particle board mill in the immediate term will come from existing under-utilised wood fibre resources and from the rapidly expanding forest harvest in the wider region," said Fenglin Wood Industry (New Zealand) director John Galbraith. "The plant will complement existing wood manufacturing, providing alternative markets for existing byproducts and our expectation is this will support further investment in new primary processing ventures in the region, utilising fibre that is currently being exported as whole logs."

Fenglin's planned investment in Kawerau was hailed as a huge benefit to the district by Mayor Malcolm Campbell when it was announced in April, who noted the area had traditionally faced a shortage of job opportunities.

Founded in 2000, Fenglin and was one of the earliest engineering board manufacturers in China and the first in Guangxi Province, according to its website. Listed on the Shanghai Stock Exchange, Fenglin has three MDF plants and one particle board plant in China with total capacity of 810,000 cubic metres a year, and also owns about 14,000 hectares of forests to secure wood supply.

With plants in China's Guangxi and Guangdon provinces, the company said it began to explore more international opportunities from 2015.