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Logging company billed $600,000 for negligence in northern Wisconsin forest

Logging company billed $600,000 for negligence in northern Wisconsin forest | Timberland Investment | Scoop.it

After a nearly four-month Department of Natural Resources investigation into the cause of the Germann Road Fire, a commercial logging company will be billed for more than $600,000 after the investigation determined the company’s negligence caused the forest fire to start and spread. Had an on-board fire extinguishing system been properly maintained, the blaze could have likely been snuffed out before it did any damage, according to a WDNR press release issued Monday afternoon.


The fire was the state’s largest in 33 years and burned 7,442 acres in Douglas County.

***

A logging crew was harvesting timber on industrial timber lands when the fire began. At the time, the crew acknowledged the fire had started at the work site and that they had unsuccessfully attempted to contain it. However, the investigation found that the crew and company, Ray Duerr Logging, of Rib Lake, Wis., withheld information from department law enforcement officials.


The investigation determined the crew had attempted to contain the fire using a fire extinguisher and a pressurized water system installed on the harvesting equipment and called 911, but the company was negligent for failing to maintain equipment at the logging site that could have prevented, or contained the fire, which was started by the cutting head of a Timberjack 840.

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Grays Harbor forestland changing owners

Grays Harbor forestland changing owners | Timberland Investment | Scoop.it

The Washington State Department of Natural Resources will be exchanging over 5,000 acres of state trust land in Grays Harbor and Clallam counties for over 9,000 acres of properties owned by Green Crow Corporation in Clallam, Jefferson and Mason counties.


Known as the Foothills Land Exchange, the change is meant to place more sections of the Olympic Discovery Trail under public ownership. While protecting that land, it will also consolidate and protect more working forest lands from development along Hood Canal and the Strait of Juan de Fuca.


DNR will manage the lands acquired in the exchange to produce revenue for the Common School Trust, which funds public school construction statewide.

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Growing the future: Global strategies for sustainable success in the forest, paper and packaging industry

Sam Radcliffe's insight:

Thanks to FORSight Resources (https://twitter.com/FORSightResourc) for this link

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Cool Planet to build 3 biorefineries in Louisiana

Cool Planet to build 3 biorefineries in Louisiana | Timberland Investment | Scoop.it

Louisiana Gov. Bobby Jindal and Cool Planet Energy Systems President and CEO Howard Janzen have announced the company will build three biorefineries in Louisiana with a capital investment of $168 million. The project will consist of modular biomass-to-gasoline refineries in Alexandria, Natchitoches and a site to be determined.

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Cool Planet will begin construction in January 2014, with the first site at the Port of Alexandria beginning operations in late 2014. Construction will begin on the second biorefinery at the Port of Natchitoches by the summer of 2015, with a completion date in the summer of 2016. The third site is scheduled to come online in late 2016 at a Louisiana site to be determined.

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Cool Planet will harvest wood waste and forest byproducts to make gasoline at its initial commercial-scale facilities in Louisiana. Each biorefinery will be capable of producing 10 million gallons of high-octane, low-vapor pressure gasoline for strategic distribution through existing market channels and for blending at Louisiana refineries. The fuel will be compatible for use in existing vehicles on the road today. The company’s business model calls for developing 400 of the micro-refineries across the U.S. in the next decade.

***

Using a proprietary process, Denver-based Cool Planet also will market biochar, a byproduct of the refining process that will be used as an agricultural supplement to boost water retention and reduce carbon released from crops. This process makes Cool Planet’s overall production cycle a carbon-negative process – meaning the project will achieve a net reduction of greenhouse gases.

***

Cool Planet’s production plants will be 100 times smaller than a typical oil refinery, but the company’s largely prefabricated systems can be moved near concentrated biomass sources, reducing transportation costs and increasing efficiency. Those savings will enable the company to produce gasoline that’s competitive with oil refineries at prices as low as $50 per barrel while eliminating the need for government fuel credits or subsidies

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Plan would offer carbon offsets to timber owners

Plan would offer carbon offsets to timber owners | Timberland Investment | Scoop.it

An Oregon conservation group has proposed a health initiative linking landowners with carbon-offset buyers, getting money to the older owners for health-care costs while more effectively managing their timber.


The initiative can work for woodlots as small as 20 acres, The Corvallis Gazette Times reported.

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The Forest Health Human Health program would allow family tree farmers to sell carbon credits based on the amount of carbon estimated to be digested by their trees each year.


Under the plan, timber harvesting could continue in the form of tree thinning or underbrush removal. The program is already in place in Columbia County.


A national 2005 study was the first time medical expenses were identified as potential key factors in the decision to sell family woodlands.

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Ninety percent of the payment would go into a health-care account and the landowner would receive an “ATreeM Card.” The other 10 percent would be dedicated to community health programs — for example, a scholarship fund to help educate doctors who will practice medicine in rural areas.

Sam Radcliffe's insight:

It would seem a lot less bureaucratic, less costly and therefore more profitable if the landowner sold a long-term timber deed. I can imagine that these would be of interest to loggers and sawmills in many areas as a way to build long term timber security.

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Grim outlook for Russian timber industry

Grim outlook for Russian timber industry | Timberland Investment | Scoop.it

Timber output in the Russian Far East could rise by a third, and timber processing more than double by 2016, according to Viktor Ishayev, the Far East development minister in the Russian government. The timber industry itself insists, however, that such a scenario would require a sharp rise in demand in the domestic or foreign markets.


Experts say, meanwhile, that Russia’s share of the global market for raw and processed timber continues to shrink, and domestic demand in the Far East is growing too slowly for such targets to be realistic.

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Baillie Lumber's curator insight, August 23, 2013 12:01 PM

Keeping an eye on the Russian timber industry will be a good idea for the next few years.  It will be interesting to see if these production levels are met or not.

Tim Sydor's comment, August 23, 2013 4:59 PM
"To increase our output by 45 per cent, we will need to find a new market, or boost domestic demand. At this moment, the main market for our timber of China, and I don't see any significant room for growth there," he adds.
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Timberland Ownership Trends and 1031 Exchanges

Timberland Ownership Trends and 1031 Exchanges | Timberland Investment | Scoop.it

Depending on whether state laws recognize timber rights as real property along with the duration of the rights directly impacts their eligibility for a tax deferred 1031 exchange. Factors impacting demand for timber include the U.S. housing market, paper products and market demand from Europe and China. Forest land owners selling timber rights and timberland utilize the Internal Revenue Code Section 1031 to defer capital gains when selling and reinvesting into either second growth timberland tracts, oil and gas royalties or commercial property.


In many states timber rights can be separated and sold independently of the timberland. Given the timber right is not a carve out or for a short period of time, the right can be exchanged for real property.

***

Timberland investors engage in the use of 1031 exchanges to upgrade their portfolios of timberland holdings (swapping 5% returns for 8% returns). Timberland sales and purchases must be carefully managed to optimize three return components: biological growth, timber product prices and land value. Similar to REITs or Real Estate Investment Trusts, Timber REITs such as publicly traded Plum CreekPotlatchRayonier, timberland is disposed and acquired similar to commercial property based upon investment criteria.

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European climate policy drives wood pellet boom in NC

European climate policy drives wood pellet boom in NC | Timberland Investment | Scoop.it

The wood pellet industry is enjoying a speedy, zero-to-60 growth surge across the southeastern United States. Hundreds of millions of dollars are being invested in factories – some of them converted from old lumber mills – in coastal plain forests from Virginia to Louisiana.


They are serving a market created, almost overnight, by paradoxical environmental policies that are driving European electric utilities to burn imported wood in their boilers instead of coal.

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MassPRIM opens the door to JV and international timber investments

MassPRIM opens the door to JV and international timber investments | Timberland Investment | Scoop.it

Massachusetts Pension Reserves Investment Management Board on Thursday approved adding non-core holdings and international developed markets investments to its 10% real estate allocation.


Also, the board, which oversees $53.2 billion, will allow joint venture investments in timber and allow timber managers to invest internationally, up to a 10% limit, according to meeting documents. The board has a 4% allocation to timber and natural resources combined.


The changes were recommended by real estate investment consultant Townsend Group, which “believes the changes will allow PRIM's managers the ability to better execute in the current real estate and timber markets along the risk/return spectrum and continue investing in the future in a manner that allows for increased flexibility and execution,” according to the documents.

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As key partner departs, future dims for Michigan cellulosic biofuel plant

As key partner departs, future dims for Michigan cellulosic biofuel plant | Timberland Investment | Scoop.it

The exit of its majority owner and operator leaves the future uncertain for a long-delayed project that has attracted at least $120 million in public financing to turn wood from Michigan’s Upper Peninsula into fuel for vehicles.


New Hampshire-based biofuels company Mascoma Corporation announced in 2011 that Valero Energy would provide up to $50 million in financing for a $232 million facility in Kinross Charter Township, Michigan, and purchase the 20 million gallons of ethanol it would produce annually.


However, Valero spokesman Bill Day confirmed in an email that the company “is no longer involved in the Mascoma cellulosic ethanol project” but declined to give further details.

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St. Joe Explores Opportunities To Sell Timber And Rural Lands

St. Joe Explores Opportunities To Sell Timber And Rural Lands | Timberland Investment | Scoop.it
The St. Joe Company (NYSE:JOE), a real estate developer and manager in Florida is exploring potential opportunities to sell timber land, rural land, and/or related timber rights, according to its latest Form 8K filing with the Securities and Exchange Commission (SEC).

The real estate company is the largest private landowner in Northwest Florida with 567,000 acres of land. Majority of its land that are not under development are used for growing and selling timber. Hedge fund manager, Bruce Berkowitz of Fairholme Capital Management is the largest shareholder of The St. Joe Company (NYSE:JOE). He serves as chairman of the board of the company. The hedge fund owns around 27 percent or more than 25 million shares of the outstanding shares of the company as of March 2013.


According to the company, it is considering the idea of selling some of its assets because of certain expressions of interests and timber market conditions. The St. Joe Company (NYSE:JOE) emphasized that the assets it is planning to sell are those “not strategic to the company’s core real estate development activities.”


“From time to time, the company has, and will continue to, evaluate opportunistic transactions with respect to such assets. At this point in time, the company cannot determine whether any of these potential opportunities will result in a signed agreement or a closed transaction,” wrote The St. Joe Company (NYSE:JOE) in its filing.

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Judge Rejects State’s Claims That Timber Company Started Moonlight Fire

Judge Rejects State’s Claims That Timber Company Started Moonlight Fire | Timberland Investment | Scoop.it

A Plumas County Superior Court judge has dismissed a state lawsuit against California’s largest timber company for a 2007 wildfire that destroyed more than 100 square miles of forest in Northern California.


State and federal officials have blamed Sierra Pacific Industries for the Moonlight Fire, which they said was caused by two unsupervised employees who operated bulldozers on a red-flag warning day with high fire danger.


Investigators had blamed company contractors working on private land for failing to follow fire regulations, sparking the blaze that burned for more than two weeks and consumed 72 square miles of public land in Plumas and Lassen national forests northwest of Lake Tahoe.

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Returns on US timberland hit highest since 2008

Returns on US timberland hit highest since 2008 | Timberland Investment | Scoop.it

Returns on US forestry hit their highest since the global economic crisis, and are poised for further gains, despite setbacks to hopes for housebuilding, a key destination for lumber.


A timberland index compiled by National Council of Real Estate Investment Fiduciaries showed returns of 9.36% in the year to the end of June, the highest figure since autumn 2008, as the world was falling into slump.


The figure, of which income accounted for 2.71 points and capital appreciation for 6.51%, came against a backdrop of disappointment for the domestic property market, slowed by rising borrowing costs.


"The second quarter rise in US interest rates and the 9% drop in overall US housing starts triggered a slight downward adjustment in forecasts for housing demand for the remainder of 2013," the council said.

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Minnesota: St. Louis County, DNR ready to make land trade

Minnesota: St. Louis County, DNR ready to make land trade | Timberland Investment | Scoop.it

A land exchange is in the works that would put the nation’s single largest wetland “bank” in the Sax-Zim Bog of St. Louis County, one of the state’s most important bird conservation areas.


Under the deal, a private wetland mitigation company would acquire and rehabilitate some 22,000 acres of former swampland in the Sax-Zim Bog area near Meadowlands to its original, pre-settlement condition before ditches drained the fields for farming.


In exchange, St. Louis County and the Minnesota Department of Natural Resources, which now manage the swampland, would get thousands of acres of upland forest land.

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The deal is being brokered by The Conservation Fund, one of the nation’s largest land conservation organizations. No price tag has been put on the deal, since the private forest land has yet to be acquired, but those involved say it’s worth multiple millions of dollars.


The Conservation Fund would buy the forested land from private parties, trade it to the county and DNR for the swampland, and then sell the ditched swampland to Ecosystem Investment Partners.


The company would then restore the wetlands and recoup its costs by selling credits to developers, road builders, mining projects and other projects that have to replace wetlands lost in construction.

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Plum Creek to salvage 7,000 acres burned by Lolo Complex fire

Plum Creek to salvage 7,000 acres burned by Lolo Complex fire | Timberland Investment | Scoop.it

Most of the forest burned in the Lolo Creek Complex fire belonged to Plum Creek Timber Co., which hopes to recover what it can of the blackened trees this fall.


“Of the almost 11,000 acres involved, we have just over 7,000 acres within the boundary of that fire,” Plum Creek Northwest regional vice president Tom Ray said. “We will be down there next week to take a look and see what’s salvageable. The company had periodically been harvesting on those lands over the past decade, and we had future harvest planned there. That’s going to change.”

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“We’ll also look at what we can do for reforestation,” Ray said. “In some places, we may have natural reseeding coming back. Other places, we’ll look at what we can we do to restore those lands. Aerial reseeding is still a viable option in large fire areas. We have a seed bank of excess seed on hand, if we have large events we need to reforest.”

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Millions at stake in Blandin, counties property tax debate

Millions at stake in Blandin, counties property tax debate | Timberland Investment | Scoop.it

A case currently working its way through tax court in Minnesota will determine the value of about 187,000 acres of forestland owned by Grand Rapids-based Blandin Paper Company. That determination, in turn, will be used to calculate property taxes for multiple parcels located in Itasca, Atikin, Koochiching and St. Louis counties.


The counties and the paper company are at odds over Blandin’s tax bill. The disputes date back to 2010 and pit one type of valuation methodology against another - with a difference in the millions.


Blandin Paper Co., owned by Finnish-based UPM, made numerous filings in 2010, 2011 and 2012, challenging its land values, according to information from the tax court and the Itasca County Attorney’s Office. Many of those individual filings have been consolidated for trial.

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Adding another dimension to the case is the fact that the lands in question were moved into a voluntary easement program in 2010. The deal, signed by the paper company and the Minnesota Department of Natural Resources, was negotiated in part by the Conservation Fund. The agreement put the Blandin lands into a permanent easement, preventing fragmentation, but remaining open to public recreational use and in use as working forestland for ongoing timber supply.

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According to court documents, both before and after appraisals were obtained as part of the easement negotiation process. The Sewell Appraisals, which are at the heart of the tax case, assessed the land value by analyzing its value as a single economic unit. The paper company contends that this single economic unit method should be used for its valuations. The counties, however, argue this single economic unit method is unlawful under Minnesota statute for calculating property taxes.

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Valuation differences using the two calculation methods are significant.


In 2010, the difference in Itasca County alone amounts to a $131 million reduction in valuation. That number jumps to $154 million in 2011 – due, according to Itasca County documents, from the lands moving into the conservation easement.


“For the 2011 assessment, Blandin continues to assert its ‘single economic unit’ methodology, and in addition asserts that the conservation easement they put on the property in 2010 further reduces its value. Their value conclusion for the Itasca parcels applying both assertions is $21,684,298 – an 88 percent reduction in value,” reads the report to the Northern Minnesota Land Use Planning Board.


The Itasca County assessor concludes that if Blandin is successful in tax court, the total tax loss to Itasca County would amount to $2.3 million for 2010 and 2011 as well as an additional loss of $1.2 million for 2012 taxes (payable 2013).

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Although the case won’t head to trail until later this year, the tax court denied a request from the counties to exclude the Sewell Appraisals from evidence. The counties had contended that the assessment methodology used is unlawful for the purpose of calculating property taxes. The four counties also requested summary judgment. Minnesota Tax Court denied both petitions.


Now, another round of legal assessment will be necessary to determine the lands’ value.


Itasca County Attorney Jack Muhar said the trial is scheduled for Sept. 23 to Oct. 4. 

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Phaunos Timber widens H1 pretax loss to $19.2m

Phaunos Timber widens H1 pretax loss to $19.2m | Timberland Investment | Scoop.it

Phaunos Timber widened its first-half pretax loss to $19.2 million, from $15.4 million. Total income was -$6.8 million, from -$1.8 million. NAV/Share was $0.85, from $0.97.


"We made good progress in our strategy to unlock value and concentrate on core operations with a further asset sale at Pradera Roja recognising a 28% premium to book value, completion of the sale process at Forest Enterprises and further progress in the Southern China disposal programme," the company said.


"As individual markets continue to recover at varying speeds, management will focus on exploiting Phaunos' global diversification to capture that recovery as it unfolds. Management will continue with its strategy to improve operational efficiencies across the portfolio and consider selective asset sales where good returns can be realised. We continue to believe that the Portfolio is well positioned to meet its performance objectives for investors."

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The Real Threat to Forests in the US South

The Real Threat to Forests in the US South | Timberland Investment | Scoop.it

There was a time, not long ago, when the largest threat to forests in the United States was widely believed to come from the forest products industry. Vilified by environmental groups and the media alike, the forest products industry was at worst responsible for razing forests and endangering vulnerable species.

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Now, however, there is a new “bad” guy in town—the wood bioenergy industry. Recent reports suggest (though hardly prove) that wood bioenergy—particularly the US-South-to-EU pellet trade—is “wrecking some of the finest forests in the US.[1]” Most of the claims proffered in these reports lack both substance and evidence and defy both forest science and logic.

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If none of these assertions about the size and nature of the wood bioenergy industry are true, what is the real threat here, the thing we should really be worried about? Earlier, I pointed out that, at best, the industry is barely tolerated when it comes to discussions of forest health and sustainability. There are worse things than barely being tolerated though. A growing number of forces want the forest products industry to just go away, and they have the resources to relentlessly pursue that end.

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Right now, the bioenergy movement is the best vehicle eNGOs have for stopping harvest activity. The new wood bioenergy participants have softer views on sustainability, after all, so collaborating with environmental groups may seem to them like a good idea. After years of dealing with eNGOs, however, we should know better. These groups have adopted a divide-and-conquer strategy, and if they are successful in dividing the industry, then the implications beyond bioenergy are immense. The forest products industry may have slipped to Public Enemy #2 in the eyes of environmentalists during the fight over wood-based bioenergy, but make no mistake: once wood bioenergy is dead, these  groups will turn their attention (strengthened by the win) back to the pulp/paper and solid wood industries. In the meantime, they will enlist the support of the traditional forest products industry to fight the battle over bioenergy.

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As long as eNGOs succeed in dividing the industry, the result will be a weakened supply chain, one that cannot lead—but can only react—to the conversation. A divided industry is one that siphons value out of the supply chain.

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Brookfield Closes US$1 Billion Global Timberlands Fund

Brookfield Closes US$1 Billion Global Timberlands Fund | Timberland Investment | Scoop.it

 Brookfield Asset Management Inc.  (NYSE:BAM)(TSX:BAM.A)(EURONEXT:BAMA), announced today that it held the final close on Brookfield Timberlands Fund V L.P. with equity commitments totaling US$1 billion, creating a global fund that will invest in timberlands, primarily in the U.S., Brazil and Australia and may also pursue opportunities in Canada, Chile, Uruguay and New Zealand.


Commitments to the Fund exceeded the original US$750 million fundraising target, reflecting strong investor demand. Investors in the Fund include a diverse group of institutional investors, including sovereign wealth funds, public and private pension plans and insurers. Brookfield committed US$250 million to the Fund, aligning its interests with those of third party investors.

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Hertfordshire County Council hires alternatives manager to explore timber

Hertfordshire County Council hires alternatives manager to explore timber | Timberland Investment | Scoop.it

Just in time to be listed as a mandate for 2012, Hertfordshire County Council announced it has hired a new alternatives manager.


The contract, worth between £200m-£300m, has been awarded to Swiss fund management company LGT Capital Partners. The manager will oversee the scheme's portfolio of alternative investments in a fiduciary-style mandate.


The £2.5bn scheme is said to move away from private equity and explore other investments such as infrastructure and timberland.

Sam Radcliffe's insight:

At today's exchange rate, the contract is worth US$128-192 million.

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Pennsylvania Real Property Purchaser May Lose Timber Rights via Unrecorded Timbering Agreement

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China Importation of Lumber and Logs Roars Back to New Highs in the 2Q/13, with Imports Up 30% Year-Over-Year

China Importation of Lumber and Logs Roars Back to New Highs in the 2Q/13, with Imports Up 30% Year-Over-Year | Timberland Investment | Scoop.it

After a decline in importation of logs and lumber into China in 2012 and early 2013, the country came back roaring in the 2Q/13 with the import value increasing by more than 30% year-over-year, as reported in the Wood Resource Quarterly (www.woodprices.com). The total value of imported softwood logs and lumber was over 2.2 billion dollars in the 2Q/13, an increase by almost $600 million from the previous quarter.

The higher demand for wood products comes as house-building activities have increased in the first half of 2013 as compared to the same period in 2012. Year-over-year, investments were up 13% in residential buildings, and 23% in commercial buildings, according to recently published official Chinese statistics.

During the past few years, importation of lumber has grown at a faster pace than that of log imports with the share of lumber of the total import value having gone up from 35 % in 2010 to 42 % in the 2Q/13. The import volumes has almost tripled in four years with Russia and Canada having been the two major suppliers of softwood lumber, together accounting for almost 80% of all lumber imported to China in the 2Q/13. European sawmills have not had a major presence in the Chinese wood market but this is changing. In June of this year, European shipments accounted for over eight percent of the total lumber imports to China. It can be expected that more containers of lumber will find their way from Europe to China in the coming years.

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Timberland Investing: What You Need To Know Now

Timberland Investing: What You Need To Know Now | Timberland Investment | Scoop.it

The following research was conducted by Forest Investment Associates (FIA), a timberland investment firm with $3.9 billion of U.S. timberland assets under management as of the 4th quarter 2012. Our conclusions show:

  • Timberland returns have varied over time as the industry has matured. Returns were negative for a year after the financial crisis of 2008, but have since been increasing.
  • Long-term demand drivers for timber remain strong and most indicators predict a meaningful mid- to long-term recovery in timber prices. This recovery should support stronger timberland investment returns in the future.
  • In the face of increasing demand, a significant reduction of timber supply is projected, primarily due to a pine beetle epidemic in western Canada.
  • Timberland returns show significant positive correlation with inflation, while stocks and bonds do not. Timberland returns have historically exceeded the long-term rate of inflation, while stock and bonds have not.
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North American Pellet Exports Booming

North American Pellet Exports Booming | Timberland Investment | Scoop.it

Pellet exports from the two primary pellet-producing regions on the North American continent – the US South and British Columbia – showed no signs of slowing in early 2013, with the rate of growth likely to accelerate in the second half of the year. In the US South, pellet export volumes to Europe resumed their double-digit growth after a brief pause in the 4Q/12. Export volumes, based on information from industry sources as well as trade data in Europe and North America, showed exports in excess of 1.7 million tons in 2012, as reported in the North American Wood Fiber Review (www.woodprices.com).


Canadian exports also rose in 2012 to 1.5 million tons, but this increase was less than that seen in the US. During the 1Q/13, total pellet exports from North America reached a new record of over one million tons for the quarter. This can be compared to the annual shipments of 750,000 tons just four years ago.


The United Kingdom continues to strengthen its claim as the primary destination for North American pellets with over two-thirds of the export volume from the US and Canada going to the UK in the 1Q/13.

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Plum Creek Timber Earnings Call Transcript: CEO opines on timber discount rates

Plum Creek Timber Earnings Call Transcript: CEO opines on timber discount rates | Timberland Investment | Scoop.it

One of several interesting exchanges:


Mark Wilde - Deutsche Bank AG, Research Division

Okay, all right. And then finally, Rick, I'm just curious about what your sense is of the discount rates being used to discount timber cash flows right now, and whether we're starting to see those discount rates moving up?


Rick R. Holley - Chief Executive Officer and Executive Director

Well, we're not seeing it move up but I still think they're kind of 5% real type numbers or what we see people using today in transactions that are occurring in the marketplace. There haven't been a lot, but I suspect over the next 2 or 3 or 4 years, you might see more of that as some of these institutional investments roll off out of their 10- or 12-year hold periods. So we should see more activity. But still about a 5% discount rates, and we haven't seen that change.

Sam Radcliffe's insight:

Thanks to Jack Bridges for bringing this to our attention.

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