Behind the Veneer - Tasmanian Greens MPs

TA ANN: BEHIND THE VENEER
Ta Ann Tasmania
In January 2006, Ta Ann entered into a joint
venture project, establishing Ta Ann Tasmania
(TAT) as a veneer manufacturing company.
TAT was established as a partnership between
Ta Ann Plywood, Japanese building material trading
company SMKC as well as Tasmania’s state-owned
forest management company Forestry Tasmania. 11
Ta Ann Plywood invested 75 per cent, SMKC 15 per
cent and Forestry Tasmania 10 per cent to the start up
costs 12 (see Appendix II for more detail). Under the
terms of the shareholders’ agreement, the Japanese
partner would purchase the plywood products made
from veneer produced in Tasmania for sale in Japan. 13
Ta Ann opened and currently operates two mills
in Tasmania that use rotary-peeling technology on
short eucalypt logs – known as billets –harvested
from native forests. One mill is located in the south of
the state, near Judbury in the Huon Valley, with the
second plant installed at Circular Head near Smithton
in the north-west of the state. The Huon mill opened
on 18th May 2007, with the Smithton mill opening
on 28th November 2008. The Huon Rotary Veneer
Mill was Ta Ann’s first international investment. 14
The two mills have a contract to receive a
combined volume of 265 000 cubic metres (m 3 ) of
Tasmanian eucalypt timber. 15 In 2010, the two mills
produced 134 091 m 3 of veneer. 16 Production by the
two Tasmanian mills increased from a combined
volume of 78 346 m 3 of veneer products in 2008. 17
This veneer is exported to Ta Ann’s plywood
factories in Malaysia where it is used to develop
flooring, predominately for the Japanese market. 18
The total volume of exported veneer has
also increased significantly, from an estimated
35 000 m 3 in 2008, to 107 000 m 3 in 2010. 19
In 2010, the value of veneer exports almost
doubled from 2008 to reach AU$55 million.
As prices for Southeast Asian hardwood floor
base panel have increased markedly in recent times,
‘Japanese building materials companies are seeking
substitutes such as eucalyptus.’ 20 According to the
International Tropical Timber Organisation (ITTO),
veneer produced by the TAT mills will be shipped to
Ta Ann Plywood in Malaysia for the manufacturing
of about 60 000 m 3 of floor base panel a year. 21
Ta Ann’s Managing Director and Chief
Executive Officer, Wong Kuo Hea, describes the
Tasmanian venture as a ‘high return initiative’. 22
Executive Chairman, Datuk Hamed Sepawi, told
Tasmanian media that Ta Ann was obtaining lower
rates for hardwood from Tasmania than what
they could obtain in Malaysia or Indonesia. 23
Ta Ann was attracted to Tasmania by the cheap
timber price offered by Forestry Tasmania and they
are ensuring that they capitalise on this opportunity
by accessing a large supply of native forest timber. 24
At the time of entering the Tasmanian market
in 2006, Ta Ann advised that it anticipated
paying much less for Tasmanian wood than
it was paying for tropical hardwoods, vis:
1 US$50 per cubic metre for Tasmanian peeler
billets;
2 US$200 to $230 per cubic metre for Malaysian
keruing (a tropical hardwood); and
3 US$210 to $225 for Malaysian meranti (also a
tropical hardwood). 25
Notwithstanding the cheaper price it would pay
for Tasmanian hardwood, Ta Ann was confident
that plywood products from Tasmanian eucalypt
veneer could be sold for equivalent prices to
tropical hardwood plywood products. In other
words the Tasmanian hardwood was cheap.
In 2006, TAT negotiated a wood supply contract
with Forestry Tasmania for the supply of 265 000 m 3
of eucalypt timber per annum. 26 Their Huon Valley
mill was granted a log supply contract of 150 000
m 3 per annum for 20 years, lasting until 2027. 27 The
Smithton mill was granted a log supply contract of
115 000 m 3 per annum, for the same period of time. 28
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