0:00

Black wood pallets are seen as a

0:02

potential silver bullet replacement for coal by

0:05

some of the major power

0:08

companies and now we're

0:10

going to talk about some of the developments that

0:13

are happening in this field. Of course coal is

0:15

burned as a backup at Huntley

0:18

in tight times and

0:21

that is clearly unhelpful to New

0:23

Zealand's efforts to reduce its CO2

0:25

emissions. So what are these pallets and

0:27

would they be an alternative? They

0:29

behave a lot like coal in the sense

0:32

that they can be stored outside and put

0:34

through the same equipment meaning plants would not

0:36

need to make large and expensive alterations but

0:39

they also have an advantage in

0:41

that they don't come with the high

0:44

greenhouse gas emissions of coal.

0:47

Worldwide the black pallet industry is in

0:49

its infancy estimates last year were that

0:51

it could produce about 200,000 tons a

0:53

year and to put that in

0:55

perspective for Genesis Huntley to move fully off coal

0:57

and to black pallets it would need about half

1:00

of that global supply. White

1:03

wood pallets have been in the supply chain a

1:05

lot longer but they break down when stored outside

1:07

a key aspect for the likes of Genesis that

1:10

needs to store large amounts. There are signs

1:12

here that the black pallet industry is starting

1:14

to take off two major suppliers of white

1:16

wood pallets, Nature's Flame

1:19

and OG Fibre Solutions are

1:21

investigating producing the black pallets.

1:24

ASX listed Forrester has signed a 30-year

1:26

lease on a Coboro property where it

1:28

plans to invest 300 million dollars

1:30

on a processing site and

1:32

another company New Zealand Bioforestry has a

1:34

memorandum of understanding with Genesis and

1:37

has plans to secure a site and start building

1:39

a processing plant later this year. Ray

1:41

Mountfit is founder and managing director

1:44

of Forrester. Morning Ray. Good

1:46

morning. And Wayne Mulligan is chief executive

1:48

of New Zealand Bioforestry. Morning Wayne. Good

1:51

morning Catherine. Good morning Alyssa. Ray can

1:53

you tell us about Forrester please and why you are

1:55

getting into the black wood pallets and how it's happening?

1:59

Yeah sure. We're getting into

2:01

the Blackwood Palace because it fits

2:03

with our business model which is

2:05

to add the highest value from

2:07

pine forest. So what we have

2:10

been doing and will continue to do is

2:12

we first take the resins

2:14

and the terpenes out of

2:16

the resinous pine. Those

2:19

form 50% of our revenues and

2:21

to drive and the chemicals market,

2:24

the resins and the terpenes, the

2:26

natural resins and terpenes is a

2:29

really significant market worldwide. Well

2:31

over $10 billion, many

2:34

millions of tonnes and

2:36

we need that market and

2:38

our industry needs more and more

2:40

of these chemicals to replace petrochemics.

2:45

And so we see the pallet

2:47

market enabling us to

2:49

put more volume through and

2:52

that's basically a complementary

2:54

process. I would point

2:57

out that our off-take

2:59

and we do have a 13,

3:01

12-year off-take agreement for the factory

3:03

of Putnam and that's with pallet

3:07

energy solutions in the South

3:09

Island there. And those selling

3:11

to energy producers for

3:14

processed heat and that's where we

3:16

burn most of our coal in New Zealand.

3:18

Genocizes, everyone,

3:21

they make a lot of noise but we're

3:23

not necessarily here

3:26

saying hey we're here to solve Genesis

3:29

problem. We're here to

3:31

solve tailored energies, customers.

3:34

Okay so just help me with the

3:36

process in the product. What actually gets

3:38

used, what would be used in the

3:40

likes of Huntley, Colburner? I appreciate you're

3:42

looking, you've got other customers. But

3:45

what would be used? What's

3:47

the difference between the resins and the chemicals

3:49

and the pallets? Are they two different products?

3:52

Yeah they're completely different products. Understood. Yeah

3:55

so resins get used in things

3:57

like cellotype, the glue on

3:59

your shirt. road marking, ship

4:01

paints, the adhesive helps bond

4:03

the rubber to the steel on your

4:07

tyres, on your road, all of those

4:09

sort of things. The essential oils are in every perfumes

4:12

and a lot

4:15

of your flavours as well in

4:17

the supermarket. You know if you're going to

4:19

buy a strawberry or a banana flavouring and

4:21

of course and that's in bulk food, you

4:24

know processed food manufacturing and that. It's

4:27

not actually from a banana, you know

4:29

a banana it's actually from a pine

4:31

tree and it's just been separated out

4:33

and converted into that. So it's an

4:35

adhesive, a bonding kind of

4:38

product? Yeah, well there's two products

4:40

there. Let's say the essential oil, you know just

4:42

the smell of the pine tree, we all know

4:44

what that is and that's got,

4:46

and we all know that it's in pine

4:48

clean and cleaning products and that. Then you've

4:50

got the resin part and that and

4:52

those chemicals are

4:55

free in a pine tree. What I mean by that is

4:57

they're not in the cell so you don't have to do

4:59

any complicated chemistry to get them out. You can wash them

5:02

out in a solvent

5:04

extraction. So it's just a mess why these

5:06

sort of go together. So Ray, would

5:09

the pellets be a profitable part of the business? If

5:12

the main business for these other products, would they

5:14

be profitable? Well when

5:16

we wash out these chemicals, 90% of

5:19

the wood is left. So

5:22

it makes absolute sense if we're talking

5:24

about sustainability and adding maximum

5:26

value out of our feed stock, which in

5:28

our case is mostly pine stumps, which

5:31

is an unutilized part of the forest as well. But

5:34

the, so you've got this volume,

5:36

high volume of this woody mass

5:38

which is a perfect fuel and

5:40

so it's complementary. How much

5:42

could you provide? It's not about trying

5:44

to break it up, it's two things.

5:46

So you've got basically 50% of your

5:48

revenues coming from the chemicals and 50%

5:50

of the revenues coming from your

5:54

wood pallets or your terrified wood pallets.

5:56

Why terrified? Because what

5:58

You're just exactly what you're talking about. right up front. That.

6:02

We. Need to. We need that Draven

6:05

replacement for for ten years. Slicer

6:07

The spotlight search for Slice. This.

6:10

Again, And. Again, as at.

6:12

Profitable though to go through whatever

6:14

is involved and I'm removing that

6:17

slice pregnant. Bring it to the

6:19

perfect for production. Yes Vote! as.

6:22

Because. Like. I saw a

6:25

lot of I'll rephrase this is you can

6:27

use or seduce you Can you switch Do

6:29

we use sledge? We use the how we

6:31

use the whole truth. Out

6:34

first is supposed us going in

6:36

and been involved in the logging.

6:39

Prices. We want the stumps,

6:41

We want the tree and will tops. We're

6:43

not trying to make the forward to/is generated.

6:46

When. You're just trying to sell a whole export.

6:48

Love. Arm. Or you're trying to

6:50

sell to a for by to manufacturer

6:52

of. A carrot and again I don't

6:54

smoke. lots a sizable either. The point but obviously we

6:57

have a large slice problem and parts of the country

6:59

and part of that as he doesn't not adding value

7:01

semester and I want to proceed with it and I

7:03

want to pursue that with it's a part. Of the

7:05

issue that some places that it it it is

7:07

too expensive to remove it and. Put it on

7:09

a place where it's not at risk from

7:12

from becoming more for in from ending up

7:14

on distance rivers for example. So you implying

7:16

that a movie the both and we be

7:18

practical about doesn't just because you're theatre mode

7:21

to pause and something that. Is

7:23

involved around cutting the trees before

7:25

voters. But. If you're if you're utilizing

7:27

the forest in a different way. As

7:30

we do, And. What we talking

7:32

about. Here's some we talk about. The. Of.

7:35

The. Tar affection we talk about the Appellate

7:37

manufacture and will have. Those guys are

7:39

woman father. Died. You

7:41

are now using it for a difference. When

7:44

we try to get to the same point

7:46

I never get my much as i sucks

7:48

I give my my devising a behalf of

7:50

the pedal it has been It is an

7:52

awfully it is financially viable to get reminded

7:54

us on getting because we're getting sued products

7:56

for one but we don't leave. You

7:59

take him out of the. same time. What's not profitable

8:01

is when you go and you take out

8:03

a 4x2 valve and then you leave

8:05

the tops and you leave the stumps and

8:07

then another crew has to come in and take those

8:10

out. You've just done two movements

8:13

and these are big movements of big

8:15

machines. So tell me now how what

8:18

you're doing could convert to a far

8:20

more efficient with far better outcomes and

8:22

a profitable process. Yeah and

8:24

it's not good convert, it's what we're

8:27

doing. But you know I

8:29

can't come in and take over what

8:31

somebody else has found at their tree

8:33

30 years ago to grow 4x2s. So

8:36

you know the sawmills

8:39

and the contracts that are in place there,

8:41

the slash that's there, that is something they

8:43

will need to deal with. For us

8:45

we're contracting and have contracted with the

8:48

likes of PF Olsen and that so

8:50

that we can control the supply chain

8:52

and control the way in which we harvest.

8:54

So we do take stumps where they can

8:57

be taken because that stumps is a big

8:59

one of the biggest contributors to slash and

9:01

certainly the biggest binding issue with what you

9:03

know did wash out on Gisborne's

9:05

beaches and so forth. But

9:07

you know that's that

9:10

so we come and we take the stumps, we

9:12

take the tops as well they form an integral

9:14

part of our process. They also provide the heat

9:16

for our process and that and

9:18

so forth. So we actually chunk the whole tree in

9:20

the forest because again we don't need 4x2s, we don't

9:23

need a 6.62. So

9:25

we can get a full load of wood taken

9:28

from the forest to our site. Okay

9:30

where are you at in terms

9:32

of having a plant in

9:34

operation? Just help me with this with where you're

9:36

at in terms of ramping up. So

9:39

where we're at is we own the

9:41

chemical plant. We now have the

9:43

site under lease. We're

9:45

now putting in the overseas investment because

9:48

we are an Australian owned company. We

9:51

put in our overseas investment approval.

9:54

That's going in in the next couple

9:56

of weeks. The Resource

9:58

consent We have. Decided to go

10:00

ahead and what they did because we

10:02

can't wait for the fast time is

10:04

like you're seeking fast tracking as well

10:07

or. Beer. We will have

10:09

a statutory law firms such as

10:11

What I'm Rob. Our

10:14

voices that sub in. I look because our

10:17

prices is very clean and green. We don't

10:19

add up in a jetpack, uniforms or less

10:21

than a thanks to week. We feel that.

10:24

I'm yeah we can work with and they. You.

10:26

Know which we need to whip than the current run.

10:28

I think you're right. Thanks very much Rain. Outset the

10:31

a misprint and when malaga nasa's is

10:33

with the zealand by for a straight

10:35

at. This. Point Good explanations

10:37

a useless for nice and I've the

10:39

proceeds to the it's still me that

10:41

your company where it said when I

10:43

took Catherine and to resume since right

10:46

hand on my may have many successes

10:48

in for also want to mean since

10:50

plentiful security tab on state or has

10:52

other companies to some really cool stuff

10:54

so us where my head Ahmad just

10:56

returned from Isis I spent half my

10:59

life ah as well in tiny and

11:01

offshore. And out

11:03

where in the process of

11:05

finalizing now? Capital Rise to build

11:07

and secure of his sights and you

11:09

Zealand and so I look forward to

11:11

combine with it would be is a

11:14

similar model that you've got. I got

11:16

series products including the wood pellets or

11:18

he would tell it's a lot Like

11:20

I said we focus on the whole

11:22

three and I'm waking with a number

11:24

of laws apply as on the humphrey

11:26

and we have determine how we use

11:28

of because I think from a are

11:31

I am if you look at far

11:33

as far as or issues by a

11:35

mess of molecular. Technology as opposed to

11:37

planks of wood is is right

11:39

his experience and with as we

11:41

know because we've actually got global

11:43

customers set of ac put an

11:45

orders for a whole suite of

11:47

have a seat. Pellets.

11:49

Being one I'm ah but but

11:52

actually of chemicals and high that

11:54

he decreed of ply so our

11:56

our model as as as different

11:58

ah I'm a. and that's not

12:00

making any comparisons with other people. We use

12:03

the whole phrase... Okay, so roll back. Would

12:05

you make the black pellets, however? Yes,

12:08

we're making steam explosion black pellets. Okay.

12:10

What do they represent by means of a carbon emission

12:13

reduction on coal in the areas where coal

12:17

is still being used? For example,

12:19

Hundley's burners and

12:22

also there are still other

12:24

coal-fired burners. What difference in

12:26

reduction in carbon emissions? The

12:29

data says between 86 and

12:31

94% is reduction when you use

12:33

biomass and cellulose. The challenge is,

12:36

and we keep hacking back to

12:38

Hundley because it is a fundamental

12:41

part of the electricity system and when

12:44

the proverbial hits the fan, that's

12:47

when that coal gets burned. It

12:49

looks like it would be virtually impossible to

12:51

get the volumes that would need to entirely

12:53

replace coal out of New Zealand. If it's

12:55

going to take 50% of current global production...

12:58

I'm not sure that's correct. Could there be

13:00

a ramp up to scale? Well,

13:02

I've worked in being to the Hundley

13:04

site to look at their processes. I've looked at

13:06

three or four processes from Asia. Hundley

13:10

needs about 450 to 500,000 tonnes of pellet or a solid

13:12

energy that can replace. It

13:22

doesn't necessarily mean to be pellet. We're actually running

13:24

a pilot project to

13:26

create a different format to that which

13:28

will be easier to ship. The

13:31

key for Hundley and other coal-based

13:34

energy, including 150 in Japan,

13:36

is that

13:38

the calorific value has to be right. Coal-based

13:42

burning is all based

13:44

on calorific value, then you work on

13:47

your volumes because it has to meet

13:49

their specifications on calorific

13:51

value and price point. So

13:53

where are you at? Just remind me with

13:56

your business case. I've

13:59

just returned. I'm I'm just finalizing

14:01

a number of investors and will

14:03

will be looking at developing a

14:05

fully integrated site out the first

14:07

one in New Zealand, but we

14:09

aim to his six to eight.

14:11

ah and that will take the

14:13

whole long see. If you need

14:15

to understand this, that. Even.

14:19

He at least three things that we

14:21

focus on decarbonization so we have built

14:23

a house weight of chemicals improve in

14:25

this was the technology it's St Lois

14:27

emissions by and we want to global

14:30

award top one hundred award for the

14:32

for lowering the second part of every

14:34

manufacturing crates emissions said the key he

14:36

has to do it it the most

14:38

the mission possible and so what we're

14:40

doing is we're putting a a log

14:43

yards a lot of would buy a

14:45

nice yard with with voting a different

14:47

of ply L. Palatine since and

14:49

chemistry on one side attack I just

14:51

got i cited heavy got basis for

14:53

their or is it still and seek

14:55

out we've identified fi sites are and

14:58

two of them again and I began

15:00

as a guy says when my cat.

15:02

Grant the in the ice was all of these sorts

15:05

of things such as intense as they say thank you,

15:07

I manage and thanks for I meant that.