timber and forestry e news issue 314

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Weekly news for the timber and forestry industries

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  • 1ISSUE 314 | PAGE

    By JIM BOWDENTHE purchase of the wood preservation division of Osmose by Koppers Holdings Inc. a $US460 million deal has caught the industry Down Under off guard.

    In the announcement last Monday, Koppers Holdings Inc, based in Pittsburgh, Pennsylvania, US, signed an agreement to acquire the wood preservation and railroad services business of Osmose Holdings Inc, a private American company based in Buff alo, New York, and founded in 1934.

    Industry experts agree the purchase will change the dynamics of the timber treatment sector in Australia; it certainly caught a lot of people by surprise.

    The purchase, expected to be fi nalised soon after certain closing adjustments, will still leave four operators in Australia Koppers Holdings Inc, Lonza Wood Protection, TimTechChem

    International and NZ-based Kop-Coat.

    [Koppers Holdings Pty Ltd as such has no affi liations with entities Koppers-Arch, Arch Chemicals or Lonza].

    Osmose Holdings, an Oaktree capital management portfolio company, has built a network of supplies and customers in 70 countries.

    Osmose, MicroPro and MicroPro Sienna are registered trademarks of Osmose, Inc. or its subsidiaries. Treated Wood Just Got Greener sm are slogan marks of Osmose Inc and its subsidiaries. MicroShades timber products are produced by independently owned and operated wood preserving facilities. 2013 Osmose, Inc.

    MicroPro Sienna micronized preservative and pigment technology penetrates the timber to give the most advanced timber protection and longer lasting colour for a one treatment solution.

    - New Age timber protection with longer lasting colour.

    4REATED

    7OOD*UST'OT'REENER

    SM

    www.osmose.com.au Call: 1800 088 809

    TM

    TheNATIONALvoice for

    TimberMerchants Suppliers

    Manufacturers

    Contact us on1800 TABMA1

    ISSUE 314 | 21.4.14

    Timber chemicalsector shake-up

    Cont P 3

    Koppers $460m purchase of Osmosecatches preservation industry off guard

    16,000 delivered weekly to timber merchants, sawmillers, wood processors, foresters,members of national and state organisations and associations, builders, specifi ers

    and selected architects.

  • PAGE | ISSUE 3142

    INDUSTRY NEWS

    Wood first program stillon to-do list for Latrobe

    A MOVE to establish Australias first regional wood preference policy is firmly on the to-do list for the city council in Latrobe Valley in the heart of Victorias timber-rich Gippsland area.

    Latrobe City Council has unanimously voted to request federal government support for the establishment of research facilities in the valley to develop innovative technology for the forestry, wood and paper sector.

    Councillor Sandy Kam, who put forward the motion to highlight woods untapped potential, said the first round table on the proposal next month would deliver a recommendation to the council.

    The wood first idea has been strongly supported in the region, but we dont want to overwhelm local businesses with the concept, Ms Kam said.

    The objective is not to rule out other building materials but rather to ensure that wood solutions are given due consideration. We want others to join us on the journey, and not think that they have been ambushed.

    Supporting Latrobes initiative, ForestWorks CEO Michael

    Hartman said wood first policies across Europe and Canada had been hugely positive for the industry, the environment, and regional economies.

    Modern timber is cleaner and greener as a primary construction material than other options, he said.

    So it is absolutely appropriate that local governments in Australias key forestry areas should be doing everything possible to encourage its use.

    Sandy Kam spoke at

    the ForestWorks industry development conference in March, where her presentation sparked considerable interest and discussion.

    Cr Kam emphasised that the idea of a wood encouragement policy was not to be prescriptive or heavy-handed, but rather to simply ensure that wood gets considered after fully understanding its environmental advantages compared to other choices.

    Mr Hartman praised Cr Kams approach as a responsible first step.

    The need to educate the community in a range of environmental issues is critical to the future of our planet and our society, he said.

    Here at ForestWorks we understand that the key to development is innovation through ongoing education and ensuring we have the relevant skills to foster that innovation. But to make this happen we need governments at all levels to recognise the opportunity that exists and to help stimulate

    conditions under which it can occur.

    Latrobe City Council has taken a significant and historic step towards that recognition now. I hope it provides food for thought across the country.

    Parliamentary Secretary to the Minister for Agriculture Senator Richard Colbeck said forest science deniers in Australia continued to be debunked by the weight of global science and research that demonstrates the real value of a strong forest and forest products industry.

    He said the latest study to reinforce the overwhelming values of the forestry industry

    shows again that timber should be embraced as the building material of the 21st Century.

    Senator Colbeck welcomed the study by Yale University and the

    Modern timber is cleaner and greener

    Councillors plan highlighs woods untapped potential

    Forest science demonstrates the real value

    Wood first .. Cr Sandy Kam, Latrobe City Council (right) joins in presentations at the ForestWorks industry conference with Michael Hartman, CEO, ForestWorks, Dr Alastair Woodard, director, Technical, Promotion and Consulting Solutions, and Kersten Gentle, executive officer, Frame and Truss Manufacturers Association of Australia.

    Cont P 4

  • 3ISSUE 314 | PAGE

    Koppers Holdings buys Osmose at a time of advanced technology development within the company in December last year, Osmose gained a US patent for its MicroShades micronised colour technology which uses micronised iron oxide colour pigments for treating wood. This new patent complements other US patents that Osmose has received for its MicroPro micronised copper technology for wood preservation.

    Meanwhile, the industry is in a holding pattern, awaiting the outcomes and how the industry will re-shape after the Koppers Holdings-Osmose announcement.

    This is certainly a long-term purchase, industry experts reckon.

    The company understands the wood preservation business a better bet than an outside investment company poking its nose in.

    Koppers seems to be going back to its previous business model, a treater re-entering the industry as a chemical manufacturer.

    Koppers Holdings says it plans to finance the purchase through new and existing bank debt, including a new term loan and an increase to the companys existing revolving credit facility. The transaction is expected to close in the third quarter of 2014, subject to regulatory filings and customary closing conditions.

    Osmoses Wood Preservation business is a developer, manufacturer and marketer of wood preservation chemicals and wood treatment technologies. The business has operations and sales in North America, Latin America, Europe, and Australasia,

    and accounted for about $US350 million of the acquired business revenue in 2013.

    Osmose is also a provider of railroad infrastructure services, including bridge inspection, engineering, maintenance and repair.

    Koppers Holdings is divided into two divisions carbon and chemicals and railroad and utility. The company specialises in manufacturing carbon chemicals from coal tar. The five main chemicals produced are coal pitch for steel and aluminum production, carbon black for rubber vulcanisation, creosote for wood treatment, and napthallene and phthalic anhydride for plastics and polyester.

    The company has extensive operations making creosote treated wood products, especially railroad ties and switches, utility poles, foundations, decking materials, and wooden panels.

    Koppers Holdings operates facilities in the US, Canada, the UK, Denmark, Australia, China and South Africa.

    The timber preservation industry in Australia has been a moving feast over the last 10 years or so.

    Take-overs and ownership of the various preservation chemical manufacturers has been as mixed as a bowl of spaghetti, one

    industry observer said.The Lonza Group, a Swiss

    supplier of pharmaceutical ingredients seeking to diversify its product lineup, purchased Arch Chemicals in July 2011 for $1.2 billion in cash. The Arch operation

    in Australia was a metamorphosis of Koppers and then Koppers-Arch.

    It is no secret in the industry that Lonza is prepared to carve out its interests in the wood business and return again solely as suppliers of pharmaceutical ingredients.

    TimTech Chemicals Ltd was launched in New Zealand in 2001 and a year later in Australia. Last year, TimTechChem International Ltd purchased the business, assets and IP of TimTech Chemicals.

    Chemcolour Industries (NZ) Ltd, a major shareholder in TimTechChem, manufacturers

    INDUSTRY NEWS

    Cont P 6

    From P 1

    Australian industry in holding pattern awaiting outcomes

    Osmose has network of buyers, suppliers in over 70 countries

    New directions .. timber preservation industry awaits outcome of Koppers Holdings-Osmose deal.

    Sale comes at a time of advancedmicronised technology at Osmose

  • PAGE | ISSUE 3144

    PLANS to revive Australias forest products research have been outlined at a national forestry investment conference in Melbourne.

    The Forest Investment and