BHM - Wawa Fibre Supply · Ontario SFLs 6 Private Land Opportunities ... § 450,000 tonnes was...
Transcript of BHM - Wawa Fibre Supply · Ontario SFLs 6 Private Land Opportunities ... § 450,000 tonnes was...
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BHM - Wawa Fibre Supply
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OverviewFibreSupply
• OntarioFibreAccess• OverviewofSupplyArea• HistoryofSupplyAccessandSustainability• FirstNationandCommunityExpectations• FibreSupplyDetails&Cost
– StatusofSupplyAgreements
• RateDeterminationModelandCrownCostDetails• Questions
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AccesstoFibre
• SustainableForestLicense– Management
• SingleEntity(SFL)• Enhanced(eSFL)• LocalForestManagementCrownAgency• Crown
• Tenure– SFL– FRL– SupplyAgreement
• Businesstobusinessagreementwithlicenseeorprimaryuser• ForestResourceProcessingFacilityLicence(MillLicence)• PrivateLand• MillResiduals
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StepstoSecureSustainableSupply
• BusinesstobusinessagreementwithSFLholderorprimaryforestproductcompany
– Access/Supply/orparticipationoneSFL• FirstNationAgreement(s)and/orproofofAboriginalConsultation• BusinessPlansubmissiontoacquireMillLicenceandWoodSupplyAgreementifoffered
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OntarioSFLs
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PrivateLandOpportunities
Thereareinexcessof20privatelandtownshipswithin50kmofthefacility
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WawaSupply-Forests
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WawaSupply-Sawmills
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WawaSupply–History
• Stage2CompetitiveprocessforfibredirectedtopotentialbiofuelplantinWhiteRiver
– RecognitionletterrelatedtoWawawhenthebusinessplanchanged– MillLicenseandMROLweregrantedacknowledginguseofsupply
• RemovalofvolumesonMNRAvailableWoodSupplyReport• DraftletterprovidedfromMNRF
– AcknowledgesthefacilityinWawaandtheBusinesstoBusinessarrangementswithSFLHolders
• MNRFdesirefuturetenuresecuritytobeintheformofparticipationinESFL’sasshareholdersandbusinesstobusinessonothermanagementunits.
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Stable,Abundant&SustainableFeedstockSupply
FeedstockRequirements:
§ Proofofbiomasssustainabilityandindependentcertification
§ CertificationsincludeFSCChainofCustodyandSBP
§ ~85%ofOntario’sCrownmanagedforestisthird-partycertified
Sustainability:
§ Bestinclassharvestpractices
§ Wildlifehabitatmanagement
§ Endangeredspeciesandfeaturedspeciesmanagement
§ Biodiversity
§ MaintenanceofFirstNationculturalvalues
§ Long-termfibresupply
Source:GovernmentofOntario
FeedstockCharacteristics:
§ Nofibresupplytensionwithpulpandpaperindustry
§ Sawmillresiduals
§ Roundwoodageof65-100years(~70%Aspen,~30%Birch)
§ MillRecognizedOperatingLevel(MROL)legislativemandatesupportslong-termfibresupply
§ Costbasedharvestanddeliverysystem
§ Stumpagefrozenatminimums
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First Nation & Community Expectations
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FirstNationExpectations
Ecological,SocialandEconomicExpectations• Ecological-Sustainableuseandrespectoftheland
– respectfortraditionalecologicalvaluesandknowledge,aswellasfortheneedsofFirstNationsforestusers,andamoreecosystem-basedapproachtoforestryincludingavoiceinthemanagementoftheland
• Social-Abilitytobenefitfromtraditionalareas– Skillsdevelopmentandyouthopportunities.
• Economic-Communitydevelopmentandcapacitybuilding– Throughemploymentorbusinessopportunities– value-addedandnon-timberforestproductsbusinesses– resourceskills&businessdevelopment
• FirstNationConsultationisaprimaryrequirementtoachieveawoodsupplyormilllicencewithMNR,ForestManagementCompany,orForestProductProducer.
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CommunityExpectations-Benefits
• Ensuringlocalopportunitiesexistwithintheforestsector• Economicdevelopment&abilitytoattractinvestment• Interesttounderstanddirectionforforestmanagementandharvestingactivitiesaroundtheircommunities
– Somehaveinteresttoprovideinputonforestmanagementorharvestingareas
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Forest Supply Details and Costs
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SupplyAgreements
• AlgomaForest– 2yearOLA(expiredMarch31,2017)providedaccessto192,226m3andanewonemaybe
established– HistoricallytheClergueBoardwasinterestedtoseeRentechandthefacilitybecomea
shareholder– Clerguehasadditionalbiomassavailableandmayberequestedformally.
• Magpie/MartelForests– Possibletonegotiatetotransfer“10Year”AgreementwithRayonierformerlyTembec(expires
2024)– SinceAugust2014RentechhadparticipatedintheeSFLdevelopmentprocessasapotential
shareholderintheamalgamationoftheMagpieandMartelForest.• Processiscurrentlyatthedraftshareholdersagreementstagewithplannedtransferof
theMagpietoNewcoSeptember2017withMNRtoissueneweSFLfortheamalgamatedforestsApril1,2021.–
• ThepartiesareveryinterestedtohaveanewownerentertheESFLdiscussions.
• WhiteRiver/NagagamiForests– FibrepurchaseagreementswithWhiteRiverForestProducts(shortterm)maybeavailable– BothWhiteRiverandNagagamiForestarescheduledtobecomepartoftheLFMC
(NawiinginokiimaFMC)– InitialdiscussionswithNFMCandareveryinterested(onceamalgamationoccurs)toestablish
longtermbusinesstobusinessagreement
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MNRFFibreSourcebyManagementUnit-Historical
SummaryTableofRTKWPCanada,ULC-WoodSourcesbyManagementUnitComparisonofVariousProductTypesfromtheManagementUnitsandOpenMarketWoodAvailable
Forest AnnualMNRCommittedVolume ForestManagementPlanVolumesbyProduct(m3/Yr)-FromTableFMP15
Management forRentech(m3/Year) Rentech OpenMarket
Unit Merch Non-Merch Total Sawlogs Veneer Pulp Fuelwood BioFuel Merch Non-Merch TotalAvailable
Algoma 96,113 96,113 149,600 6,100 70,000 12,500 96,113 495,116 495,116Magpie 131,064 33,750 164,814 199,000 6,000 500 165,814 114,825 67,062 181,887Martel 222,254 37,800 260,054 636,387 30,218 450,000 1,233 1,233
Nagagami 131,837 131,837 185,113 26,249 43,647 152,184 -WhiteRiver 148,240 148,240 473,903 59,261 59,061 155,000 237,176 105,855 343,031
Total 801,058 1,644,003 127,827 172,708 13,000 1,019,111 848,350 172,917 1,021,267
Source: OntarioMinistryofNaturalResourcesElectronicForestManagementPlanWebsite,fromFMP-15PlannedWoodUtilizationbyMill.Dataisfromthe2010-2020AlgomaForestManagementPlan-PhaseII,the2009-2019MagpieForestManagementPlan-PhaseII,the2011-2021MartelForestManagementPlanPhaseII,the2016-2021NagagamiForestManagementPlanPhaseIIandthe2013-2018WhiteRiverForestManagementPlanPhaseII.
Notes: TheAnnualMNRCommittedVolumeisfromtheMinistryofNaturalResourcesandForestryreporttitleProjectWoodUseandUtilizationSummary-Rentec,Inc.(Wawa)-BioproductsdatedMarch13,2015.
The"biofuel"columnisthevolumethatisbeingshownineachForestManagementPlanasbeingcommittedtoRentech.
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SampleTableFMP-15AlgomaForest
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Regional“Crown”AvailableWoodSupply
MERCHANTABLE UNMERCHANTABLEREGION MANAGEMENTUNIT BW CE OC PO PWR SPF TOL Total BW CE OC PO PWR SPF TOL Total TOTAL
Northeast AbitibiRiverForest (6) 11 14 (50) - 258 - 227 17 - 6 88 - 229 - 340 567AlgomaForest 63 4 1 39 4 31 75 217 25 - - 10 - 27 47 109 326BigPicForest 37 5 - 152 - - - 194 13 - - 40 - 59 - 112 306GordonCosensForest 38 14 76 260 - 93 - 481 13 1 21 79 - 174 - 288 769HearstForest 14 12 14 222 - 37 - 299 5 - 4 44 - 146 - 199 498MagpieForest 39 1 1 100 - - - 141 14 - - 25 - 36 - 75 216MartelForest 53 21 14 26 8 - 4 126 29 1 3 44 - 85 - 162 288NagagamiForest 1 4 - 132 - - - 137 4 - 2 34 - - - 40 177NipissingForest 56 3 13 37 47 153 56 365 37 - 2 33 14 43 28 157 522NorthshoreForest 37 5 7 70 22 - 60 201 20 - 1 32 5 34 14 106 307PicRiverForest 47 1 - 78 - 8 - 134 20 - - 20 - 60 - 100 234PinelandForest 44 22 8 66 1 - - 141 15 1 2 28 - 35 - 81 222RomeoMaletteForest (1) 11 17 1 - - - 28 20 - 4 24 - 7 - 55 83SpanishForest 107 3 1 108 57 1 21 298 39 - - 69 7 119 4 238 536SudburyForest 60 1 5 104 39 1 34 244 17 - 1 25 9 31 7 90 334Temagami 15 3 - 1 17 31 2 69 7 - - 16 5 21 1 50 119TimiskamingForest 3 1 - 8 3 28 (1) 42 1 - - - - - - 1 43WhiteRiverForest 69 8 11 25 - - - 113 3 - - 5 - 21 - 29 142
RegionTotal 676 130 182 1,379 198 641 251 3,457 299 3 46 616 40 1,127 101 2,232 5,689
ONTARIOAVAILABLEWOODREPORTNovember2018(thousandscubicmetresperyear)
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WawaFacilityFibreSupply
56percent
17percent
12percent
5percent9percent
1percent
MartelForest-(10yr.Agreement)
AlgomaForest-RTKLicense
MagpieForest-Merch(BtoB)
WhiteRiverForest-Merch(BtoB)
MillResiduals-SupplyAgreements
MillGatewood(OpenMarket)
Fibre Supply Source
Annual Facility Fibre Requirement: 800,000 Tonnes (design capacity)
§ 136,000 tonnes were controlled directly through Overlapping License Agreements
§ 450,000 tonnes was secured through a long term business to business agreement (expires 2024)
§ Shorter term (1 to 3 year) business to business (B to B) agreements provide up to 214,000 tonnes
TheOntarioMinistryofNaturalResourceshasprovidedaRecognizedOperatingLevelof800,000m3/year(FacilityLicense)inconjunctionwithaMinistryrecognizedfibresupplyof801,058m3(note:1m3fibre=1tonnefibre)
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WawaFacilityFibreSupply(continued)
Roundwood64percent
BushMicrochips/Grind27percent
Millresiduals9percent
Roundwood-512,000GMT
BushMicrochips/Grind-218,000GMT
MillResiduals-70,000GMT
§ Wawa Facility can accept deliveries of round wood or processed fibre (microchips, grind or mill residuals)
§ Current ability to accept processed fibre is limited by the truck dumper capacity; as efficiencies in dumper are realized, there is potential to increase processed fibre mix
FibreSupplyType
AverageBlendedFibreCost: 2018–$41.21perGreenMetricTonneForecastConversionFactors: 2018–1.88GMTperPelletTonne
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FibreSourcingAdministration
• Fibrewaspurchasedthroughvariousmechanisms:– LongTermAgreement
• Longerthan3years(Rayonier/TembecAgreement,Narinmillresidualagreement)
– Rentechheldlicences(OverlappingLicences)…Algoma,Martel– ShorterTermAgreements
• Upto3years(Columbia,Eacom,Kenogami,LongLacLumber,WhiteRiverForestProducts)
• Twostaffwereresponsibleforallaspectsofsecuringagreements,administrationofthecontracts,fibrequalitysamplingandcomplianceonRentechheldlicences.
– Supportedbymillstaffinoperationoftheweighscalesandpaymentforfibredeliveries.
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Rate Determination Model & Crown Charges
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RateDeterminationModelDeliveredFibreRateModel
ConventionalRoadSideProcessed
Chipping(InBushfullTree)
Chipping(HarvestResiduals)
FuelatPrice $1.18
Volume(m3) RoadsideCosts($/m3)
Felling $4.00 $4.00 $-Skidding 4.00 4.00 4.00Delimb 4.00 - - -Slashing - - -Processor - 5.65 - -Chipping - - 12.00 12.00
SubTotal $12.00 $13.65 $12.00 $16.00
Overhead($/m3) Commute $- $- $- $-Supervision - - - -Mobilization - -- -Roads 3.00 3.00 OHandAllow. 3.00 3.003.00 3.00
SubTotal $6.00 $6.00 $3.00 $3.00 HaulAssist - - - -Profit 1.50 - - -
TotalRoadside($/m3) $19.50 $19.65 $15.00 $19.00 LoadingCosts(includesprofit) 1.89 1.89 - -
TotalCostLoaded($m3) $21.39 $21.54 $15.00 $19.00 ConversionFactor 1,000 1,000 1,000 1,000
TotalHarvestingCost $21.39 $21.54 $15.00 $19.00 SFLFees CapitalRoadsandMaintenance 0.50 0.50 0.50
TotalCostLoaded($/Tonne) $21.89 $22.04 $15.00 $19.50 TruckingCost@$110/hour(40TonneLoad) $15.97 $15.97 $19.00 $19.00
TOTALDELIVEREDCOST(BeforeCrownDues) $37.86 $38.00 $34.00 $38.50 CrownDues $2.00 $2.00 $2.00 $2.00
TotalCost $39.86 $40.00 $36.00 $40.50
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DistancetoMill–Haul/TransportationCost
Haulingcostsarebasedoncycletimeswhichareinfluencedmainlybydistanceandspeedtravelledbasedonthetypeofroadutilized.Basetruckinghourlyrateis$110/hourwithfuelat$1.00perlitre.Wawapricingsetbasedondeliveredexpectation$38-40/gmt
150km-$16-19/gmt
100km-$12-15/gmt
50km-$8-10/gmt
0km-Consumer
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HaulRateCalculator
• Averagelogsizeload=40tonnes,averagechipsizeload=35tonnes• Loadsize,road“type”,speedanddistanceaffectratepertonne• Hourlytruckingratevarieswithfuelpricing.Someagreementshavefuelsurchargemechanismsbuiltin.
ASSUMINGLOGS ASSUMINGBUSHCHIPSHaulRateCalculation(WawaPellets) HaulRateCalculation(WawaPellets)
***63,500KG'sMaxLoad ***63,500KG'sMaxLoad
BlockNumber RouteDescription Speed Distance Time BlockNumberRouteDescription Speed Distance TimeXYZ TertiaryRoad(blockcenter) 20.0 10.0 0.5 XYZ TertiaryRoad(blockcenter) 20.0 10.0 0.5XYZ SecondaryRoad 60.0 25.0 0.4 XYZ SecondaryRoad 60.0 25.0 0.4XYZ TertiaryHighway 80.0 - XYZ TertiaryHighway 80.0 -XYZ MainHighway 80.0 130.0 1.6 XYZ MainHighway 80.0 130.0 1.6XYZ MainHighway 90.0 - - XYZ MainHighway 90.0 - -Total 165.0 2.5 Total 165.0 2.5
Hours $perHour Hours $perHourDrivingTime 5.08 105.0$ 533.8 DrivingTime 5.1 105.0$ 533.8Waitingtime 1.0 105.0$ 105.0 Waitingtime 1.25 105.0$ 131.3
TotalTime 638.8 TotalTime 665.0Tonnesperload 40.0 Tonnesperload 35.0
Ratepertonnehaul 16.0$ Ratepertonnehaul 19.0$
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Code Name Conifer Hardwood Grade 1 & 2
Poplar / White Birch
AllSpecies(Hardwood&Softwood)
615AlgomaForest 5.25 2.12 1.73 5.25565MagpieForest 5.50 1.00 1.00 3.50509MartelForest 0.50 0.50 0.50 0.50390NagagamiForest 5.00 0.50 0.50 5.0060WhiteRiverForest 4.50 0.50 0.50 0.50
Crown Charges Table # 1
Ontario Crown Timber Charges (Stumpage) Crown Charges Payable To Consolidated Revenue Fund (C.R.F.) CFSA Section 31(1) and Forestry
Futures Trust (F.F.T.) CFSA Section 51(5) 2017/2018 Period 12: March 01 - March 31 ($/m3)
Species Group Pulp Veneer Sawmill Composit
e Paper Fuelwoo
d Bioprodu
ct NES Mixed Woods (Bioproduct Sector Only) CRF Price (CFSA S. 31(1)) Minimum Price 0.00 Residual Value Price 0.00 Forestry Futures Trust (CFSA S. 51(5)) Forest Resources Inventory 0.59 Forestry Futures 0.52 Subtotal Crown Charges 1.11
CrownChargesforCrownFibre
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OtherAssociatedFibreCosts
• SFLFees– FeepayabletoSFLholderforforestmanagementrelatedcosts(onOverlappingLicences).$1.50to$2.25
• RoadsFees– FeepayabletoSFLorLicenceholderformaintenancecostsonforestaccessroads.$1.00to$2.00
• SFL&RoadFeesincludedinthedeliveredfibrepricewhenpurchasingdirectlyfromtheSFLHolder
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ForestRoadsFundingProgram
TheprovincialgovernmentsupportstheconstructionandmaintenanceofforestaccessroadsonCrownforeststhatservemulti-resourceusesbyprovidingfundingrelatedtoroadconstructionandmaintenance:
• 100%ofprimaryroadcostsand50%ofbranchroadcosts(forbothconstructionandmaintenanceexpenses)
• AlgomaForestHistoricalrateof$1.50perm3
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George Hasenberger
(613) 242-1612