“Current Wood Supply & Consumption”

“Current Wood Supply & Consumption” Forest Resource Development Conference October 28, 2009, Harbison Forest, Columbia, SC

Exports

Supplies & Equipment Imports

Lupold Consulting Inc.

The Supply Chain Primary Components Have Made the $17.3 Billion a Reality - Development Initiatives Must Have Buy-in From All of These Key Players

Exports

Supplies & Equipment Imports

Lupold Consulting Inc. SCFC & SCFA Degree of Supply Chain Involvement

Exports

Supplies & Equipment Imports

Lupold Consulting Inc.

Let’s Start With the FOREST!

The $17.3 Billion is because SC has an Available, Usable Wood Supply

Trees Dictate the Type & Location of Our Primary Wood-Using Industry

Where are the GAP OPPORTUNITIES?

Lupold Consulting Inc. US Forest Timberlands, 513 million Acres, 69% Private, 57% Softwoods SC, 12.9 Million Acres Timberland, 2.5% of US 86% Private, 4.2% Roundwood Harvest in US

30% SYP Southeast US: ships Largest Single Timber North, no Growing Area, treatable Processing Center & End User in World species

Maryland to Texas; same type land, same tree species, same mills and processes, same consumer products

Lupold Consulting, Inc.

US Softwood Growing Stock, Private Timberlands 20000

18000 Current Rotation Age Thinking in the South Availability? 16000 25-30 Years Sustainability? West Coast 14000 29%

12000 Lake States 4%

10000 Rocky Mtns 8% 8000

Million Cubic Feet Central 1%

6000 South 45% US Northeast 4000 73% Softwood Growing 13% Stock Less Than 40 Yrs 2000 Located in Southeast

s s s s s s s s s s s s s s s s s s s s rs r r r r r r r r r r r r r r r r r r r r a a a a a a a a a a a a a a a a a a a a a e ye ye ye ye ye ye ye ye ye ye ye ye ye ye ye ye ye ye ye ye y 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 5 0 + - 1 -1 -2 -2 -3 -3 -4 -4 -5 -5 -6 -6 -7 -7 -8 -8 -9 -9 0 0 0 6- 1 6 1 6 1 6 1 6 1 6 1 6 1 6 1 6 1 -1 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 6 1 5-yr Age Classes 9

Lupold Consulting Inc. USFS FIA Web 1/08 Southern Pine Timber Types (Acres), Private, Planted 61% 8 “The Wall of Wood” 7 15-25 yr old peak Natural Stands, 23.1 Million Ac Planted Stands, 6 35.5 Million Ac

4 40 Yrs Balanced Natural Forest 3 Tree Planting Today 15 to 55 years old 1978-97 avg @ 66% Great News for Plywood & LVL 2 Million Acres Private Timberlands

Lupold Consulting Inc. USFS FIA Web 1/08

Southern Pine Growing Stock, Private, Planted 43%

10 Natural Stands, 49.7 Billion CF 9 Planted Stands, 37.9 Billion CF, 43.3% Pine Vol Natural 5 East Coast States, 46.5% Vol 8 Planted 5 East Coast States, 51.3% Vol

4 Million Cubic Feet 3 Million Acres Private Timberlands 2

3 8 3 8 3 8 3 8 3 8 3 8 3 8 3 8 3 8 3 8 3 + 0 9 9 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 0 ------0 7 2 7 2 7 2 7 2 7 2 7 2 7 2 7 2 7 2 7 2 7 1 0 0 9 9 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 0 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 5-yr Age Classes Lupold Consulting Inc. USFS FIA Web 1/08 Excess Annual Growth Softwood Sawtimber -3.2MM Tons 7/06, 21.03MM Tons 3/08, 28.5MM Tons 3/09 6 Why smallest state in South, SC, has 5 more excess annual 28-Jun Mar-08 Mar-09 sawtimber growth 4 on FIA Web past 2 years? 3 2 1 0 -1 -2 -3 Million Tons Excess Annual Growth -4 TX AR LA MS TN AL FL GA SC NC VA Avg State GRM Date: 01&03 01&02 97&97 99&99 98&00 98&00 99&00 02&03 00&02 00&02

FIA Web Date 7/06 3/08 3/09 Southeast - Texas to Virginia Avg GRM Date 1998 1999/0 2001

Lupold Consulting Inc. 9

Consulting Inc. 10 Lupold Consulting Inc. 11

Excess Annual Growth Softwood Sawtimber -3.2MM Tons 7/06, 21.03MM Tons 3/08, 28.5MM Tons 3/09 6 Why smallest state in South, SC, has 5 more excess annual 28-Jun Mar-08 Mar-09 sawtimber growth 4 on FIA Web past 2 years? 3 2 1 0 -1 -2 -3 Million Tons Excess Annual Growth -4 TX AR LA MS TN AL FL GA SC NC VA Avg State GRM Date: 01&03 01&02 97&97 99&99 98&00 98&00 99&00 02&03 00&02 00&02

FIA Web Date 7/06 3/08 3/09 Southeast - Texas to Virginia Avg GRM Date 1998 1999/0 2001

Lupold Consulting Inc. 12 Excess Annual Growth Softwood Pulpwood, FIA Web .57MM Tons 7/06, 10.6MM tons 3/08, 9.3MM Tons 3/09 6

5 6-Jul Mar-08 Mar-09 4

-1

-2 Million Tons Excess Annual Growth -3

-4 TX AR LA MS TN AL FL GA SC NC VA Avg State GRM Date: 01&03 01&02 97&97 99&99 98&00 98&00 99&00 02&03 00&02 00&02

FIA Web Date 7/06 3/08 3/09 Southeast - Texas to Virginia Avg GRM Date 1998 1999/0 2001

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Excess Annual Hardwood Sawtimber, All Ownerships 43.2MM Tons 7/06, 54.4 MM Tons 3/08, 54.2MM Tons 3/09

12000

FIA Web Date 7/06 3/08 3/09 6-Jul 8-Mar 9-Mar Avg GRM Date 1998 1999/0 2001 10000

8000

6000

4000 Thousand Tons Green, 68#/cf

2000

0 TX AR LA MS TN AL FL GA SC NC VA

Lupold Consulting Inc. USFS FIA Web 1/08 Southeast - West to East 14 Eastern US Acres in Hardwoods, Private 18

16 Impact Hardwood Clearcut Lake States 10% 14 Regeneration, Shovel Logging & 12 Paper Mill Volume Central 18% Past 20 Years 10

8 Northeast 28%

South 43% 4 Million Acres Hardwood Timber Types 2 63% Oak-Hickory, 6 million acres, 0-5 years in South

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Lupold Consulting Inc. USFS FIA Web 1/08

Excess Annual Hardwood Pulpwood, All Owners, 8-10" dbh -2.5MM Tons 7/06, -3.73MM tons 3/08, -3.76MM Tons 3/09 1500

6-Jul 8-Mar 9-Mar

1000

500

-500

-1000 Thousand Tons, Green, 68#/cf

-1500

-2000 TX AR LA MS TN AL FL GA SC NC VA FIA Web Date 7/06 3/08 3/09 Southeast - West to East Avg GRM Date 1998 1999/0 2001

Lupold Consulting Inc. USFS FIA Web 1/08 16 New Plant Announcements, 2005-2009, To Use Pine Pulpwood 10.5MM Tons OSB, Paper, Small Logs 14.5MM Tons Energy 9

7 At an Avg GRM date of 2001 across the South, 6 none of these announced volume 5 uses are included in OSB, Paper, Sml Log Energy current state FIA 4 growth/removal data

1 Million Tons Excess Annual Growth 0 TX AR LA MS TN AL FL GA SC NC VA Southeast - Texas to Virginia

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Excess Annual Growth Softwood Pulpwood, -15.7MM Tons With New OSB, Energy, Paper, Small-log Users at 25MM Tons 6

5 6-Jul Mar-08 Mar-09 New User h t 4 w o r G

l 3 a u n

n 2 A s s

e 1 c x E 0 s n o

T -1 n o i l l i -2 M -3

-4 TX AR LA MS TN AL FL GA SC NC VA Southeast - Texas to Virginia

Lupold Consulting Inc. 18 Initial inventory & inventory change from 2005 to 2030 from recession/recession scenario, in terms of percentage change in pine inventory from 2005 to 2030. Forest Products Journal 7-8/2009, By Abt, Cubbage & Abt

Softwood Products: 317 Million Green Tons; 66% Total US Timber Harvest; South 70%, West 25% & Maine 2.4%; Sawtimber 66%, Pulpwood 33%, Fuel 1%

24% 3% 5%

68%

USFS TPO 2005

Lupold Consulting Inc. Hardwood Products: 181 Million Green Tons; 36% US Timber Harvest; MS-AL-GA 17%, MN-WI-MI 15%, ME 4.4%; Sawtimber 40%, Pulpwood 44%, Fuel 16%

31%

2% 22%

45%

Lupold Consulting Inc. USFS TPO 2005

Primary Forest Products 76 plants, $4.26 billion shipments

X X X X X X

X Shutdown Over 42% Southern Pine treated

26% SYP used in trusses & EWP Systems

1” boards (4%) 85-90% LUMBER & PANELS industrial (18%) SHIP TO SECONDARY USERS framing (10%) - 70-75% SHIPS OUT-OF-STATE SFPA Single & Multifamily Housing Starts

2.5

1.5

1 Million Annual Starts 0.5

0 1978 1993 2008

Raw Materials Received & Primary Products Engineered Wood Products Engr WP Shipped, $/Ton Publisbing Paper Copier Products Boxboard Market Pulp Container Bd Pine Plywood Pine Lumber MDF Solid Wood Building Materials Particleboard Pine OSB Pellets, Bags Wood Pellets Sold in US Pellets, Industrial Waste Paper Shavings Pine Sawtimber Hdwd Sawtimber Pine CNS Chips Hdwd Pulpwood Green Roundwood & Mill Residues Pine Pulpwood Sawdust Bark

0 200 400 600 800 1000 1200 $/Ton Green or Dry Per Product Secondary Wood Products 217 plants $1.4 billion shipments

Lupold Consulting Inc. Black Liquor Fuel Credits ? Pulpwood Use in SC 1980’s 13.5 million tons annually 1990’s 14.95 2000-5 15.1 2006 15.98 Secondary Paper Products 76 plants $1.7 billion shipments

Lupold Consulting Inc.

Forest Forestry/Forest Products Cluster Forest Products Stumpage: Saw 75%, Pulp 25% Supply Chain Wood Buyers Sales: Wood 34%, Paper 66% Value SC Economy: $17.4 Billion 57% To SC Communities Loggers

Solid Wood Pulp & Paper

Softwoods Hardwood Raw Materials s Roundwood, Chips (Softwood & Hardwood) Logs $1 Bil Fuel Residues Mill Residues Logs $.1 Bil Lumber Waste Paper Fuel (Steam, Hot Lumber Plywood Veneers OSB Air), Paper Chips, Plywood Primary $3.2 Poles, Piles, Particleboard, MDF, Bedding, Export Logs Billion Post Energy Energy Landscaping Paper, Paperboard, Tissue, Linerboard, Pulp, Power to Grid Secondary $1.4 Billion Secondary $1.7 Billion Treating, Trusses, Containers, Pallets, Millwork, Mobile Homes, Boxes, Containers, Cups, Utility Buildings, Engineered Systems, Furniture, Cabinets, Cut Stock, Coated, Tubes Windows, Doors, Reman, Flooring, Mattress

Lupold Consulting Inc. Multiple Operations: Fell & bunch Forward logs, truck 9-12 month old tops bundled in Sweden, Bundle tops 80-yr Rotation Forward bundles, truck Pull stumps 1-2 years forward stumps Chip stumps, truck Hardwood brush cut & forward Chip hardwood yr later, truck

Lupold Consulting Inc.

Swedish home electricity: $.21 US/kw Wood fuel $50 to 100 US/ton (Kr/kw) Same 3 Times Ratio as US

Lupold Consulting Inc. Pellet Operation in Sweden Sawmill Sawdust & Shavings

Lupold Consulting, Inc.

Summary Recent USFS/SCFC Study To Determine SC Biomass Fuel Available

Types and volumes currently being utilized: Mill Residues 6,000,000 green tons Paper & Wood Recycled 1,000,000 Logging Residues 600,000

Volume not being utilized: Standing residuals after harvest, 9 tons/acre: 412,500 acres annually (3.2% SC forest) 3,740,000 green tons

Recoverable logging residues at 60%, 11 tons/acre: 35% >5” dbh, 65% <5” dbh 4,532,000 green tons

Total not utilized: 8.3 million tons annually Fabricated into modular components at Ridgeland, South Carolina by Haven Custom Homes

New Orleans Home

Lupold Consulting Inc.

Wood Fiber Used Annually in SC, million tons: 45.72 Sustainable Potential 29.07 Currently Used

Does not include urban wood waste 8.85 Excess Sawtimber 2.34 Residue at $22/ton Currently Used By Industry 5.46 Residue at $30/ton 62% Rwd Used Today Shavings

Mill 19.4% Hdwd Saw Residues By Vol 5.1% 11.9% Later By Vol By Vol Hdwd Now Later Pine Saw Pulp Chips Excess Pine Saw Excess Log Stand Pine Pulp Bark Hdwd Res Res Saw $30 $30

Unit Value Delivered Green From Woods Rdwd Fuel Sawdust Stand Res $22 Percent Tons Distributed Log Res $22 Lupold Consulting Inc.

Wood Fiber Delivered Annual Value By Product, million dollars:

Does not include urban wood waste $838 Current Roundwood (54%) 166 Current Mill Residues (10.7%) 332 Future Sawtimber (21.4%) 52 Log Residue Now (3.3%) 164 Log Residue Later (10.6%) $1,551 Sustainable Potential PineSaw 68% Used Today - $500 Million GAP OPPORTUNITY! $17.3 + 8.2 = $25.5 Billion

Excess Hdwd PinePulp Pine Log Pulp Chips Excess Saw Res Stand Bark Hdwd Saw $30 Res $30

Million Dollars Delivered Green Fiber Shavings StandRes$22 HdwdSaw RdwdFuel Sawdust LogRes$22 Percent TonsGreenFiber Lupold Consulting Inc. Isn’t it mostly about telling our fantastic “supply chain” sustainability story to SC citizens who can enjoy the forest in so many different ways and at the same time use wood derived products that are greener than any other products ever developed over a long period of time.