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Scion Annual Report 2013

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SCION ANNUAL REPORT 2013 HIGHLIGHTS Scion’s purpose is to drive innovation and growth from New Zealand’s forestry, wood product and wood-derived materials and other biomaterial sectors, to create economic value and contribute to beneficial environmental and social outcomes for New Zealand. SCION ANNUAL REPORT 2013 PUBLISHED BY Our Annual Report is presented in two parts – Highlights (Part A) Scion and Reports and Financial 49 Sala Street, Private Bag 3020 Statements (Part B). Together Rotorua 3046 both documents fulfil our annual New Zealand reporting responsibilities under www.scionresearch.com the Crown Research Institutes September 2013 Act 1992. © 2013 New Zealand Forest The Reports and Financial Research Institute Limited Statements (Part B) includes the trading as Scion employment and environmental ISSN 1177-1763 (print version) reports, core funding investment, ISSN 1178-5276 (online version) directors’ report, performance targets and financial statements. Cover image: Pinus radiata seeds OUR VISION PROSPERITY FROM TREES MAI I TE NGAHERE ORANGA CONTENTS 05 FROM THE CHAIRMAN AND CHIEF EXECUTIVE 09 RESEARCH PERFORMANCE 11 COMMERCIAL FORESTRY 17 SOLID WOOD PROCESSING 21 WOOD FIBRE, PULP, PACKAGING, BIOPOLYMERS AND BIOCHEMICALS 27 RISK AND ADAPTATION 33 LICENCE TO OPERATE 37 BIOENERGY AND ENERGY SECURITY 38 OUR COMMUNITIES 43 SCIENCE OUTREACH 46 OUR PEOPLE 48 FINANCIAL RESULTS SUMMARY SCION AT A GLANCE THE NEW ZEALAND FOREST INDUSTRY • New Zealand’s third largest exporter. • Total export earnings were $4.7 billion $45.5m (year ended December 2011). REVENUE • The available volume of wood harvested from planted forests has the potential to increase LAST YEAR: $44.1m from 26 to 35 million cubic metres per year by 2023. • The target is to increase exports to $12 billion by 2022 (from the “New Zealand Forest and Wood $1.7m Products Industry Strategic Action Plan”). TOTAL COMPREHENSIVE INCOME LAST YEAR: $1.6m 274 5.8% ROTORUA RETURN ON EQUITY LAST YEAR: 6.0% 02 WELLINGTON 298 FULL-TIME EQUIVALENT STAFF 21CHRISTCHURCH 01 DUNEDIN 04 SCION ANNUAL REPORT 2013 Our achievements are making an important contribution to the forest and wood products industries’ goals HIGHLIGHTS 05 FROM THE CHAIRMAN AND CHIEF EXECUTIVE Domestic wood processors have Our successes over the past year, aimed significantly increased production to at increasing the value and productivity meet rising market demand, mostly of forestry, wood and biomaterial driven by the Christchurch rebuild and manufacturing, are game changing. population growth in the Auckland During the year we have been: region. They have however been • Defining how remote sensing negatively impacted by rising log prices technology can contribute to the goal driven by the strong export demand of doubling the productivity for logs. of planted forests by enabling Scion too, has successes to report, precision forestry. and we continue to make excellent • Developing and using the Woodscape TONY NOWELL, CHAIR progress in meeting the objectives of our study for the New Zealand Wood Statement of Core Purpose. Our science, Council so it can evaluate new and technology and thought leadership existing wood processing technologies are helping to strengthen the forest and highlight investment options for industry’s international competitiveness the sector. and develop future growth options. • Working with the Radiata Pine Our role in ensuring that exporters can Breeding Company Ltd to improve expand their global markets and that radiata pine breeding stock and forest growers are protected from risk commenced identification of the is vital to creating economic value for genetic structure of Pinus radiata DNA. New Zealand. Scion’s advances in these areas have been significant for industry, • Refining wood modification with examples such as: technologies to make higher value WARREN PARKER, CHIEF EXECUTIVE products from radiata pine. • Identifying the cause of red needle cast disease and developing tools to • Working with Solid Wood Innovation to New Zealand’s forest industry mitigate its risk to forest health and improve log processing yields through has enjoyed a positive year, log exports. the use of segregation technologies. • Helping MPI to eradicate the Another important milestone was the with export earnings Eucalyptus leaf beetle. successful development of a Primary provisionally up 7 per cent to • Developing a new fire weather Growth Partnership (PGP) investment monitoring system and support proposal, ‘Stump to Pump’, with Norske June 2013 compared to the tools for fire fighters. Skög and Z Energy which may see the commercial production of renewable previous year, and the • Developing, with others, an biofuel products using forest biomass. national log harvest expected improved camera vision system Scion will provide research and for safer and more productive technology support for initial feasibility to exceed a record 26 million steep land harvesting. assessments. cubic metres. • Assessing alternatives to copper In addition to its strong forest industry chromium arsenic (CCA) preservation focus, Scion is also dedicated to of timber. increasing the benefit to New Zealand • Supporting the industry develop from forest ecosystem services and alternatives to the methyl bromide improved environmental sustainability. treatment of export logs. 06 SCION ANNUAL REPORT 2013 A highlight this year was securing a SOUND FINANCIAL PERFORMANCE With respect to a safe work environment, $4.7 million Waste Minimisation Fund in January we were delighted to achieve grant, with Rotorua District Council, to Our financial results are summarised on the tertiary level requirements for build a commercial-scale demonstration page 48. Despite a challenging economic ACC Workplace Safety Management plant for the TERAX™ technology, environment and expenditure constraints Practices. We are maintaining a strong which converts organic waste, such as faced by our main Government clients, programme of initiatives to build a municipal sewage sludge, into energy revenue for the year grew by 3.7 per cent ‘safety’ culture across the organisation. and useful chemical products. The Terax to $45.5 million, with profit of $1.7 million We maintained Enviro-Mark Bronze Limited Partnership between Scion and ahead of the budgeted $1.4 million. This accreditation for environmental the Rotorua District Council has been represented a return on equity of 5.8 per management and are seeking ‘Silver’ formed to commercialise the technology. cent (budget 4.8 per cent) and enabled reinvestment of $975,000 into strategic next year. – Helping Maori grow their cultural, initiatives such as industry secondments, Significant investment was also made social and economic wealth through commercialisation, Ma–ori economic in Scion’s tree nursery to enhance the the sustainable use of their land is development through forestry and security of the genetic modification field demonstrated by our work with Te Tai campus development. trial area, and improve the tree breeding Tokerau in Northland to include kauri and propagation research facilities. and totara in its forestry innovation CAMPUS DEVELOPMENT AND ASSET This infrastructure is critical to meeting project; and with Nga–ti Porou on the MANAGEMENT forest owners’ productivity goals. East Coast to develop an integrated afforestation programme for the Scion implemented a 10-year campus Waiapu catchment. maintenance and development plan in 2011. This year, as part of this plan, we Our achievements are making an commissioned the refurbished Orman important contribution to the forest Laboratory Wing. The wing was officially and wood products industries’ goal of opened by the Minister of Science and more than doubling exports to $12 billion Innovation, the Honourable Stephen per annum by 2022, in turn supporting Joyce, in October 2012. In June, the Government’s target of growing exports refurbished laboratories were awarded as a percentage of GDP, from 30 per cent the international S-Lab 2013 Award for currently to 40 per cent by 2025. an International Laboratory Building. Also, during the year approximately (left to right) Scion Director Chris Insley, half of our staff located into more open, Chair Tony Nowell, CEO Warren Parker and interactive work spaces with improved Hon. Steven Joyce at the opening of the furnishings and equipment. Orman Laboratory Wing. HIGHLIGHTS 07 FUTURE OUTLOOK An increase in the global demand ACHIEVEMENTS AND ACKNOWLEDGEMENTS for bioproducts is encouraging more Markets for New Zealand forest and New Zealand companies to invest This has been another very busy wood products are improving, and in material composites, renewable and productive year for the Board forecasts suggest a global deficit in chemicals and packaging based on and executive team. Scion’s staff are softwood log supply as early as 2020. forest biomass. The Woodscape study continuing to excel and embrace change post the CRI Taskforce, with notable These positive trends, along with a identified several bioproducts as having achievements highlighted on the declining New Zealand harvest volume the potential to generate a step change following pages. We acknowledge their forecast from the late 2020s and the in the economic returns from a log. dedication and enthusiasm to realise need to reduce our greenhouse gas These market opportunities are guiding Scion’s vision Prosperity from trees – emissions, have focussed forest owners Scion’s investments in bioproducts and Mai i te ngahere oranga. and Scion on finding ways to improve bioenergy
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