2. March 2008 ABARE Outlook Conference2 March 4 2008 Overseas Opportunities for Australian Forestry Sector

3. March 2008 ABARE Outlook Conference3 Topics Australian forest industry’s current overseas business Regional forest products demand/supply issues Australian industry growth Overseas opportunities Conclusions

4. March 2008 ABARE Outlook Conference4 Australian forest industry’s current overseas business Manufactured wood exports by country 2006 - 2007 0 50 100 150 200 250 300 ChinaTaiwanHong KongJapanMalaysiaNew Zealand Rep. of Korea '000 m 3 kt (paper product Paper and paperboard Wood based panels Sawnwood

5. March 2008 ABARE Outlook Conference5 Australian forest industry’s current overseas business Wood product export trend from 1995 - 2007 0 2000 4000 6000 8000 1995-96 1997-98 1999-002001-022003-042005-06 2006-07 Woodchips Paper and paperboard Wood based panels Sawnwood '000 m 3 kt (paper product

6. March 2008 ABARE Outlook Conference6 Regional forest products demand/supply issues Regional markets - globally strongest growth Product innovation – big role for RCP and (hardwood) pulpwood grades. Regional fibre supplies are constrained Embodied energy values of wood (and biomass) are increasing

7. March 2008 ABARE Outlook Conference7 Regional markets’ strong growth Share of consumption mid decade % Pulp fibre demand growth 2005 - 2020 %/a

8. March 2008 ABARE Outlook Conference8 RCP and hardwood fibres have strongest growth 0 200 400 600 198019851990199520002005201020152020 Hardwood Non-wood Forecast Recovered paper Million tons/a Softwood dominated grades World Consumption of Papermaking Fibre 1980-2020

9. March 2008 ABARE Outlook Conference9 DateDuty*Min. duty 20066.5% 4 EUR/m 3 July 200720% 10 EUR/m 3 April 200825%15 EUR/m 3 January 200980%50 EUR/m 3 April 2008 step appears likely Creates East Asian market opportunities * Growing Russian log export duties

10. March 2008 ABARE Outlook Conference10 Regional log imports are evolving Source ITTO 08-07 CountryImports (1000m³)Proportion (%) China Total Imports37,088.9100 Russia25,395.668.5 Papua New Guinea2,341.06.3 Australia489.61.3 Russia is Asia’s major source for fibre China doesn’t have incremental domestic sources available Chinese Log Imports – 2007

11. March 2008 ABARE Outlook Conference11 Australian forest industry’s major growth through 2010 Immediate term growth - plantation hardwood chip volumes Post 2010 announced new/expanded pulpmill projects will become operational based on current timetables – Gunns’ greenfield Tasmanian BHKP mill +/- 900 000 ADt/a – Visy Tumut new kraftliner line +/- 350,000 Mt/a – Protavia new BCTMP line +/- 750, 000 ADt/a Softwood log, lumber and panel exports

12. March 2008 ABARE Outlook Conference12 Export woodchip potential Million BDt 1 3 5 7 9 19921994199619982000 200220042006 2007e 2011f 2016f Net surplus potential Indonesia China South Korea Taiwan Japan OUTLOOK

13. March 2008 ABARE Outlook Conference13 Woodchip export opportunities Indonesian MTH supply constraints Europeans tapping South African and Latin American sources Strong markets to meet tightening supply/demand

14. March 2008 ABARE Outlook Conference14 Softwood Potentially good markets for export accessible sources Increasing Russian taxes and uncertainty – traders looking for alternative supplies

15. March 2008 ABARE Outlook Conference15 Biomass Accessible biomass sources will increasingly be tapped in the search for renewable energy sources Australia is remote from mainly European markets - but could benefit from knock-on effect.

16. March 2008 ABARE Outlook Conference16 Conclusions Strong demand and limited supply in Asian markets Opportunities across a range of products Uncertainty on Russian taxes will be resolved – outcome will drive more or less opportunity for Australian exports