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Australian woodchips and wastepaper exports to Indonesia on the rise

ABC News - March 4, 2023

Matt Brann – Ausralia's largest woodchip exporter says Indonesia has become a net importer of wood-fibre and is shaping up as an important customer for Australian timber companies.

Midway Limited chief executive Tony McKenna said his company was expecting Indonesian imports to increase "significantly" this year.

"Indonesia has always been a big pulp and paper producer, but largely self-sufficient with their [timber] resource," he said.

"It now appears there's a declining domestic supply of wood in Indonesia while they're expanding their pulp-mill capacity, which presents some great opportunities for our projects, particularly our Tiwi Island project."

Mr McKenna said Midway exported woodchips to Sumatra last month, via its project on the remote Tiwi Islands in the Northern Territory.

"So that's the first vessel from the Tiwis to Indonesia and also the first vessel of woodchips out of Australia to Indonesia since 2019," he said.

"It was a six-day sail and we expect several more vessels to be going this year – it's a natural market for us to be exporting to."

Midway took over 30,000 hectares of plantations on the Tiwi Islands in 2017 and expects to have it harvested and re-planted in full by 2030.

The company also runs operations in Victoria, Queensland and Tasmania. Its major customers have long been China and Japan.

Woodchip price rise

Mr McKenna said the global spot price for woodchips was rising, with the benchmark Eucalyptus globulus price sitting at $296 per bone-dry metric tonne [$US200bdmt].

It was more than $US20 up on the strong prices reported prior to the COVID pandemic.

The spot price for acacia mangium woodchips, which is the timber grown on the Tiwi Islands, has also increased to about $US170bdmt [$A252bdmt].

"So we're getting better prices for the product, the market is good, we're looking at the second rotation planting on the Tiwi Islands, and the new carbon credit rules will also improve the economics," he said.

According to data from the Federal Department of Agriculture, Australia exported $1.3 billion worth of woodchips in 2022.

Indonesia last imported Australian woodchips in 2019 worth just $8.9 million.

"It'll be significantly larger than that in 2023 and we expect it'll grow meaningfully beyond that given the additional capacity being developed in the pulp-mills of Sumatra," Mr McKenna said.

Meanwhile, Indonesia has also become Australia's major customer for scrap paper and cardboard.

Since China's ban on taking foreign waste in 2017, it seems Australia's recycling sector has turned to Indonesia, exporting $193 million worth of wastepaper in 2022, compared to $33 million in 2018.

Indonesia is now taking roughly two-thirds of Australia's wastepaper exports, which in total was about 1.2 million tonnes valued at $309 million.

Source: https://www.abc.net.au/news/2023-03-04/australian-woodchips-and-wastepaper-exports-to-indonesia/10204866