The federal government will hold urgent crisis meetings about timber supplies next week, with a severe supply crunch linked to Russia’s invasion of Ukraine set to impact Australia over the coming months.
Imports from Russia and Belarus account for around 40 to 50 per cent of Australia’s supply of some of the key laminated veneered lumber (LVL) and engineered wood products (EWPs) used in building and construction.
These products include formwork LVL, which is an essential component of all concrete constructions for multi residential, high-rise, commercial buildings, and some civil works, as well as i-joist beams and timber flooring systems.
Supplies of these Russian and Belarussian products are set to almost completely dry up over the coming months. This is likely to put even more critical supply chain pressure on a building industry that’s already been hammered by an ongoing supply and skills crisis.
The Fifth Estate understands some leading building and construction companies are already stockpiling timber.
Even if you can buy Russian timber, it will cost you a big tariff slug and a “conflict timber” tag.
The federal government, through Australian Customs Notice No. 2022/21, has imposed an additional 35 per cent tariff on the cost of Russian timber products, which have also been labelled as conflict timber by the Programme for the Endorsement of Forest Certification.
The tariff was to originally take effect from 25 April, but was postponed until 25 October to account for the fact that a significant amount of timber had been shipped from Russia before the conflict began. This timber is set to continue to arrive in Australia until July or August.
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Russian timber supplies are drying up
However, the tariffs on this conflict timber could well end up being a moot point.
“The supply chain from Russia will be almost non existent. Because of the war, a lot of factories in Russia that were producing timber products have shut down, or there’s bans on imports and or bans on exports,” Australian Timber Importers Federation general manager John Halkett told The Fifth Estate.
“From about July or August, you’re going to see a significant reduction in the availability of a whole range of products that have LVL at their core, so these are i-beams, structural beams, flooring systems and so on that go into both residential construction and also commercial construction.”
Worse, in tactics a little reminiscent of the gas crisis, some timber exporting countries are withholding supply to meet domestic demand, or are scrambling to find other supplies.
“What I’m hearing from European countries – from Germany, from the Czech Republic, and from Austria – who have exported product to Australia traditionally, is that those countries are now not importing Russian products or the Russians have banned exports,” Mr Halkett said.
“These countries who were exporting to Australia are going to find that the prospect of continuing to do that at current levels into the future will be quite difficult, because they’re backfilling for their own domestic requirements.”
Domestic supply close to capacity
As if the situation wasn’t already bad enough, there’s also the additional problem that Australia’s domestic softwood production is close to capacity: and imports have been growing and the situation was made worse by the 2020 bushfires.
According to figures from Forest and Wood Products Australia, sales of locally produced sawn softwood totalled 3.134 million cubic metres in the year-ended March 2022, which is close to the industry’s theoretical capacity of around 3.2 million cubic metres.
Australia’s softwood plantation estate, which was estimated at 1.028 million hectares in 2020, has not expanded for almost three decades. New trees planted today will take around 20 years to provide marketable timber.
“The bushfires generally damaged about 40 per cent of the plantation pine resource in Australia, around Tumut and Tumbarumba, in New South Wales, Kangaroo Island and elsewhere,” Mr Halkett said.
“The companies involved and the forest owners got cracking and salvaged a lot of that material that was salvageable. There’s a window during which you can do that before the trees are no longer salvageable. Now, that work has been completed.
“That meant that in the shorter term there was a good supply, because all the salvage logs were processed. But since then, that wood has now flowed into the market. The domestic industry is at about capacity.”
Crisis talks in Canberra next week
With an imminent timber supply crunch threatening the Australian market, timber importers are scrambling to secure additional supplies from a range of places including Canada, South America and Africa.
“Certainly, the quantum of LVL or EWP products coming out of Russia was substantial and the capacity to replace a significant amount of that of that resource from other sources is a real challenge. The degree to which that challenge can be overcome and still a work in progress,” Mr Halkett said.
Against this background, industry representatives from the timber import sector are set to hold talks with the federal government in Canberra next week to discuss potential solutions.
The Fifth Estate has contacted the federal government for comment, but did not receive a response prior to publication.
A potential silver lining
If there’s such a thing as a silver lining to the looming timber crisis, it’s that Australia will still have some domestic supplies of timber products available through local suppliers, including Hyne Timber and its XLam subsidiary.
Founded in 1882, Hyne Timber is a family-owned company that operates two sawmills (at Tuan—near Maryborough—in Queensland and Tumbarumba in NSW) that produce a total of 800,000 cubic metres of sawn timber.
The company’s timber feeds supplies its XLam cross laminated timber plant in Wodonga, Victoria, along its glue laminated timber plant in Maryborough, Queensland.
The products are used both mass timber construction as well as in conventional “hybrid” construction where CLT is used with steel and concrete
“XLam has seen strong growth year-on-year and especially over the past 24 months and, based on our pipeline of contracts and forward commitments, we expect this strong growth to continue,” XLam general manager Shane Robertson said in a statement.
“XLam CLT supply is guaranteed by the vertically integrated feedstock we receive from our sister company Hyne Timber – there has been no disruption in our manufacture and supply.”
“XLam is the largest supplier of CLT in Australia and New Zealand by volume – we manufacture and supply commercial, residential, and government projects.”