5 mins read

Indigenous islanders win Japanese contract

Tiwi Islanders (photograph by Glenn Campbell)

Even the toughest of business people are taking their hats off to the Tiwi Islanders nowadays. Only seven years ago, the islanders committed themselves to resurrecting an abandoned acacia plantation business on their homeland.

They had no money, no trained forestry staff, no port suitable for woodchip and no export market.

Tiwi sought and received expert advice on the risks and opportunities and decided to take on the risk and back themselves to fund the investment required to bring the project to fruition. They employed good managers. But it hasn’t been easy.

Tiwi Plantations Corporation board chairman Kim Puruntatameri says: “Things weren’t looking good.”

“It’s been an incredible turnaround”

Today, the plantation covers 5 per cent of Melville, one of two islands making up the Indigenous-owned Tiwi Islands, 60 kilometres north of Darwin.

Twenty four of the 55 forestry staff are Tiwi and the aim is to increase that to 80.

The company was able to secure finance , a port has been built and a major Japanese customer found for the exports.

“It’s been an incredible turnaround,” says Kim. “I’m very impressed by what our crew has achieved. It makes me very proud.

“And it’s great to see so many of our people working.”

TPC’s medium-term financial performance is underpinned by an agreement to sell 40% of the forecast harvest to Japan.

Woodchip demand from China and emerging Asian economies is expected to continue driving export growth.

Along the journey Tiwi have engaged the services of forestry experts to independently prepare and assess the fundamentals of Tiwi Plantation Corporation’s business plan. These assessments have helped guide the Tiwi and management’s decision-making.

Woodchip is exported through Port Melville, a deepwater port with significant shipping advantages to north Asia, China and South-east Asia.

The port has the potential to service a wide range of customers, including the oil and gas industry.

TPC is now seeking to sell the full forecast harvest, requiring a second customer, investment in a third harvest unit, additional trucks and a truck unloader at the port, thereby unlocking further efficiencies in the supply chain.

Trial plantings of a eucalypt hybrid are showing early promise for a highly productive, non-invasive replacement for the current acacia plantations, thereby underpinning the success of future rotations and a sustainable industry well into the future.

Bouncing back from a devastating decision

The first plantation started on Melville Island in the early 1960s.

In 1986, the then Northern Territory government ended its support for the forestry operation.

This was a devastating decision – 3900 hectares of pine plantations had been established, plus trial plantings of Acacia mangium.

Many Tiwi had been employed in the forestry for more than 10 years.

The islanders decided to continue the plantation in partnership with several successive private investors.

The last of the investors, the Great Southern group, went into receivership in 2009.

Rather than give up, the Tiwi founded Tiwi Plantations Corporation to export woodchip.

A port was built with investment from Singapore-based company Ezion Holdings, through its Australian subsidiary Ezion Offshore Logistics Hub (Tiwi) Pty Ltd, to replace the land-backed wharf at Port Melville with a floating pontoon wharf.

The first harvest was celebrated with gusto in June last year.

Tiwi Land Council chairman Gibson Ilortaminni described it as a “great day for the Tiwis”.

This was followed five months later by another celebration – the first export of Tiwi woodchip. A second shipment went out in February this year. The 3rd shipment went out in August and the 4th is due September/October.

It was the first time in Australia that woodchip loading of a 3.6 million cubic foot woodchip carrier had been undertaken with mobile conveyors from a floating pontoon wharf.

The achievements didn’t stop there.

It was the first time 50,000 deadweight tonne vessels had been brought through the Apsley Strait between Melville and Bathurst islands and moored to a floating pontoon wharf.

Across the first two shipments, loading time improved from 6.7 days to 5.4 days and total bone dry metric tonnes exported improved from 18,479 to 20,465.

TPC has signed a three-year contract for the sale of 560,000 green metric tonnes of woodchip to Japan in 14 consignments.

Total export value of the consignments is estimated to be more than $47 million.

Growing demand from markets in Asia

A second Japanese paper mill is interested in buying Tiwi woodchip from April next year, subject to Port Melville accommodating larger carriers.

There are about 30,000 hectares of Acacia mangium planted on Melville Island, compared with two million hectares in South-east Asia.

The woodchip is used to make high-quality paper.

Vietnam is the largest supplier to China and to the premium Japanese market. Vietnamese production costs are low and Vietnamese suppliers have a freight cost advantage to China and Japan.

But Vietnamese suppliers are small and fragmented. Many Chinese and Japanese paper mills are looking to diversify supply to ensure sustainability.

The Tiwi plantation can provide about 300,000 tonnes of woodchip each year, reliably and sustainably, at prices competitive to Vietnam.

Although more expensive than Vietnam, shipping of woodchip from Port Melville has a 10-day return advantage over shipping from other Australian woodchip ports.

Tiwi Plantations Corporation hopes to benefit from growing demand from China and India.

Its marketing strategy is to keep costs down and ensure reliable, continuous and sustainable supplies.

The goal is to secure contracts with two major pulp mill customers, supplemented with spot market sales if required.

Central to the strategy is the engagement of Mitsui Bussan Woodchip Oceania, a company of the Mitsui group, to market up to 400,000 tonnes of Tiwi woodchip per annum for five years.

The Mitsui group is the fourth largest exporter in Australia on an equity basis, with about $6.5 billion in total exports annually, including 2.5 million green metric tonnes of hardwood and softwood chip.

It has invested about $15 billion in Australia over the past decade.

Combating disadvantage, creating jobs

The project has received strong support from the Australian and Northern Territory governments because of its social and economic importance.

Financial partners include Commonwealth Bank and the Export Finance and Insurance Corporation.

At a technical level, it is vital for Tiwi woodchip to meet product size and quality specifications.

Tiwi woodchip is accredited as Forest Stewardship Council Controlled Wood, which allows it to be exported to the premium Japanese market.

The plantations and export of woodchip from Port Melville have been assessed and approved under the Commonwealth Environment Protection and Biodiversity Conservation Act.

TPC is headed by a board that includes five Tiwi directors. And the Tiwi Appointor of the TPC Trust rides shotgun.

This is no ordinary company.

Of course, it wants to be profitable – not to increase the wealth of outside shareholders but to help combat Indigenous disadvantage.

The primary objectives of the TPC Trust are the relief of poverty, sickness, suffering, distress, misfortune, disability and helplessness – and to advance education.

Tiwi Aboriginal Land Trust, Tiwi Land Council and TPC entered into a licensing agreement to manage and harvest the plantation commercially because they wanted to create jobs and a sustainable income for their people.

The benefits are already being felt on the islands.

Local people are employed in fulfilling, well-paid jobs.

And school leavers will be offered work experience and Certificate 1 training to make them eligible for forestry work.

Certificate 2 and 3 training in harvesting and haulage, and forest growing and management will be available to workers.

Specialist machinery operators have been brought to Melville Island to carry out one-on-one training in the use of forest machinery, such as chippers, feller bunchers, skidders and ship loaders.

Haulage of woodchip relies entirely on Tiwi operators.

Replanting, including growing of plant seedlings in the nursery, field planting, care and maintenance of new plantings, will provide additional employment for Tiwi.

Programs in fire management and control, weed control, Acacia mangium wilding control and environmental management will provide continuing employment.

Tiwi Land Council chairman and TPC director Gibson Ilortaminni started working in forestry at the age of 17, more than 40 years ago.

“It’s good to work,” he says. “We’re trying to stop our people being welfare dependent. It’s not good to sit around doing nothing.

“We’ve had bad times, but the future looks good for our people.”

About the author

Nigel Adlam is the owner of Adlam Media, a Darwin-based writing and marketing company. Nigel has worked on several of the world’s most prestigious newspapers, including The Times and Guardian in London, and covered a civil war in Africa. He has been named NT Journalist of the Year twice.

acacia plantation Adlam Media Commonwealth Bank Darwin Efic export Ezion Holdings indigenous Kim Puruntatameri Melville NewsHub Nigel Adlam paper mill Tiwi Tiwi Islanders Tiwi Islands Tiwi Plantations Corporation wood chip
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