In answer to a question on notice from the 3 November 2021 Budget Estimates Regional NSW hearing, the CEO of Forestry Corporation provided a copy of a letter sent to wood supply agreement holders on the North Coast regarding negotiations on "possible extension through to 2028 of WSAs expiring on the north coast in 2023".
(1) Has any formal direction been provided by the Minister to Forestry Corporation (FCNSW) since 3 November 2021 regarding negotiations of WSA’s expiring on the North Coast in 2023?
(2) Has any additional correspondence been sent by FCNSW to North Coast WSA holders regarding negotiations of agreements currently due to expire in 2023 since 3 November 2021?
(a) If yes, will you provide a copy of the correspondence?
(3) Has any other action been taken by FCNSW since 3 November 2021 regarding renegotiation of North Coast WSA due to expire in 2023?
(a) If yes, will you outline those actions?
(a) Correspondence sent to individual wood supply agreement holders remains confidential while commercial negotiations are completed with all customers.
Text of correspondence sent to all agreement holders on 21 December 2021 is provided below.
Extension of North Coast Type A, B and C Wood Supply Agreements (WSAs)
You will recall advice in March this year following indications from the previous Deputy Premier, that Forestry Corporation would commence goodfaith discussions regarding the possible extension through to 2028 of nominated north coast WSAs expiring in 2023. That correspondence noted that a number of other factors could impact these planned discussions; and FCNSW's consideration of these factors has contributed to delays in the original timelines.
I am now pleased to advise that with support from the Deputy Premier, FCNSW will progress discussions with holders of Type A, B and C WSAs on possible extensions until 31 December 2028 for existing annual quantities. FCNSW will commence discussions initially with holders of Type A WSAs and progress sequentially through to holders of Type B and C WSAs. Following that, FCNSW will develop and implement a separate sales process for any remaining quantities of Low Quality (Salvage Grade) Sawlogs which can be sustainable supplied over the same period.
The process and forecast timeframes are listed below, noting that these timelines may be impacted should any further unforeseen matters arise.
1. Forecast timelines:
Jan-Mar 2022 High Quality Sawlogs and Veneer Logs (Type A and Type B (Sawlog)) WSAs
Mar-Jun 2022 Pole, Pile, & Girder (Type B) WSAs
May-Aug 2022 Low Quality (Salvage Grade) Sawlog (Type C) WSAs
2. Consistent with the above timelines, FCNSW will extend written invitations to all WSA holders outlining its intentions regarding extensions and providing an opportunity to discuss in more detail.
3. For customers seeking face-to-face meetings, FCNSW can develop a schedule of meetings to occur at its Coffs Harbour office.
4. After discussions are complete, FCNSW will prepare and distribute a Variation Agreement for companies to execute and return for final execution by FCNSW and the Deputy Premier on behalf of the State of NSW.
I trust you will view this advice as a positive step towards providing additional security for the north coast hardwood timber industry.
(a) Actions taken are consistent with the steps detailed in 2(a).