Funding for a major study into the future strategic needs of the forestry industry in the State's south-east has been boosted to more than $1 million.
Manufacturing Innovation and Trade Minister, Tom Kenyon today announced a further $330,000 was being provided by the State Government for Stage 2 of the Cellulose Fibre Chain Study with the federal government committing another $250,000.
"This is on top of a $500,000 contribution from the State Government in October last year for Stage 1 of this vital study," Mr Kenyon said.
"The south east forestry industry accounts for approximately 35 percent of local employment and offers great potential for the region to secure a sustainable economic future.
"The Cellulose Fibre Chain Study - part of the State Government's Manufacturing Works strategy - involves working with local industry to identify short, medium and longer term sustainable and achievable market opportunities.
"This is an important project for South Australia's economy as developing higher-value forestry products is the key to creating a sustainable future for the forestry industry.
"That's why we went out and actively sought the involvement of the VTT Technical Research Centre in Finland.
"They're world leaders in translating cellulose fibre opportunity research into tangible business opportunities with global connections to major international cellulose fibre players and investors."
Mr Kenyon said the VTT's Stage 1 report released today included analysis of the value chains associated with the south east forestry sector and the landscape for future opportunities based on interviews with more than 20 industry groups.
Federal Minister for Industry and Innovation, Greg Combet said he was pleased to support the study which could prepare south east South Australia to compete internationally in the forestry industry by producing niche, high-value products of its own.
"This project presents a great opportunity to develop an innovative, renewable feedstock for industry in South Australia," Mr Combet said.
"We've seen examples of the benefits of an innovative cellulose fibre value-chain in Northern Europe, so I look forward to supporting South Australian companies interested in working towards that.
"The Federal Government is proud to be funding this initiative with the South Australian Government and we will continue to support local innovation and local manufacturing jobs in SA's south-east."
Stage 1 of the study indicated:
• There is general agreement on the need to renew the industry
• In the absence of a pulp mill in Mt Gambier area, the use of chips and saw dust for bioenergy, biochemical or biomaterial generation should be given serious consideration
• The future of the industry should not be based on a low Australian dollar
• Raw material in the Green Triangle is cheaper than corresponding material in Scandinavia
• Average sales price in Australia for sawn timber appear higher than prices in Northern Europe
• However, low profitability in Australia appears to be linked to poorer yield for average size logs
• The industry has not been implementing modern process technologies
• A more highly trained workforce is necessary to improve industry profitability.
Mr Kenyon said the additional $580,000 funding for Stage 2 would enable the VTT to develop a plan for producing more sustainable and higher-value products.
"This will involve an analysis of local industry readiness to take up new technology, consultation with the industry globally, particularly in Northern Europe, preparing a draft agenda for joint research and development projects and policy recommendations to State Government."