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Southern Exposure 

South America is looking increasingly attractive to North American forestry companies like BC based West Fraser Timber. 

By Jim Stirling

The precocious little pine was a mere 27 months old and it was already taller than Diego Frederick's six feet. Now, Frederick would have to step back and gaze up-way up-into the sun to glimpse the tree's surging crown. Healthy, fast-growing trees are one persuasive reason why West Fraser Timber has diversified into Uruguay, South America. The highly successful Canadian company with corporate headquarters in British Columbia has been in Uruguay since 1995. 

By the end of 2000, BC based West Fraser Timber had 18,000 hectares in Uruguay in plantations, split equally between eucalyptus and pine species. The company had the intention from the outset to concentrate on producing timber for solid wood production, rather than pulp, says Diego Frederick (above, right), Uruguay project manager for West Fraser Overseas Ltd.

It has acquired about 30,000 hectares of land in the department of Rivera in northern Uruguay, near the Brazilian border. By the end of 2000, about 18,000 hectares was in plantations, split equally in area between eucalyptus grandis and elliotti pine. The Australian eucalyptus prospers in the drier, mildly elevated areas and the pine originating in the south-eastern United States is planted in the moister, marginally lower levels, explains Frederick, Uruguay project manager for West Fraser Overseas Ltd. 

The company does business in Uruguay as Los Piques SA. West Fraser did its homework before venturing into South America. The company investigated economic and political factors and the cost and availability of land suitable for forestry in Chile, Argentina, Brazil and Uruguay. With the prices and stability here, the decision was made to invest in Uruguay, says Frederick. 

It was West Fraser's intention from the outset to concentrate on solid wood production. "In Rivera, with the growth rate of trees and distance from port, the drive is to produce quality wood for sawing, not pulp," says Frederick. That objective dovetails neatly with that of Urufors SA. The company, also based in Rivera, manages plantations to support its sawmill and value added plant (see accompanying story). "We have a common interest with Urufors in growing eucalyptus for solid wood," says Frederick. That has evolved into a non-contractual-but strategic-working relationship that has the companies cooperating, sharing information and experience emanating from their respective strengths. 

West Fraser has a strategic working relationship with Urufors, which has a mill and added-value plant

Frederick estimates West Fraser is four or five years away from building a manufacturing plant to convert the wood from its plantations into high quality products. It could be a sawmill, a veneer plant or perhaps a joint venture with Urufors. The company estimates 700,000 cubic metres of wood a year coming on stream. It's going to have a huge impact on Rivera, population 80,000, whatever processing plant decisions are taken. Frederick reckons West Fraser hires, mainly through contract, five to six people per thousand hectares of land owned. 

That will easily be multiplied by four with a manufacturing plant. Weyerhaeuser is the largest North American forest company active in Uruguay. It's there for similar reasons to West Fraser: good tree growth rates and favourable operating climate. And perhaps it could see the writing on the wall in other areas in which it operates. Weyerhaeuser revealed this past November that it had lost $40 million since 1998 on its coastal Crown tenures in British Columbia. 

A situation, it says, brought about by escalating logging costs, poor markets and high stumpage rates. Weyerhaeuser has purchased 100,000 hectares of land in Uruguay in the last four years. It has succeeded in planting about 40,000 hectares, mainly in taeda pine, followed by eucalyptus grandis. The company has extensive experience in growing and processing pine in the US and marketing its products worldwide. Weyerhaeuser, known locally as Colonvade SA, has three operating areas in the Uruguayan departments of Rivera, Tacuarembo and Paysandu. It is also managing its stands for clear, solid wood. 

"Our thinking is to do the manufacturing in Uruguay and export the products abroad," says Stephen Hee, vice president of Weyerhaeuser Forestlands International based in Seattle, Washington. He predicts Weyerhaeuser will have a minimum of 2.3 to 2.5 million cubic metres of wood a year coming on stream from its plantations. Construction of manufacturing plants to accommodate this wood flow will have to begin by 2006 at the latest. Hee says a plant will be built in each of Weyerhaeuser's three operating areas. 

"Growth rates appear to be every bit as good as we thought they'd be and our operations are going well," Hee says. "We're very enthusiastic about Uruguay. A lot of North American companies are interested in Latin America. Everyone is thinking more globally and it helps deal with the pressures at home."

Plantation Works "Hand-in-Glove" With Mill
To Meet Its Requirements Matching the wood to the mill is more predictable under plantation forestry conditions and Uruguay forest company Urufors and its nursery/plantation division, Cofusa, work hand in glove from sowing seeds to delivering logs to the mill yard. High levels of quality control characterize the process. "We manage for the sawmill. Our target is to get the most clear wood we can," says Cofusa's Ignacio Ros. 

The nursery produces about five million seedlings a year and each fall plants about 700 hectares in eucalyptus and 300 in pine on the lower, cooler levels. Ros says Cofusa has established its first plantation of cloned plants, chosen from select trees in the field, demonstrating the health, volume and form that bode well for solid wood production. About 20 clones are currently being tested for their genetic viability. 

Elliotti pine seedlings are 18 centimetres tall at planting, eucalyptus grandis, 20 centimetres. Planting is mechanical with site preparation, planting and fertilizing being done in a single pass. A tractor pulling a manually fed planting machine is fitted with a blade to create an exposed soil-planting site. A third person walks in behind to ensure plants are straight and secure. 

Ros says the contracted system plants one hectare an hour. Ants and rare frosts are the main natural impediments to growth. Management has become aggressive and eucalyptus stands are first thinned at one and a half years of age. There follows a pruning schedule that has the best trees pruned at up to heights of 10.5 metres. It works. Ros has sites that produce 38 cubic metres of eucalyptus per hectare a year and 18 cubic metres of pine per hectare annually. Three to four metres in height and four centimetres annually in diameter far exceeds the sloth like growth rates in cold Canada. 

The Urufors sawmill and value added plant produces up to 70,000 tonnes of wood products a year and the plants directly employ 60 people. Log cores lack the quality of outside wood. "That's why pruning is very important to us to get the most wood we can for high valued products," says Juan Pedro Belderrain, mill manager. An Italian made, three metre twin band saw backed by a multi-saw trimming capability separates the high quality wood for the remanufacturing plant. 

Five computer controlled Brunner Hildebrand kilns reduce the wood to nine to 10 per cent moisture content. The wood is resorted for quality: those pieces with clear faces and one, two or three knots. Clears may be finger jointed to make flooring, siding, beams or panelling. A range of housing and furniture products are also produced and sanded according to end use. All products travel by rail from Rivera to Montevideo from where they're shipped to regional or refinishing markets or direct to export markets primarily in Japan and the US.


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