Subiaco-based Lignor Ltd has signed a supply agreement with Melbourne-based ITC Ltd for 100,000 tonnes of immature blue gum logs per year, with an option to supply an additional 100,000 if required.
Subiaco-based Lignor Ltd has signed a supply agreement with Melbourne-based ITC Ltd for 100,000 tonnes of immature blue gum logs per year, with an option to supply an additional 100,000 if required.
Commencing in 2009, Lignor will use the logs in its planned $250 million engineered lumber plant at Albany, which is due to be commissioned in late 2008.
The contract is valid for ten years, with an option to renew thereafter.
Lignor and Futuris subdidiary ITC, which was formed from the recent merger of Integrated Tree Cropping and Neville Smith Timber, have also finalised a resource management services agreement for ITC to manage Lignor's total log intake to the plant.
The full text of a company announcement is pasted below
An agreement between Lignor Ltd and ITC Ltd will ensure log supply to Lignor's proposed world-class timber engineering project at Albany in Western Australia's Great Southern region.
Under the contract, ITC will initially supply Lignor with 100,000 tonnes per year of blue gum logs, commencing in 2009.
The parties have also finalised a Resource Management Services agreement for ITC to manage Lignor's total log intake to the plant.
The contract with ITC will supplement Lignor's existing supply agreements and will be complemented by further contracts with log suppliers in the near future to provide the plant's total requirements.
The Engineered Strand Lumber (ESL) plant will utilise German technology and process immature eucalypt trees to produce high strength timber products that are expected to compete against steel for use in housing and commercial building construction.
Plant output is expected to reach 240,000 m3 per annum by 2011.
Lignor Managing Director Glyn Denison said the contract with ITC represented a significant step forward in the road to production.
"Securing the log requirements for the plant from major blue gum resource companies was an important milestone for the company and we are pleased to be able to announce the contract with ITC," he said.
"Also of value will be having ITC's support in the management of the log intake.
"As the plant reaches full capacity, and we begin to receive log intake from multiple suppliers, Lignor will receive value from ITC's proven expertise in the management of forest resources.
"Lignor can be confident the plant's log demand will be professionally managed and met."
ITC Chief Executive Vince Erasmus said an expanding native hardwood plantation estate and growing infrastructure capacity in key regions prompted innovation such as that undertaken by Lignor.
"An innovation like this gives us even greater opportunity to add further value to the timber resources we're establishing," he said.
