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DMI Will Save Up to $8 Million Per Year by Adopting In-The-Woods Chipping


December 1, 2004
By Pulp & Paper Canada

Daishowa-Marubeni International (DMI) will substantially boost its bottom line by converting to in-the-woods chipping to produce the hardwood chips needed for its Peace River, Alberta pulp plant. It will also be among only a small group of Canadia…

Daishowa-Marubeni International (DMI) will substantially boost its bottom line by converting to in-the-woods chipping to produce the hardwood chips needed for its Peace River, Alberta pulp plant. It will also be among only a small group of Canadian pulp manufacturers daring to chip aspen in this way.

Once DMI’s contractors have fully deployed and commissioned nine Peterson Pacific DDC 5000-G portable chippers, the Alberta pulp manufacturer expects to save as much as $8 million per year. However, recent increases in the cost of fuel and steel used in the manufacture of spare parts are putting downward pressure on that projection.

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Using portable chippers to manufacture wood chips is not a new concept, as portable chippers are commonly used to process Eucalyptus trees in Brazil. Bowater Paper Co. in Thunder Bay, ON, also uses portable chippers for in-the-woods manufacturing of pine, spruce, birch, aspen and poplar chips. In fact, DMI developed its own system based on what it learned from Bowater’s experiences.

However, during its investigation of in-the-woods chipping, DMI helped develop new portable chipper technology to improve on the difficult task of chipping frozen aspen. So far, its contractors have put eight chippers to work, and are actually achieving better chip quality from their portable chippers than what’s currently being produced in DMI’s wood room.

“In the process of changing to portable chippers, we took 12 full steps out of the chain from a tree being cut to a chip being deposited on our chip piles,” said DMI Peace River Woodlands Superintendent, Joerg Goetsch. He was the architect of the conversion plan, and once DMI head office executives in Japan gave a thumbs-up to the concept, they also asked if the conversion could be accelerated from three to two years. That is now underway, with shutdown of the wood room slated for this month.

The 14 year-old pulp mill manufactures about 440,000 air dried metric tons of pulp per year, consuming about 75 % hardwood and 25 % softwood. Its hardwood component consists of 80 % aspen and 20 % black poplar. DMI has typically manufactured its own hardwood chips, while its softwood chips are purchased from area sawmills.

Among the technical breakthroughs making in-the-woods chipping of aspen in northern climates more affordable were increasing the size of the sheave and knife system on the portable chipper, and reducing the feed speed from 110 feet per minute to 80 feet per minute so the debarking flail chains could properly debark the frozen aspen. The DDC 5000-G is a combination delimber, debarker and chipper. Manufactured in Portland, Oregon, it is distributed in Alberta and British Columbia by Woodland Equipment Inc. in Kamloops, BC. Other Canadian distributors include Wajax Industries for Manitoba, Ontario, New Brunswick and Quebec and Wilson Equipment for New Brunswick and Nova Scotia.

“One of the deciding factors of why we went with Peterson Pacific Corporation (PPC) was because of the very unique way that they do business,” says Goetsch. “They are not only interested in selling you a piece of equipment, but they are also interested in how they can make that piece of equipment do the work you want it to do better, faster, and cheaper. In addition, both PPC and their distributor continually stay involved and provide great after market product support.” For example, Woodland Equipment has established an inventory of spare parts through a local company called Bearing and Transmission.

Rather than purchasing the portable chippers and operating them with their own staff or hiring companies solely as chipping contractors, DMI asked its logging contractors to add this function to their operations. All but one of the company’s logging contractors accepted their offer. Goetsch says because of how DMI and its contractors are now so interdependent upon each other, the relationship between the two has changed from one of client and contractor to a partnership.

At a cost of $1.1 million (CDN) per unit, this is Peterson Pacific’s largest single order of portable chippers to date. Additionally, contractors need to spend approximately $150,000 more for such items as spare parts and a log grapple.

DMI contractor and owner of All-Wood Fibre Ltd., Leonard Legault, applauded the pulp manufacturer’s gutsy move. His company has been in the chipping business since 1994. Legault also has considerable logging experience. All-Wood Fibre owns four chippers, including three DDC 5000 units and was instrumental in helping DMI through the testing phase that evaluated the viability of in-the-woods chipping of aspen. When DMI decided to proceed, All-Wood Fibre continued to support the initiative by hiring out its staff to other logging contractors to help them learn how to use and maintain the portable chippers. The company has also invested in a log harvesting line to become one of DMI’s full line contractors.

“I believe this in-the-woods chipping method will be looked at seriously by other pulp manufacturers,” Legault said. “Technological advances in the portable chippers were an important breakthrough as far as delivering the chip quality and allowing for adjustments for different conditions. Everything has worked out well.”

Contractors will operate their portable chippers from midnight Sunday to 7 am Saturday year round. It takes two employees to operate and maintain the equipment properly. The chippers are high maintenance machines, requiring about six hours of maintenance for every 24 hours of production. One of the most costly items is the flail chain used for debarking. However, DMI has negotiated a deal through Woodlands Equipment to reduce the cost. The chipper uses about 200 links per day. DMI has factored in that cost as part of its logging and chipping rates for its contractors.

Another issue was finding a company willing to insure the portable chippers. That has not only been a problem for owners of portable chippers, but for all owners of forestry equipment. However, after considerable discussion related to such issues as the chipper’s fire suppression system, DMI’s contractors have been able to get insurance.

DMI’s in-the-woods chip manufacturing system required changes to just about every aspect of its harvesting, skidding, forest management, and delivery system.

Harvesting and chipping will occur on DMI’s tenured land from October to March.

Contractors will be required to only harvest wood three days in advance of what the chipper can process in order to prevent the bark from drying onto the trees. Because the portable chipper produces a significant amount of debris, contractors’ skidders have been configured with a unique front grapple and a conventional rear grapple. This is done so the operator can take a front and back load of debris back to the cutblock and pile it in a random pattern. The unique front grapple was designed and fabricated by a Fort Vermilion, Alberta company called ABCO Industries. Provincial forestry officials have approved of this disposal method.

Because DMI will no longer experience the 8-9% fibre loss resulting from yard breakage, log debarking and chipping in the company’s wood room, and because its portable chippers can chip down to a two inch stem rather than the four to six inches in the wood room, DMI anticipates it will realize anywhere from 6-20% more volume off the same land base.

A fundamental change to the chip manufacturing process at DMI is the delivery system. Typically, the company would deliver about 1.3 million cubic metres of wood in its yard during a 100-day delivery period, consisting of 33,000 truckloads of logs. Then throughout the year, Wagner log loaders would remove the strapped log bundles and pile them on DMI’s log deck. Now, DMI has contracted nearly its entire delivery system to a company headquartered in Kamloops called Gold Star Transport (1975) Ltd., which will operate a fleet of chip trucks. They dispatch these trucks to portable chipper locations as needed. While a typical 40-tonne payload log truck would deliver about 44 cubic metres of wood to the DMI yard, a 40-tonne payloa
d chip truck will deliver 57 cubic metres of wood. Plus, chip trucks can haul this payload on public roads year round without being restricted by winter weight allowances. One of DMI’s anticipated increased expenses by adopting this system is having to build roads to a higher standard. It has also spent $7 million to build a second chip truck dumper to complement the existing softwood chip truck dumper.

Local log truckers will have the option of working for Gold Star and using their tractor trailers to transport chip vans or continue to haul logs because of another aspect of this program. From October to March, (the same time of year that DMI manufactures chips from its own Forest Management Area (FMA)), it will transport logs harvested as incidental hardwood from land tenured to other companies, to satellite yards. From April to June, the portable chippers will move to satellite yards and continue to manufacture chips during spring breakup.

From July to September, the harvesting and chipping process will relocate to land owned by private landowners and First Nations communities wanting to clear land, and who are eager to sell their hardwood resource.

DMI’s new in-the-woods chipping system will also allow many Peace River area sawmills to decommission their beehive burners because DMI needs their bark for hog fuel.

All told, DMI needs about 370,000 green metric tons of hog fuel for its boiler annually. The company needs to burn hog fuel to generate the steam needed in its pulp manufacturing process.

NEWPRO, a particleboard manufacturer in nearby Wanham, has also negotiated agreements with a number of area sawmills for their shavings and sawdust, meaning that all of these sawmills’ residual wood products have found a market.

By eliminating the cost of operating and maintaining beehive burners Goetsch says DMI has paid area sawmills and the public a significant financial and environmental dividend. DMI has built a unique hog fuel dumper at a cost of $4 million for this purpose. It is also working with trailer manufacturer, Ty-Crop, to design and build a unique side dumping trailer. In addition to transporting hog fuel from area sawmills, DMI will transport hog fuel accumulated at its satellite yards as well.

Switching to in-the woods chipping will result in the loss of a number of log trucking jobs, as well as over 30 positions in DMI’s wood room. Goetsch says this is his only personal regret about suggesting and implementing this change. However, it was necessary to safeguard the remaining 300 jobs at the pulp mill. DMI can no longer rely on the uniqueness of its long-fibred northern pulp because computer advances have made the use of short-fibred pulp in papermaking just as attractive. This has leveled the playing field between northern hardwood pulp producers and pulp producers utilizing faster growing Eucalyptus trees, resulting in considerable competitive pressure on DMI. The savings anticipated from switching to in-the-woods chipping will make DMI better able to respond to these types of competitive challenges and making their operation even more sustainable.


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