How We Sell Wood

VicForests engages contractors to harvest and deliver logs to our customers' ‘mill door'. All sales contracts are developed using a delivered price that incorporates harvest and haulage costs.

Logs may be sold based on their measured volume or by weight. Logs are assessed for quality and classified according to our log grading procedure.

Auctions

Supply contracts can be purchased for tenures of up to ten years through our auctions. These are predominantly run as online auctions although sometimes a sealed bid format may be used. During auctions, Lots are offered based on the location of the area to be harvested as well as log quality and species. Each Lot can range in size from less than 500m3 to 5000m3 per annum and have tenure of between one to ten years.

In order to participate in a log auction, bidders must be qualified by VicForests prior to the auction. Qualification of bidders ensures that:

• All logs sold through the auction system will be processed in Australia
• All buyers adhere to OH&S standards
• All buyers accept the VicForests Terms and Conditions for Timber Sales and the Auction Rules
• All buyers are assessed to ensure their financial viability

As part of the qualification process, VicForests determines an auction capacity limit for each bidder. Capacity limits allow bidders and VicForests to manage the financial risks associated with large auctions.

The online auction is a multi-round, simultaneous system that is designed to prevent the frenzied last minute bidding that can occur with a normal auction. Prior to an auction, a catalogue is released that describes each of the Lots on offer. All Lots are offered to the market at the start of the auction.

We may choose to run sealed bid auctions for various reasons, including where there is only a small number of Lots available. Sealed bid auctions also allow us to evaluate bids based on factors other than solely price.

Contract Transfer

VicForests' customers are able to assign contracts or part-contracts to other mills, provided the new mill satisfies all of our requirements. We have developed a secondary market-based auction platform to allow our customers to offer their timber rights to the market.