South Korean Market On Ice

South Korea, the second largest export market for Canadian pellet producers have introduced regulations that are legally impossible for those producers to comply with, effectively shutting down the Canadian-Korean pellet trade.
By Tim Portz | September 01, 2015

The Biomass Magazine and Pellet Mill Magazine team prides itself on nearly constant communication with industry professionals. We set goals. We track our progress towards those goals. We use that outreach to produce stories, webinars, conference panels and blogs. We do this because we recognize that the industry’s news is all “out there”, amongst all of you.

This point was reiterated and underscored during a conversation I had with Gordon Murray, executive director of the Wood Pellet Association of Canada. While writing a feature for the September/October issue of Pellet Mill Magazine I learned that the WPAC had successfully made a case to add wood pellets to a list of cargoes exempted from a rule that required the vessels carrying them to have inert gas fire protection system. For more on that, I urge you to read the feature when the issue shows up in your mailbox. 

Whenever I’m interviewing someone like Gordon about something specific, I always end the conversation by asking a simple catch-all question. “What else has been going on?” Gordon’s response had me scribbling and shaking my head in disbelief that I had not yet heard about the issue he was outlining for me.

For now, the Canadian-Korea pellet trade is at a stand-still and really has been since this spring. The stoppage can be traced back by a decision by the Korean government to require a either FSC or PEFC chain-of-custody certification for all bids submitted to wood pellet tenders (basically an RFP). This caused a number of reactions including the issuance, Gordon tells me, of certificates that were later deemed to be fraudulent by some Vietnamese pellet producers (currently the largest supplier of wood pellets to Korea).

In reaction the Korean government, via the Korea Forest Service and the Korean Forest Promotion Institute eliminated this chain-of-custody requirement and replaced it with a require for government-issued and notarized documentation for all the fiber that went into the manufacturing of a given load of pellets. This documentation has to be completed for each load or container that contains pellets. While the administrative burden alone makes this situation untenable, the rotten cherry on top is that because Canada is not a member country of something called the Apostille Convention, they are not even legally able to provide this kind of documentation.

The bottom line, written in bold on a memorandum Murray sent to his members is this. This means that Canada presently has no way to legally ship wood pellets to South Korea. 

More information about this situation can be gleaned from a PowerPoint presentation available on the WPAC website. The slides supported a presentation that Murray gave at the BC-Korea Trade and Investment Forum earlier this summer.

From what I gather, this issue is top of mind for Gordon. He’s been meeting with Korean officials this summer, getting the Canadian government as well as the Sustainable Biomass Partnership involved, and will be traveling there again this month. As the second largest export market for Canadian pellets, Murray’s urgency is understandable.

Serendipitously the final issue in the 2015 calendar for Pellet Mill Magazine focuses entirely on Asian production and consumption. I’d say we’ve found our cover story.