Australian forestry company gears up for NZ expansion with multi-million fund

In December 12, 2017

Australian forestry company New Forests has a war chest of up to $500 million set aside for investing in New Zealand forestry.

Managing director for Australia and New Zealand, Mark Rogers, said the money had been recently raised from mainly European investors.

“We raised $873 million and we need to spend a big slab of it here, at least $400-500m for trees and infrastructure, but not trucking and harvesting because the locals to do that.”

“Pre-election we were thinking it might be quite difficult [to operate] but post-election it’s clear both sides understand that if foreign capital dried up in forestry, New Zealand would have a smaller sector.”

The Forest Owners Association said the Government would be keen to tap into these funds as well as other overseas investment for forestry, partly for environmental reasons.

“My understanding is that the new Government’s intention to see a billion trees planted in the next ten years was largely reasoned on plantation forestry being the only immediate and available tool to reduce New Zealand’s net greenhouse gas emissions to a level anywhere near Paris Agreement commitments,” Association president Peter Clark said.

The Government has attached a rider to its policy on forestry investment to the effect companies need to develop local processing.

Rogers said besides having invested in forests, New Forests already owned a mill in Blenheim employing about 85, and was investing $10-15m into that in order to bring it up to scratch.

New Forests has four radiata pine plantations in New Zealand, totalling 18,800 hectares: Taupo Estate (3900 hectares), Wairarapa Estate (9700 ha, Blenheim Estate (4600 ha), and Southland Estate (600 ha).

It owns about 60 per cent of its forestry assets in freehold ownership, with 40 per cent in other forms such as leasehold, or having cutting rights.

Since 2005 it has invested more than $180m into New Zealand forestry.

Rogers said it was a significant step to invest in local processing. Companies had to be assured there would be sufficient labour, roading infrastructure and access to ports.

About 40 per cent of its trees are processed in New Zealand, much of them as structural timber for the Australian housing market, and 60 per cent are exported as logs.

Rogers made no apologies for the fact New Forests sent raw logs overseas because it was a good market.

He said one of the critical things was for land to find its highest best use, especially in New Zealand where land was generally very productive.

“The big challenge isn’t finding the capital and planting the trees, it’s finding the available land. The price of land is $3-4000 per hectare and it’s only $1500 to get the trees in the ground.”

Clark said most of the land to plant the extra trees on, to meet the billion-tree target, would be Maori or farmer-owned.

Rogers painted an optimistic portrait for forestry, saying global wood supply was shrinking as countries moved away from cutting native forests.

New Forests was always on the lookout for land to either own or lease. Its investors were often pension funds or individuals who were looking for a stable investment returning about 3 per cent a year.

Like Central Plateau-based company Timberlands, New Forests is also doing its bit for falcon or kārearea conservation.

The threatened raptor favours pine forests because of the abundant prey but it nests on or near the ground, making it vulnerable to stoats, weasels, rats and cats.

Merrill and Ring, who manage the Blenheim Estate, pay the Marlborough Falcon Trust $5000 a year to help its work, as well as educate contractors who may come across kārearea on the job.

In Australia the company has to manage forests to protect koalas, so that when it sees a population of the marsupials it spares the trees they are living in.

New Forests manages more than 780,000ha of land and forests and is headquartered in Sydney with offices in San Francisco, Singapore, and New Zealand.

Australian forestry company gears up for NZ expansion with multi-million fund by GERARD HUTCHING.  Available from <> [Last updated 12:58, December 11 2017] Photo: Article Source (KATE TAYLOR/STUFF)