Tiwi Plantations Corporation denies it is on verge of collapse and unable to repay debts

In March 21, 2017

(AU) – The forestry operation that Tiwi Islanders have hoped for six decades will lift their communities out of poverty has denied it is about to collapse because it is unable to repay its debts.

Tiwi families on the islands, 70 kilometres north of Darwin, have supported the Tiwi Plantations Corporation (TPC) with millions of dollars in loans since November 2009 when it took over the project.

The Northern Territory Government, which is a secured creditor of the corporation, said it agreed in October last year to freeze repayments from a taxpayer loan of $6.8 million.

Now the TPC has told Tiwi family groups that it does not have the money to repay loans they have provided, which are now due.

The Munupi Family Trust, whose members have parts of the 30,000-hectare acacia mangium plantation on their Melville Island land, has not been paid back a $500,000 unsecured loan it gave to the TPC.

But the TPC’s managing director Roger Smith has rejected any suggestion it is in danger of insolvency.

“The forestry operation isn’t about to collapse,” he told the ABC.

Mr Smith said those lenders include financial institutions and the Northern Territory Government, but that the corporation is not looking for extra support from the Government.

The company is appealing to Tiwi families to be patient.

Mr Smith is holding out hope that the deal the plantation has with Japanese company Mitsui for its wood chips will enable repayment of the loans.

“The project is still in its infancy,” he said.

“We will operate for eight years. We have made six out of 56 shipments (of woodchips). We still have 50 shipments to go.”

Mr Smith said he did not want to comment further until he was able to put further proposals to the Tiwi families.

“We can’t conduct commercial business in public,” he said.

Mr Smith estimates that “between 200,000-400,000 tonnes of wood chips would be exported every year … with an annual gross value of $18-$21 million”.

But the forestry operation has been struggling since being planted in 1999, and particularly since its then owner, managed investment company Great Southern Plantations, collapsed in 2009.

Tiwi leaders decided to take over the abandoned plantation, considered “financially unviable” by Great Southern’s receivers.

They had to borrow money to manage it and purchase harvesting and wood-chipping machinery.

The plantation has also caused environmental concerns, and in 2008 Great Southern was ordered to pay the Tiwi Land Council $1.35 million after the invasive acacia trees spread into rainforests and wetlands.

TPC Port Melville’s sole customer

The TPC is as yet the only confirmed customer of the controversial $130 million AusGroup Port Melville, also on Munupi land.

The port was redeveloped by Singaporean company Ezion-AusGroup without being required by either the Northern Territory or Federal Governments to undergo an Environmental Impact Statement to enable it to operate as an oil and gas marine supply base, as well as exporting wood chips.

That was despite advice from the Federal Environment Department’s Migratory Species Section that the marine supply base could reduce numbers of critically endangered shorebirds and threatened marine mammals including turtles and dugongs.

AusGroup is also facing financial challenges.

Its last annual report, AusGroup said its auditor PricewaterhouseCoopers had found the group had “incurred a net loss of $258,922,000 for the financial year ended 30 June 2016, and had net liabilities of $14,687,000 as at that date”.

One of the reasons given in the report was “the extended delay in the full commercialisation of the Port Melville facility”.

Ezion-AusGroup has assessed the wood chip business as “a 5 per cent margin business at best,” but it has yet to announce other customers for the port.

The ABC asked AusGroup what effect the forestry operation’s financial problems would have on its Port Melville operation, but it declined to comment.

Tiwi Plantations Corporation denies it is on verge of collapse and unable to repay debts by Jane Bardon.  Available from <http://www.abc.net.au/news/2017-03-11/controversial-tiwi-forestry-project-denies-collapse-risk/8344680> [Updated March 11; 6:30 pm]