Australian forestry company gears up for NZ expansion

Friday 15 Dec 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 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. 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.

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