Agreement over sale of forestry assets

Press, 19 July 1989, Page 8

Agreement over sale of forestry assets

PA Wellington The Government and Maori interests have reached agreement over the sale of Crown forestry assets worth up to $5 billion, on the same day that the Forestry Corporation has reported a record profit of $B2 million.

A spokeswoman for the Minister for State-Owned Enterprises, Mr Rodger, said yesterday that details of the agreement would be released soon. Forestcorp yesterday reported a 36 per cent increase in profit to $82.4 million for the year to March 31, compared with a $60.6 million profit last year. The result was on sales which increased 24 per cent to $292.7 million. Forestcorp was established as a State-owned enterprise on April 1, 1987, to manage the Crown’s commercial forest assets and sawmills. As part of the Government’s asset sales programme, the forestry assets — valued at up to $5 billion — will soon be sold. Forestcorp is acting as agent for the Crown in the sale.

The chairman of Forestcorp, Mr Alan Gibbs, said in the company’s annual report released yesterday, that the main hurdle to the sale was providing purchasers with secure title to the forestry resource, while enabling the consideration of Treaty of Waitangi land claims. “Obviously investors will not pay hundreds of millions for forests and collectively invest $6 billion to $7 billion in new industries if they do not feel that they have absolutely secure rights to the resource,” Mr Gibbs said. Forestcorp executives were unable to comment yesterday on the agreement with Maori representatives, which was approved by Cabinet on Monday. It is understood the

agreement will allow the Crown to sell its exotic production forest. It does not cover indigenous production, or two Stateowned sawmills.

The Crown will sell existing trees and wood supply contracts while buyers will pay an annual rental for land. If the Waitangi Tribunal calls for the return of land, the buyer will be able to stay to harvest the tree crop when it matures. The tribe will be paid rental in the interim, and compensated for the restriction of not being able to sell or use the land itself. Mr Gibbs said in the annual report that there would be dozens of individual sales. Forestcorp was ready to

sell some of its 551,413 hectares of forests, while the rest would be placed on the market over the next nine months, he said. Mr Gibbs said the forest would provide export receipts of $2O billion a year within 20 years, which was 41 per cent of total exports from New Zealand in 1987. This was sufficient resource for up to two new kraft pulp mills, three new paper mills, two new medium density fibreboard mills, 15 new sawmills, and log and chip sales of 4 million to 6 million cubic metres a year. Mr Gibbs said this would require investment of $6 billion to $7 billion, but such investment could not be made without the settlement of the property

claims. The managing director of Forestcorp, Mr Andy Kirkland, said yesterday that in the two years of its existence, Forestcorp had returned $lOO million to the Crown, and generated, cash surpluses in excess of $l4O million. In the latest year, a subsidiary, New Zealand Timberlands, Ltd, had increased sales and revenue, including an increase of nearly 100 per cent in export returns, he said. Prolog, Forestcorp’s sawmilling arm, achieved a profit of $4.2 million, compared with a loss of $200,000 in its first year. This resulted from improved productivity, rationalisation of activities and a 60 per cent increase in export sales, Mr Kirkland said.