A Hong Kong company’s NZ$101m purchase of a Northland forest is part of a trend towards Asian-oriented businesses buying New Zealand forests for security of supply, a forestry consultant says.
PF Olsen chief executive Peter Clark understood another two forestry sales to Asian investors were under way but not yet public. He said that while institutional investors had treated logs as a spot market business, demand was now so great in Asia that companies were buying their own supply sources.
This week Hong Kong investment company Greenheart Group confirmed that it is to buy the Mangakahia forest in Northland from its own largest shareholder, Sino-Forest Corporation.
Around 11,000ha of the 13,000ha forest is planted in radiata pine.
Toronto-listed Sino-Forest is a major forest plantation operator in China but is owned by a consortium of largely American or Canadian investors.
Sino-Forest was given Overseas Investments Office approval in October to buy the forest from a company associated with Global Forest Partners for an undisclosed sum. The company announced this week that it planned to issue up to US$37m (NZ$48.6m) in new shares to fund the purchase, with the remaining US$40m being borrowed from or guaranteed by Sino-Forest.
It has a three-year optional agreement to sell and supply up to US$210m of timber products to Sino-Forest subsidiaries.
“China’s demand for New Zealand radiata pine has increased significantly, with New Zealand being the second-largest exporter of softwood into China after Russia,” Greenheart chief executive and Sino-Forest vice-chairman Judson Martin said.
