Foresters left up in the air

By PAM GRAHAM



Investment in wood-processing in Northland will go ahead with or without Carter Holt Harvey.

This is the view of Ken Crean, chief of Northport, the region's gateway for commodity exports, and it is shared by others.

An Enterprise Northland report circulating for comment in the industry details the amount and quality of the resource becoming available.

But no one knows whether Carter Holt Harvey, owner of 30 per cent of the region's forests, will take up the opportunity, and what some industry participants have to say about that is unprintable.

It is now more than 20 years since New Zealand Forest Products went north and started buying marginal land for a new forestry region capable of supporting a pulp mill near Dargaville.

The trees matured, even if the plans did not.

The buy-up stopped, leaving Northland with 11 per cent of the nation's forest estate.

The forestry industry is the region's third biggest behind pastoral farming and tourism, and even though markets are poor now and Carter Holt has cut its harvest, forestry will increase because the crop is approaching maturity.

The harvest this year was expected to be about 2.57 million cubic metres before Carter Holt cut back.

Figures vary depending on harvest assumptions, but in the next 10 years on average 4 million to 4.5 million cu m a year could be harvested.

The report for Enterprise Northland's Forestry Development Group says that by 2010 at least 2 million cu m a year could be processed locally.


The region has 33 processing plants but almost half of its sawmills handle less than 1000 cu m a year.

It has the lowest proportion of primary processing to total harvest of any in the country.

If two new sawmills go ahead, the goal of processing 2 million cu m annually would be a long way to being achieved. Whangarei sawmiller TDC is seeking resource consent for a mill to be built in stages which could eventually have a log intake of 700,000 cu m a year.

Carter Holt envisages a sawmill of a similar size on 55ha bought near Marsden Pt where it has a new laminated veneer lumber plant.

The company has supported the development of new deepwater port facilities at Marsden Pt, which will facilitate forestry exports.

But Carter Holt has ownership of its forests under review and has not committed itself to the sawmill it calls Project Bigfoot.

"There are substantial uncertainties about the availability of the Carter Holt wood flow," says the report, written by forestry consultants Chandler Fraser Keating.

Carter Holt has told the Government that new investments will not be forthcoming unless policies affecting business improve, and it is particularly concerned about the cost and security of electricity supply.

The company's chief executive, Peter Springford, has said the sawmill would cost around $100 million and involve rationalisation of other mills.

A spokesman said the purchase of the land left the company's options open but the mill was one of many projects competing for capital.

Carter Holt has already bought large processing assets in Australia and is looking for a foothold in China.

Its stated strategy is to be a involved in a number of countries.

The company's critics say that it will lose competitiveness here if others build new sawmills of world scale. They say Carter Holt should decide if it is committed to New Zealand and if not, get going. It makes planning for others difficult.

Northland produces dense wood suitable for structural uses, such as framing for houses. It is close to Auckland and two days closer to Australia by ship than the central North Island.

"I really do believe that outside of the central North Island it is the best region to invest in and in five to seven years time it will look like a mini central North Island but with a better quality wood and a bit more accessible port," said Michael Edgar of Global Forest Partners, which manages a fund that bought 50 per cent of Mangakahia Forest from Shell Renewable Resources.

The other half of the 24,000ha forest is owned by Carter Holt.

"There are various international processors aware of the opportunity in Northland and considering the fit with their strategic plans," Mr Edgar said.

The report says that if TDC's plans are realised, demand for the highest-grade S logs will exceed supply until 2009, while there will be a plentiful supply of lower grade A and K logs.

What to do with residue from saw mills and lower-grade logs remains an open question.

Options include a medium-density fibreboard plant, wood chip exports, and using wood as fuel for power generation.

There has been no suggestion of a pulp mill.

"We have a challenge to utilise the lower-grade resource," said Derek Colebrook, chairman of the Enterprise Northland Forestry Development Group. "If we are thinking about attracting greenfields investment it is not necessarily targeted at large corporates," he said.

But sawmills in Northland have gone bust and banks are reluctant to lend to them. Harvesting contractors enticed to the region found the work disappeared with the harvest cutback and workers left the industry.

"What we hope to do is basically make Northland more investor friendly," said Colebrook.

The group would co-ordinate information, try to get resource consent in advance for some areas in the region and work with others on infrastructure, labour and skills, resource management and energy issues.



NORTHLAND'S WALL OF WOOD

* At least 4 million cu m of wood a year could be harvested in Northland over the next decade.

* A big expansion in wood-processing capacity is needed to handle the avalanche of timber.

* Carter Holt Harvey, which owns nearly one-third of the region's forests, is frustrating the industry by refusing to commit itself to a big mill near the new Marsden Pt deepwater port.