Log exporters talk deal

By PAM GRAHAM

New Zealand's forestry giants have agreed in principle to export their logs together and have invited others to join in.

Carter Holt Harvey and the receiver of the central North Island Forest Partnership (CNIFP) said last night that they were working on a plan to set up a company that would sell and transport logs to export markets and ultimately develop NZ wood standards and brands.

Fletcher Challenge Forests' chief executive Terry McFadgen said his company liked the concept but was waiting for details before pledging its export logs.

The new entity, with a working name of Export Co, could initially handle about 40 per cent of log exports, and more if Fletcher joined in.

The attempt to co-ordinate marketing on a grand scale for the first time comes amid a debate about industry consolidation to maximise returns from forests before the "wall of wood" arrives.

The idea is to cut marketing and transport costs and ultimately improve prices.

Carter Holt Harvey chief executive Chris Liddell rejected the suggestion that a "Fonterra" for forests was being born.

"I'm not sure what is meant by Fonterra-style. In essence, we are trying to pool our resources and get benefits and share the benefits," he said. That was a private sector model.

The new entity would never be a single seller for New Zealand, "but I like to think it could sell on behalf of a large proportion of the industry".

The creation of a New Zealand brand is being considered.

Carter Holt was leading the initiative by pledging all of its log exports to the entity but said it did not want to be seen as controlling it.

"The beauty of this is people can still buy and sell their own forests. This gives them some benefits in the marketing without a lot of costs," Liddell said.

Will it increase prices in log export markets which have been weak for years?

"The direct benefits are going to be on the cost side of sharing logistics and transport," Liddell said. Set-up costs would be "in the $100,000s". Export Co would have a staff of 20 to 30 people.

"In concept, the entity would just recover whatever costs to run it and would pass the benefits back to the owners of the trees."

It has no impact on onward processing of wood.

CNIFP receiver Michael Stiassny said the development was separate to the sale of the forests.

"We think this is a positive move for the asset and we think any prospective purchaser will look very favourably at this."

A buyer of the forests can withdraw from the arrangement. The new entity has nothing to do with management of forests or domestic sales of logs.

Separately, the management of the CNIFP's forests is under review.

"Under any new management arrangement, there are likely to be a number of operational aspects of the business that CNIFP and Fletcher Forests would continue to co-operate on. But CNIFP would ultimately have its own domestic management entity, which it would control, Stiassny said.

Guinness Peat Group director Tony Gibbs said the marketing development was "all good commonsense ... It's where I'm coming from".

Separately, GPG announced it had raised its stake in forestry and biotech company Rubicon to 25.8 per cent. Its takeover bid for Rubicon, priced at 75c a share, ends today.