KEY POINTS:
Carter Holt Harvey's forests will be replanted as they are harvested by their new owners, ensuring ongoing wood supply for the pulp, paper and saw-milling industries.
Hancock Timber Resource, which this month bought four former CHH companies owning 200,000 hectares off Graeme Hart in the largest forest sale in this country, has laid to rest fears that such replanting may not take place.
Hancock president Dan Christensen said the forests bought from CHH for the two funds especially established for the purchase were likely to be replanted when harvested.
The funds are open ended, meaning they have no set investment period.
The CHH estate has a range of different types of ownership structures but 80 per cent have a perpetual element, which means they can be replanted.
"Anything we have a perpetual right on we intend to fully replant," Christensen said.
"We are buying this as a forest. Most of the land suitable for dairying conversion has already been converted or reserved out."
The investors in the funds - one covering the CHH forests in the North Island and one in the South Island - include Hancock's Canadian owner Manulife, Australia's Perpetual and UniSuper and undisclosed investors, including some from Europe.
The sale raised a range of issues, including wood supply to whatever business Hart is turning what is left of CHH into, as well as harvesting and replanting strategies affecting hundreds of contractors.
And it has come at a time when industry participants are wondering if forests coming on stream in Northland, once dubbed by CHH as a "wall of wood", will be processed.
Other questions involve whether central North Island forests will be replanted long term if difficult export markets continue.
Hancock, which already managed former Fletcher Challenge forests in the central North Island, is increasing the workforce in its forest management company by 90 to about 115 to handle the CHH purchase.
Hancock also does not buy into the idea the central North Island's forest estate will shrink as land is converted to dairying and as the Crown returns land to Maori in Waitangi Tribunal settlements.
"The central North Island will continue to be a strong forest products region," Christensen said.
Karl Kny, managing director of the Australasia region for Hancock, said it was continuing supply arrangements on standard terms with no real change in volumes.
Bruce McKnight, Hancock's managing director and chief operating officer for forest operations, said it had made commitments to CHH mills, which also had other sources of supply.
Hancock also had additional volume left over to market.
McKnight believed the Overseas Investment Office had found Hancock's industry relationships working well. "Our track record speaks for itself," he said.
The timber management organisation (Timo) made its first investment here in 2004 and now oversees a total of 296,000ha of forests, more than anyone else.
Hancock would not comment on whether it had any other acquisitions pending here. Timo runs each investment separately for groups of investors.
Hancock is not endorsing the theory that Timo will bring overseas processors to New Zealand.
"We are not a processor ourselves. We are a tree grower," he said.
"But we do hope the industry will continue to grow over time."
Hancock would do anything it could to "help that along".
Northland was a case in point. Many forests there are maturing for the first time, providing an opportunity for the processing industry.
"We would like to use our resources to encourage the industry to continue to grow there so they can use up that resource as it matures," Christensen said.
"There is a considerable resource that can support a greater industry than currently exists."
Industry speculation has it that Hart is considering either establishing a large sawmill in Northland or buying an existing one and expanding it.
Hancock admitted to having organised an ongoing relationship with Hart's processing businesses but did not know what he was planning.
"We will do everything we can from a resource standpoint to make sure CHH is successful in the future," Christensen said.
The sale was controversial because three Maori trusts - Puke Makoiti, Te Rongoroa and Maraeroa C - owning 10,000ha in the CHH portfolio said they had funding to buy the forestry rights on their land.
They are angry Hart would not consider a separate sale to them and have complained to the OIO and taken a case in the Maori Land Court on the issue that will be heard in Hamilton on February 15.
Hancock said confidentiality agreements barred it from talking to the trusts concerned and it had contacted them immediately after the sale was completed.
Maori trusts spokesman Willie Te Aho said he expected Hancock to only be around for about 15 years and it would have had tax advantages to its purchase.
He estimated more than 50 per cent of the wood from the forests sold would supply CHH businesses.
Hancock said it had generally had positive feedback from Maori trusts it had had contact with in the past.
There was generally an "alignment of interests" because trusts owning land had a stumpage share component to their participation so they benefited if tree owners increased the value of the resource.
Kny said Hancock had no specific plans to change harvest strategy.
"One of the reasons why we were interested in acquiring these particular forests is that they have been well managed," Christensen said.
Another reason Hancock was interested in this country was that the science and technology available to forest growers was world class.
Christensen believed radiata pine would continue to be the main species grown here.
- NZPA
