Rayonier puts its roots down

By PAULA OLIVER forestry writer

American timber giant Rayonier says it has no plans to leave New Zealand, despite news that it is making strides in selling its Nelson forest blocks and Mataura panel mill.

Instead, Rayonier is understood to be looking to buy more forest assets.

It would not confirm if it was interested in bidding for the assets of the Central North Island Forestry Partnership, which fell into receivership in February.

The company said it wanted to sell some of its local assets as part of a strategy to return to its core businesses - timberlands and performance fibres.

It traditionally sells standing timber on an auction basis, and operates pulp and lumber mills in the US. Its New Zealand forestry holdings of 90,000ha make it the country's third-largest owner, behind Carter Holt Harvey and Fletchers.

Rayonier's move to build a medium density fibreboard (MDF) plant in Mataura in the late 1990s was the company's first foray into wood processing, although its American head office changed tack late last year and decided to go back to basics. It bought a giant forest estate in the southeast United States, and elected not to follow the wood processing strategy.

It then put its Mataura plant, and 9000ha forestry in Nelson on the block.

"We have absolutely no plans to leave," Rayonier spokeswoman Sylvia Hunt said. "Our chief executive chairman, Lee Nutter, was in New Zealand recently and he told a staff meeting that quite categorically."

Rayonier took on sizeable debt to buy the American estate, and said it planned to use the strong cashflow generated from its two core businesses to reduce the debt.

The Mataura plant, said to have cost $180 million to build, has a capacity of 165,000msup3 a year. It survived a tough launch around the time of the Asian crisis, and is open to further expansion.

Its sale comes as many local forestry companies look to invest in processing facilities to make the most of an expected harvest boom in the next 10 years.

One company lining up the asset is Nelson Pine Industries, an MDF specialist and wholly owned subsidiary of Japanese company Sumitomo. It operates the country's largest MDF facility in Nelson - with a 350,000msup3 capacity - and says in an application for approval from the Commerce Commission that it needs to increase capacity to take advantage of an expected MDF boom in Asia.

CHH and Fletchers also produce MDF in New Zealand, and most of it is exported.

Rayonier remains Southland's largest forest owner, and has holdings on the west coast of the North Island. It recently signed an agreement with Ngai Tahu to buy 40,000ha of land in the deep south that it already manages.