New-look Tas­ma­nian forestry busi­ness

Australian Forests and Timber - - IN THE NEWS -

TAS­MA­NIA’S MAIN forestry op­er­a­tions are in for a ma­jor shake-up fol­low­ing the Gov­ern­ment’s move on Forestry Tas­ma­nia ... there will be a new name, a leaner staffing plan and more self-re­liance.

From 1 July next year Sus­tain­able Tim­ber Tas­ma­nia will be the new op­er­at­ing name, but, ac­cord­ing to Min­is­ter for Re­sources Guy Bar­nett, it will re­main a GBE but will be down­sized and will be leaner, more ef­fi­cient and more ag­ile and will have a more de­fined com­mer­cial fo­cus.

The Min­is­ter said the Gov­ern­ment ac­cepted the ad­vice of the Forestry Tas­ma­nia Board that while the re­quired wood vol­umes are in fact avail­able on the Per­ma­nent Tim­ber Pro­duc­tion Zone, a sig­nif­i­cant vol­ume can­not be har­vested com­mer­cially at cur­rent prices.

“This is be­cause of fac­tors such as the quan­tity and qual­ity of wood, the dis­tance to mar­ket, cost of har­vest­ing, and the cost of new road con­struc­tion for coupes that are not read­ily ac­ces­si­ble from the ex­ist­ing road net­work,” Bar­nett said.

The Gov­ern­ment also ac­cepted ad­vice from the Board that even af­ter sub­stan­tial re­cent con­tract price in­creases in­clud­ing built-in es­ca­la­tion clauses, it would not be pos­si­ble for the busi­ness to meet its full sup­ply obli­ga­tions at a com­mer­cial rate of re­turn for the fore­see­able fu­ture.

“The Gov­ern­ment does not ac­cept that the answer lies in a re­turn to per­pet­ual sub­si­dies or other as­sis­tance to sup­port FT’s com­mer­cial op­er­a­tions. Tas­ma­ni­ans are en­ti­tled to ex­pect that in­dus­try pays its own way for the pub­lic na­tive for­est that it utilises.

“The Gov­ern­ment recog­nises – but does not ac­cept - the Board’s ad­vice that a com­mer­cial so­lu­tion would be to sell all of the hard­wood plan­ta­tions, ac­cept a con­se­quent re­duc­tion in the sus­tain­able yield from the Per­ma­nent Tim­ber Pro­duc­tion zone, and use pro­ceeds from the full sale of plan­ta­tion to com­pen­sate mills for the cut­backs.

“This would sig­nif­i­cantly im­pact jobs and fam­i­lies, par­tic­u­larly in re­gional com­mu­ni­ties, and would be di­rectly con­trary to the Gov­ern­ment’s plans to grow the in­dus­try. It will not hap­pen un­der this Gov­ern­ment.

“The Gov­ern­ment is not pre­pared to im­pose a re­duc­tion in wood sup­ply to in­dus­try and give rise to wider sov­er­eign risk con­cerns for the Tas­ma­nian econ­omy.

How obli­ga­tions are met

“This is not about whether wood sup­ply obli­ga­tions are met – it is about how those obli­ga­tions are met.

“The Gov­ern­ment will not re­duce the leg­is­lated re­quire­ment for Forestry Tas­ma­nia to make avail­able 137,000 cu­bic me­tres of high qual­ity sawlog to its cus­tomers and it will not sup­port pro­pos­als that would see the busi­ness un­able to hon­our its cur­rent wood sup­ply con­tracts,” the Min­is­ter said.

The Gov­ern­ment pre­vi­ously an­nounced that Forestry Tas­ma­nia would di­vest so much of its hard­wood plan­ta­tion as­sets as is re­quired to sup­port its op­er­at­ing deficits over the tran­si­tion pe­riod, sub­ject to ap­pro­pri­ate due dili­gence, in­clud­ing im­pact on sus­tain­able yield and cer­ti­fi­ca­tion.

That due dili­gence process has been com­pleted with the as­sis­tance of Sale Ad­vi­sors Gre­sham Ad­vi­sory Part­ners Lim­ited. FT’s es­tate is ex­ten­sive and con­sists of var­i­ous grades of plan­ta­tion es­tate, with around 20,000 ha man­aged for sawlog pro­duc­tion post 2027. “This is an im­por­tant part of the sus­tain­able sawlog yield and for that rea­son we have de­ter­mined to re­tain it. By do­ing so – in con­junc­tion with other re­source changes we are mak­ing - there is no ques­tion about the sus­tain­abil­ity of the leg­is­lated re­quire­ment to make avail­able 137,000m3 of high qual­ity sawlog each year, and there­fore no detri­ment to cer­ti­fi­ca­tion,” the Min­is­ter said.

Pulp­wood plan­ta­tions sale

The Gov­ern­ment agreed that FT would pur­sue the sale of only the re­main­ing pulp­wood plan­ta­tions. Fur­ther de­tails will be re­leased soon, but the Gov­ern­ment’s view is this will in­volve the sale of a long term forestry right – in the order of 99 years.

In line with ear­lier com­mit­ments, there will be no out­right sale of land on which the plan­ta­tions are stand­ing.

FT also owns around 6,000 hectares of for­mer farm prop­er­ties which it pur­chased on a free­hold ba­sis for plan­ta­tion con­ver­sion. These will not be part of the long-term forestry rights sale, but the Board will re­tain the op­tion to con­sider fur­ther whether a re­turn to agri­cul­tural use may be ap­pro­pri­ate for these prop­er­ties at a later time.

While it would be un­wise for the Gov­ern­ment or Forestry Tas­ma­nia to set a price ex­pec­ta­tion for the ap­prox­i­mately 30,000 hectares of plan­ta­tion re­source ahead of the mar­ket process, the in­tent is that sale pro­ceeds are used to re­pay debt and help fund the tran­si­tion pe­riod as the busi­ness moves to a com­mer­cial model.

On the sub­ject of spe­cial tim­bers, the Min­is­ter said ac­cess to spe­cial species tim­bers had been sig­nif­i­cantly im­pacted by cre­ation of new re­serves, in­clud­ing the 2013 ex­ten­sion to the Tas­ma­nian Wilder­ness World Her­itage Area.

“The Gov­ern­ment will pro­ceed with the cur­rently leg­is­lated pro­gram to al­low ac­cess to the FPPF Land from Oc­to­ber 2017, sub­ject to a new Spe­cial Species Tim­bers Man­age­ment Plan which is cur­rently un­der devel­op­ment.

“The Gov­ern­ment also will re­quest the busi­ness to con­sider the op­por­tu­nity for spe­cial species tim­bers ac­cess to around 340,000 hectares of the Per­ma­nent Tim­ber Pro­duc­tion Zone which is in in­for­mal re­serves or oth­er­wise un­avail­able for com­mer­cial eu­ca­lypt har­vest. Any such ac­cess would of course need to be con­sid­ered by the Board in the con­text of the cur­rent ap­pli­ca­tion for FSC cer­ti­fi­ca­tion.”

Min­is­ter Bar­nett said that in com­ing to its de­ci­sions over the fu­ture of the pub­lic forestry op­er­at­ing model, the Gov­ern­ment was con­scious of en­sur­ing the for­est in­dus­try, in­clud­ing the pri­vate forestry sec­tor, con­tin­ued to grow in Tas­ma­nia.

“It is there­fore Gov­ern­ment’s in­ten­tion to con­sult with the pri­vate for­est grow­ers and man­agers in the com­ing months, over the role and func­tions of Pri­vate Forests Tas­ma­nia and what, if any, fur­ther re­forms are rec­om­mended.”

“The Gov­ern­ment is not pre­pared to im­pose a re­duc­tion in wood sup­ply to in­dus­try and give rise to wider sov­er­eign risk con­cerns for the Tas­ma­nian econ­omy.”

■ Guy Bar­nett, Tas­ma­nian Min­is­ter of Re­sources.

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