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Gunns eyes plantation assets

Posted on July 31, 2009, 8:08am

Gunns has emerged as a potential bidder for Timbercorp and Great Southern’s bluegum assets on the back of the announcement it has been chosen as the preferred provider of a second hardwood chip facility at the Port of Portland.

The port infrastructure announcement yesterday signalled a major step towards cashing in on the Green Triangle’s extensive bluegum estate.

But that news developed further with chief executive Greg L’Estrange telling The Border Watch that Gunns was always looking at opportunities.

He said numerous parties would be interested in the estates operated by the failed managed investment scheme companies, including the Green Triangle’s bluegums.

“We will be having a look,” he said.

“There is a process and we are watching and working through those processes.”

He said Gunns had been pleased with its recent investment in the region when it purchased Auspine and had managed to maintain the business, including mill activity, despite the economic downturn.

Meanwhile, Port chief executive Scott Paterson said construction was expected to begin before the end of the year on the new port infrastructure, which would be needed regardless of who took control of the former Timbercorp and Great Southern plantations.

“The Green Triangle region’s plantations were dominated by three managed investment scheme companies — ITC is still running and has trees ready to export and although the Great Southern and Timbercorp forests are in disarray, those trees will need an export facility to go through,” Mr Paterson said.

“No-one knows who will own those assets, but we couldn’t afford to wait to find out because we would have then faced intense criticism from growers or new owners as there wouldn’t be enough capacity at the port to export when they want to turn their trees into cash.”

Mr Paterson said there were plans to upgrade the existing port woodchip facility, operated by GrainCorp and South West Fibre.

The existing facility is set to be expanded to handle an estimated 1.5m tonnes, including 1.3m tonnes from the South West Fibre Myamyn woodchip mill, which is due to begin processing logs next month.

But Mr Paterson said a second terminal was needed to boost volume.

“Without the second facility, trees would have had to stay in the ground,” he said.

“We see this as good news for growers because they will have some choice how to get their product to export, which means competition — if the pulp mill gets up at Penola that will add a further option.”

Mr Paterson said if the Penola mill was developed, it would take 50pc of the region’s hardwood volume, but enough hardwood chip would remain to utilise the two port facilities, although with less activity.

He said Gunns’ commitment to fund and operate the new export infrastructure, expected to cost tens of millions of dollars, was a strong show of confidence.

Gunns and the port operators will finalise contractual arrangements and design the new facility over the next three months.

Mr Paterson said the region’s three MIS companies had developed concept plans for the new facility before the demise of Great Southern and Timbercorp, which was followed by an extensive process that led to the decision to chose Gunns to step in.

“We expect to be handling over 3m tonnes of plantation-grown hardwood chips per annum from 2011 and currently the port can only handle one quarter of this volume,” he said.

“Therefore we need to urgently seek ways to increase our capacity to handle the estimated A$300m in exports.”

Mr L’Estrange said Auspine exported more than 10m tonnes of pine woodchips through the port over the past 26 years and the infrastructure announcement was a positive step in developing the region’s growing exports.

“Gunns owns almost 50,000 hectares of plantation land in the Green Triangle and we operate the region’s largest pine sawmill, timber treatment plant and export woodchip facility,” Mr L’Estrange said.

“This new facility will provide much needed additional capacity to handle the region’s plantation-grown blue gum hardwood chips.”

JASON WALLACE

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