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China keen for more NZ forests

China Forestry Group New Zealand, a subsidiary of state-owned China Forest Group Corp, is keen on mopping up more local forests after buying a chunk of estates from the New Zealand Superannuation Fund. Source: Business Spectator

The North Island forest estates are the first step in the Chinese company’s strategy to invest in the local industry and look at other opportunities, it said in a statement.

The general manager of China National Forests, Lin Zhan, expects the forestry investment will generate new jobs.

“China Forestry Group NZ will establish a permanent base in New Zealand in order to manage the newly acquired forest estate,” Mr Lin said.

“To ensure that the forests are managed to best practice, New Zealand based in-forest suppliers will continue to provide the in-forest services.”

The Chinese company bought the majority of the portfolio, subject to Chinese regulatory approval, after getting the thumbs up from New Zealand’s Overseas Investment Office, the super fund said in a statement.

Part of that deal includes offering a scholarship to promote trade and business between New Zealand and China.

China Forestry Group NZ director Graeme Wong said it sees the acquisition as a long-term investment to retain continuity of supply.

“Owning the forestry estate will not likely see any reduction in the purchase of export logs from other New Zealand suppliers,” Wong said.

“Rather it should see the company sourcing more of its timber requirements from New Zealand.”

The superannuation fund, known as the Cullen Fund for its architect former finance minister Michael Cullen, sought a buyer for the blocks last year, when it valued the estates at some $91.1 million as at June 30.

General manager of investments Matt Whineray said the sale would let the fund focus on other domestic and international investment opportunities.

“We see more attractive investment opportunities for our purposes elsewhere,” Whineray said. “We are always working to ensure that we have the best possible mix of investments in the fund.”

The rest of the portfolio was sold to New Zealand investors.

The Cullen Fund recently upped its stake in the Kaingaroa Forest, which is still the fund’s single biggest asset worth $945.1m as at March 31, and recently bought a $140m stake in local IT company Datacom and 11 local dairy farms.

The fund’s timber assets, which accounted for 6% of the fund as at March 31, will still exceed $1 billion after the sale.