The woodchip industry suffered another blow when Primary Securities Ltd moved to wind-up a string of managed investment schemes near Bremer Bay on WA’s south coast and Kangaroo Island in South Australia. Source: The West Australian
Primary Securities director Anthony Treadgold said in a letter to blue gum growers that the plantations were not worth harvesting at current prices.
He warned that the managers would not take out fire insurance on the plantations, which include about 3000 hectares at Bremer Bay with some plantings dating back to 1999.
There is a strong prospect they will be cleared of blue gums at a substantial cost and the land returned to traditional farming. It is understood Elders has already begun test clearing near Esperance as it tries to sell off its forestry interests, which include about 11,000ha of freehold land and 46,000 hectares of standing timber.
Mr Treadgold cited the high Australian dollar, a lack of demand and depressed prices as factors behind the decision to wind up the five schemes managed by RuralAus Investments.
“Growers would have to pay more to have their trees harvested and transported to a shipping port than they would receive in sales proceeds,” Treadgold said.
“There is no viable market for the schemes’ produce if harvested.”
The latest move came after a meeting with growers last month showed there was strong support for termination of the schemes.
RuralAus company secretary Scott Wallace said the board had not made a decision on whether to continue leasing the land at Bremer Bay.
“If RuralAus chooses to not continue lease payments at Bremer Bay, the trees will revert to the landowner,” Wallace said.
Albany-based Plantall Forestry Consultants principal David Wettenhall said the landowners then faced a choice of waiting for the woodchip market to improve or returning the land to pasture by removing the trees.
“In the current market they are unlikely to get a positive return from harvesting. Esperance has a very similar problem,” Wettenhall said.
While Albany port continues to export woodchips at well below capacity, there are no woodchip export facilities at Esperance.
Tasmanian company Gunns, which exports from Albany, went into receivership in October owing $700 million after posting a $904 million loss in 2011-12.
The Tasmanian company took over the management of blue gums previously owned by Great Southern and was exporting 500,000 tonnes of woodchips a year.
