Sumitomo buys Hancock's Nelson forests

29 December 2015

Giant Japanese company Sumitomo has bought out Hancock Forest Management's 30,000 hectares of Nelson region pine forests in a $370 million deal that gives its big Richmond timber processing plants long-term security of supply. NPI already has 5000ha. The buyout covers the former Baigent forests to the east of Golden Downs, and a smaller area at Hira, east of Nelson city.

Sumitomo is 100 per cent owner of Nelson Pine Industries (NPI), which produces large export volumes of medium-density fibreboard (MDF) and laminated veneer lumber (LVL) from its sprawling site just outside Richmond.

The purchase was concluded just before Christmas and was still subject to Overseas Investment Office approval, NPI managing director Murray Sturgeon said. Sumitomo would own the forests through its New Zealand arm, which holds all of NPI.

He said the management of the forests was yet to be worked through, with Sumitomo not taking over until June.

West Coast-Tasman MP Damien O'Connor said Sumitomo was a key player in the region's economy, and was a clear example of positive foreign investment. "It's a positive move to see more vertical integration, even if the reality of that in many cases will mean total ownership by foreign interests. 

"Sumitomo has invested huge amounts in additional processing and this move to secure supply is an understandable one, and probably beneficial to the region."

Nelson MP Nick Smith said Sumitomo had always felt a vulnerability around the supply of wood to its investment of more than $800m in its Nelson plant. Over the last 30 years NPI was one of the few examples of increased investment in processing domestic logs, and he hoped this new investment would give Sumitomo the confidence to further expand its processing, Smith said.

Sumitomo was one of the more constructive long-term investors in the New Zealand economy and he wouldn't foresee "major difficulty" in getting OIO approval for the buyout.

Stuff story by Bill Moore. To read the full article >>