17 May 2014

Some local sawmillers and iwi say the sale of cutting rights of the Greater Wellington Regional Council's forests to an overseas buyer could well have an impact on log supplies and erosion control.

The council has sold cutting rights to 5430 hectares of forests in Wellington and the Wairarapa to US company Resource Management Service (RMS). Although the price was not disclosed, LJ Hooker agent Warwick Searle said it was more than the $28.5 million valuation.

Council chairwoman Fran Wilde said the sale process had been transparent, and the result was good news for ratepayers.

"They [RMS] are taking the downside risk so if the bottom falls out of the timber market, we're covered because we're able to pay off our debt attached to those forests." Other upsides were that the council still owned the land, and had ensured it could still be used recreationally on weekends and public holidays."

Because most of the logs were already exported, Wilde did not think the move would have much impact on local sawmillers. But Adam Gresham of Kiwi Lumber, which has a mill in Masterton, said his firm had been buying some of its logs from the council and it would be talking to the new owners.

Local iwi also had concerns. Regardless of who got the cutting rights, soil conservation was crucial, said Ngati Kahungunu ki Wairarapa environmental manager Ra Smith.

"While trees mature and will need cutting, the main reason for the trees being here is in terms of soil conservation." The council should also look at planting more native species, he said.

Peter Clark of forestry consultancy PF Olsen said people should not be surprised that the cutting rights had gone to a foreign buyer because it was an investment that suited pension funds.

"Forests are incredibly capital-intensive investments. They tie up a lot of money for a long time."

The New Zealand Super Fund was starting to buy forests and "we do have KiwiSaver, of course, but that's spread over many funds, and we don't see much activity - any activity, to be frank - from the KiwiSaver managers to invest in forests."

The regional council's estate covers 12 forestry blocks including land in the Akatarawa Saddle and Puketiro near Wellington, and Hiwinui, Stoney Creek and Tauanui in the Wairarapa.

Source: Fairfax NZ, story by Catherine Harris and Caleb Harris. To read more, click here.