Bushfires place NSW softwood privatization plans under threat

The potential privatization of government-owned softwood plantations in New South Wales is in doubt after assets were hit by Australia’s ongoing bushfire crisis.

The state government announced in September that it had launched a scoping study into the possible sell-off of around 230,000 hectares of radiata pine forests, owned and operated by Forestry Corporation of NSW.

A significant portion of FCNSW’s softwood plantations are in the Snowy Mountains region and have been directly affected by the Dunn’s Road fire, which has burned through almost 300,000 hectares of land and is still out of control.

A spokeswoman for FCNSW told Agri Investor that the Dunn’s Road fire had burned through approximately 40,000 hectares of softwood plantations, comprising around 25 percent of the total plantation assets in the area.

Multiple sources told Agri Investor this was likely to have a negative impact on the prospects for privatization, as FCNSW and the state government would need to focus efforts on the clean-up and salvage of burned logs.

The burned area covers both state- and privately owned plantations. FCNSW did not respond to a request to clarify exactly how much of the affected land it owned. One market source indicated to Agri Investor that the commission’s affected area could cover more than 30,000 hectares, but this could not be confirmed.

US-based Global Forest Partners is also known to have significant softwood plantations in the area, which it manages through its Snowy Mountains Forests subsidiary. The firm’s chief investment officer and partner Mike McFetridge said that it could not yet confirm the areas affected by the fires, but that “conditions on the ground continue to be very challenging.”

“We are co-operating with state authorities to suppress fires that threaten plantations and property within our operating area,” he said.

When asked whether the unfolding natural disaster could stop the FCNSW privatization from proceeding, a spokesman for the NSW treasury said the impact of the bushfires would be considered as part of the scoping study.

“The scoping study remains ongoing and a final report will be handed to the NSW government later in the year for consideration,” the spokesman said. “The state will only proceed with the long-term lease if it is deemed to be in the best interests of the people of New South Wales.”

A FCNSW spokeswoman said in a statement: “The current fire situation is significant and once the fires are contained, the Forestry Corporation will work to get a complete picture of the impact across various ages of tree stands. We are committed to working with the local timber industry on recovery plans and salvaging the burnt logs across the plantations as soon as possible.”

Separately, Australian Securities Exchange-listed Kangaroo Island Plantation Timbers said today that approximately 90 percent of its assets on the island in South Australia had been burned by a large fire that is still out of control.

The firm owned 86 percent of the plantation forestry on Kangaroo Island, with 80 percent of its assets hardwood and 20 percent softwood. Its shares are currently in a voluntary trading halt.