The size of the initial investment is approximately A$50 million ($36 million; €32 million) and Mitsui is the only investor in the fund, which was created for the company. The Japanese firm announced the commitment at an investor day last week.
Mitsui said in a statement that the total estimated volume of carbon offset contributions to be generated through plantation activities via the vehicle will be around four million tonnes of CO2 emissions. It added that this will be scaled up to more than 10 million tCO2e depending on market demand.
Mitsui said it “aims to combine this low carbon investment with its forestry expertise and contribute to achieving net-zero emissions of Mitsui group and its business partners by 2050.”
The firm has invested in forestry businesses in Australia since the 1990s to supply woodchips to the Asian pulp and paper industries, and in 2016 it acquired a 22.5 percent shareholding in New Forests.
In a statement, Mitsui said: “Leveraging its forestry business expertise, Mitsui envisions creating environmental values as an additional advantage of forestry assets by way of industrial approaches and contributing to solving global climate issues in collaboration with business partners who are interested in investing in ESG and low carbon businesses. Under this strategy, Mitsui will aim to develop forestry business in Australia with other parties and generate Australian Carbon Credit Units through afforestation activities.
“In the future, Mitsui will look to establish forestry carbon projects in other countries in addition to Australia by using Mitsui’s global business network and partnership with local partners and will contribute to global greenhouse gas reduction and the realization of sustainable society.”
New Forests declined to comment on the fund launch beyond Mitsui’s statement.
The Sydney-based asset manager recently announced its first significant foray into the African market and is aiming to raise up to $500 million over the next three to five years for a new vehicle focused on sub-Saharan Africa, initially in partnership with three investors: CDC Group, the UK’s development finance institution; Finnfund, the Finnish fund for industrial cooperation; and Norfund, the Norwegian government’s investment fund for developing countries.