APT cashes in on old growth forests issue
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Tuesday, 2 May, 2000 - 22:00
ONE company taking advantage of the current political climate in relation to removing old growth forests is Australian Plantation Timber.
APT recently listed on the Australian Stock Exchange and expects to benefit from a $2 billion mismatch between local wood exports and imports.
Financial advisory group Davey’s CEO Michael Clayton, who was responsible for attracting the initial investors, said Australia currently imported $3.5 billion annually in wood and paper products compared with exports of just $1.5 billion.
Now that eucalyptus has overtaken most traditional crops in yield per hectare, Australia can finally make more money growing native trees than cutting them down,” Mr Clayton said.
Davey first recommended investments in APT in 1992 and were APT’s sole source of funds until 1998.
Most of Davey’s clients – doctors, lawyers and dentists – have seen their outlay more than triple during the past two years.
The share price has since been driven up by global pressure to preserve remaining rainforests, once a primary source of hardwood, and local pressure to lock away Australia’s old-growth forests, Mr Clayton said.
“The conservation movement unintentionally boosted tree farming profits by locking away old growth forests, driving fine paper manufacturers to the renewable alternative,” he said.
APT also benefited from geography.
“APT plantations are located on what was very ordinary grazing land, but conveniently located near transport routes and major ports such as Bunbury,” Mr Clayton said.
“The low land acquisition costs, reduced freight costs and, of course, the minimal maintenance that Tasmanian bluegums require was always going to grow our investors an asset.
APT deputy managing director Paul Brazenor said the initial plantations were not popular in a sector then dominated by tax-driven investments like alpacas and ostriches.
“You needed to pick the global trends to correctly value the potential of the underlying asset.
“Also (Davey’s) medical and professional clients were a natural fit for an investment that also contributed in other ways, such as soil desalination and greenhouse gas reductions,” Mr Brazenor said.
APT recently listed on the Australian Stock Exchange and expects to benefit from a $2 billion mismatch between local wood exports and imports.
Financial advisory group Davey’s CEO Michael Clayton, who was responsible for attracting the initial investors, said Australia currently imported $3.5 billion annually in wood and paper products compared with exports of just $1.5 billion.
Now that eucalyptus has overtaken most traditional crops in yield per hectare, Australia can finally make more money growing native trees than cutting them down,” Mr Clayton said.
Davey first recommended investments in APT in 1992 and were APT’s sole source of funds until 1998.
Most of Davey’s clients – doctors, lawyers and dentists – have seen their outlay more than triple during the past two years.
The share price has since been driven up by global pressure to preserve remaining rainforests, once a primary source of hardwood, and local pressure to lock away Australia’s old-growth forests, Mr Clayton said.
“The conservation movement unintentionally boosted tree farming profits by locking away old growth forests, driving fine paper manufacturers to the renewable alternative,” he said.
APT also benefited from geography.
“APT plantations are located on what was very ordinary grazing land, but conveniently located near transport routes and major ports such as Bunbury,” Mr Clayton said.
“The low land acquisition costs, reduced freight costs and, of course, the minimal maintenance that Tasmanian bluegums require was always going to grow our investors an asset.
APT deputy managing director Paul Brazenor said the initial plantations were not popular in a sector then dominated by tax-driven investments like alpacas and ostriches.
“You needed to pick the global trends to correctly value the potential of the underlying asset.
“Also (Davey’s) medical and professional clients were a natural fit for an investment that also contributed in other ways, such as soil desalination and greenhouse gas reductions,” Mr Brazenor said.