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Great Southern in $150m timber deal

GREAT Southern Ltd’s 50 per cent owned Bunbury chip mill has entered into a $150 million, six-year agreement to buy timber from Integrated Tree Cropping Ltd. Chip mill Hansol PI Pty Ltd will buy about 1.8 million tonnes of timber from ITC starting from next year for delivery to its Japanese customers. Great Southern chief executive Cameron Rhodes said the contract was a win-win for both companies, with Hansol securing additional resources while ITC received a competitive price for its growers. ITC chief executive Vince Erasmus welcomed the agreement. “We have achieved an excellent stumpage price for our growers and shareholders,” Mr Erasmus said. ITC manages plantations in the Bunbury region. “This contract will assist greatly in reducing operating costs and allow the operation to reach its full potential,” Mr Rhodes said. He added that the deal was in line with Great Southern’s strategy of deriving revenues from infrastructure it owns or builds, or having the opportunity to build over the next three to five years. Great Southern, which is listed on the Australian Securities Exchange, acquired the 50 per cent stake in HPI in March this year. The deal is good news for Great Southern, which last month began cutting its workforce across Australia after producing a poor managed investment scheme sales result, down 24 per cent from the previous financial year to $315 million for fiscal 2008. The Perth-based company is expected to lay off more than 25 of its 600 workers in the sales and marketing department.

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