Pine steals march on blue gums

THE pine timber industry is set to emerge from the shadows of its young cousin, bluegum forestry, with a WA company planning to launch a range of initiatives which could eventually lead to a stock market float.

The first phase of Pinetec's plan to create a vertically integrated forest products company started this week with the commissioning of a $1.5 million treatment plant at Bassendean.

That move will be followed by the $9 million relocation of its metropolitan sawmilling operations to the South West, the launch of a managed investment scheme prospectus and the issue of shares to retail investors, which would pave the way for a future listing.

The ambitious strategy is clearly aimed at filling the void left by the rapid demise of the native timber industry.

The bluegum industry has captured the headlines for its potential to replace big volumes of native woodchips being pulped for the production of paper.

But that species has not offered a substitute for karri and jarrah in the building materials market or provided hope for sawmill operations, which have been the lifeblood of many South-West townships.

Initially, Pinetec has aimed at the periphery of the construction business, intending to proved fencing, pergola material and lattice to the building sector.

But its new technology will be available to third parties to treat pine for structural use.

Although Pinetec's planned managed investment scheme will include some bluegum, it is the first such prospectus to propose planting radiata pine in WA under the much stricter regime engineered by the Australian Tax Office and Federal regulators.

Pine has been considered something of a dirty word since investment schemes established in 1960s and 1970s left investors with thousands of hectares of pine plantation with little or no economic value.

With a 10-year growth period, bluegum's ability to meet investors' expectations is about to be tested in a significant way in the next two to three years, whereas pine's 25-30 year growth cycle meant it took decades to discover that many private plantations were simply not worth harvesting. But Pinetec managing director John Jacobs believes the new rules will end concerns about pine investment and his company's long presence in the processing business will offer an alternative to many investment products on the market.

Mr Jacobs owns a third of the company, which turns over $13 million a year, after he and three other managers were assisted in a management buyout 12 years ago by the company that takes Pinetec's waste.

"This is a company that has been in this industry for 40 years, not three accountants in West Perth with mobile phones," Mr Jacobs said.

He said the 26-year rotation for pine was deceptive because commercial thinnings were available at 12 years and 18 years, in addition to the bluegum component at 10 years.

Pinetec is promoting the use of New Zealand-sourced technology in the pine treatment process at the Bassendean facility, and the company wants to expand its softwood production into the building materials sector.

It currently focuses on the packaging and pallets for WA's industrial and mining sectors, using about 3 per cent of Australia's 2.2 million cubic metre ($1 billion) softwood output.

"This plant represents a significant investment in the future which will add a higher value-added product to our range and establish Pinetec in the rapidly growing treated timber market in WA, which in the long run will replace many products traditionally sourced from native forest," Mr Jacobs said.

The prospectus-based investment project will offer investors 2250 hectares of pine and bluegum at Esperance.

The project is small compared to the tens of thousands of bluegum-only investments marketed during the past few years in WA.

Several of those bluegum investment promoters have used their strong sales records to go to market in spectacular fashion, with some listed shares performing like technology stocks until the crash in April last year.

The end of the momentum in the tech market was mirrored by the forestry groups, which have struggled to win investors back during the past nine months, even though nothing has changed.

Investors in Pinetec's scheme will be offered shares in the company, a device used by many promoters in both the bluegum and wine sectors, which have since floated on the stock market.

Add your comment

BNIQ sponsored byECU School of Business and Law


6th-Australian Institute of Management WA20,000
7th-Murdoch University16,584
8th-South Regional TAFE10,549
9th-Central Regional TAFE10,000
49 tertiary education & training providers ranked by total number of students in WA

Number of Employees

BNiQ Disclaimer