18/06/2008 - 22:00

Sandalwood in demand

18/06/2008 - 22:00

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Emerging sandalwood industry player, Osborne Park-based WA Sandalwood Plantations, has launched its 10th sandalwood project in the state's wheatbelt.

Sandalwood in demand

Emerging sandalwood industry player, Osborne Park-based WA Sandalwood Plantations, has launched its 10th sandalwood project in the state's wheatbelt.

The company released its prospectus this week to raise $6 million to establish the Ballybrook Plantations Ltd project, by acquiring 660 hectares of land in the Avon River Basin and plant 594ha of sandalwood trees.

Ballybrook is the latest in a series of projects established by WA Sandalwood, which now has more than 1,200ha of sandalwood plantations under management.

Ballybrook is the fourth project started this year, adding to the company's Emerald Peak project and two private client projects, which together raised a total of $4.5 million.

WA Sandalwood Plantations started its first commercial plantation in 2003, establishing a 50ha sandalwood plantation in Beverley.

Managing director Keith Drage told WA Business News the company had launched one or more projects each year since 2003, with a combination of prospectus projects and private client projects.

He said the structure of the projects differed from that of other agribusiness investments because its investors were shareholders in the company who owned the land and were entitled to all revenue from the plantations.

"The primary incentive for WA Sandalwood is as a shareholder in Ballybrook itself," Mr Drage said.

"Our shareholders own the land Ballybrook is established on, and own the rights to all revenue derived through the business from the sandalwood plantation."

Each of the four prospectus projects averages between 60 and 80 investors, with a mix of onshore and offshore investors.

WA sandalwood is mainly exported to Taiwan and China for use in joss sticks, or is sold to the Mt Romance essential oil factory in Albany.

The current market value for WA sandalwood is about $12,000 a tonne for good quality uncleaned logs.

The company is looking at secondary revenue streams to enhance the value of its plantations, including the marketing of oil-rich sandalwood seeds.

It is also considering launching a carbon solutions product, incorporating carbon credits.

The Forest Products Commission manages the bulk of the state's native WA sandalwood supply, harvesting about 2,000t a year.

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