04/02/2009 - 22:00

Strong demand a positive for opportunities in sandalwood

04/02/2009 - 22:00

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WITH a 160-year trade history, sandalwood is Western Australia's oldest export.

Strong demand a positive for opportunities in sandalwood

WITH a 160-year trade history, sandalwood is Western Australia's oldest export.

Last year, the state had the largest proportion of new sandalwood project development in the country due to the vast acreages devoted to forestry projects.

Both Integrated Tree Cropping and TFS Corporation have substantial plantations in the Ord River Irrigation Area.

ITC is seeking to raise $7.47 million for its WA and Indian sandalwood projects, which have plantations both in the ORIA and the South West of WA.

Funds management general manager Linda Pickering could not give specifics about the expected forecast for June this year, but said independent evaluation by the research houses indicated investment opportunities were very good.

"Our 2009 product disclosure statements for pulpwood, sandalwood and diversified were released to the market in January, receiving incredible interest and positive feedback from advisers and research houses," Ms Pickering told WA Business News.

She said ITC was the leading forester for Forestry Stewardship Council certification, with the company hoping to announce full certification for all its WA forestry plantations soon.

TFS Corporation aims to back up its strong 2008 performance with a 10 per cent increase in product sales to 900 hectares.

Perth-based TFS was one of the MIS sector's better performers last year, upping sales of its Indian sandalwood project by 44 per cent to $54.2 million through the sale of 808ha.

The company is also forecasting its recently acquired Albany-based essential oils business Mount Romance Australia will contribute $5 million to earnings before interest, taxes, depreciation and amortisation.

The merger of the two companies combines the world's largest Indian sandalwood plantation owner and grower with the world's largest processor and distributor of Australian sandalwood.

TFS also added to its significant Kimberley land bank in the 2008 financial year, reaching 4,000ha, which the company says is sufficient to supply its requirements for the next three to four years.

At its annual general meeting late last year, executive chairman Frank Wilson said the state government's commitment to Ord River Stage 2 would further assist TFS to achieve its objectives.

Rewards Group managing director Andrew Rado said the ATO court case had had a negative effect on its non-forestry products, but had been good for its sandalwood plantations.

Rewards Group was the first WA company to grow sandalwood in the Wheatbelt and to export the timber.

"It was our very first venture. It's what started this company," Dr Rado said.

He is confident the company would meet its projected aim of raising up to $50 million by June.

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