Tiwi Islands – Northern Territory

Tiwi CEO John Hicks says $80 million needed Oct 09

Posted by tiwiccbb on October 6, 2009

Lex Hall | October 06, 2009

Article from:  The Australian

TRADITIONAL owners on the Northern Territory’s Tiwi Islands are looking for new investors to support a $275 million forestry project that environmentalists say is a white elephant.

Prior to its collapse earlier this year, forestry group Great Southern Plantations ran the 30,000ha acacia forest on Melville Island, north of Darwin.

Receivers McGrath Nichol last week ended their lease agreement, handing control of the $275m asset to the Tiwi Land Trust.

The project, seen by some as a means of beating welfare dependency, is now in the hands of Tiwi landowners, who will manage the project for the next four years.

Despite the withdrawal of support from a banking consortium last month, Tiwi Land Council chief executive John Hicks said global demand for woodchips indicated the scheme was “clearly a viable operation”. “We have got it debt-free,” Mr Hicks said. “And it has a minimal rate of return of between 15 and 30 per cent.”

The plantations will be harvested on decade-long cycles and landowners now have title to all fixed assets, including the camp headquarters, sewerage farm, port infrastructure, and airstrips. The TLC estimates it will need $80m to manage the plantation to maturity in 2013 and fix the Melville Island wharf so the trees can be exported.

Mr Hicks said at least 15 private investors had indicated they were prepared to support the group in the run-up to the first harvest in 2013.

Mr Hicks said the 20 staff on the operation had been retained and that the plant had the potential to create 660 jobs in associated industries.

He said he was also hopeful of securing $500,000 a year in commonwealth funding for controlled burning and other maintenance work that needed to be carried out.

The controversial venture has already fallen victim to a cyclone and Great Southern was last year ordered to pay $4m for breaching environmental guidelines.

NT Environment Centre head Stuart Blanch questioned the viability of the project, saying it “stinks like a white elephant”. Mr Blanch said Tiwi islanders should knock down the plantation and return the land to natural bush to try to gain an income from a future carbon trading scheme and tourism.

“There are other opportunities for indigenous people to make money — and destroying the land isn’t one of them.”

The Australian Plantation Products & Paper Industry Council said the plantation had the potential to return a profit. APPPIC manager of plantation investment Alan Cummine said that despite the global slowdown there was still demand for acacia products.

“The species that’s being grown by the Tiwi islanders, acacia mangium, is the main species that’s used by the Indonesian paper and pulp industry, which actually supplies a lot of Australia’s photocopy paper.

“So it’s recognised pulpwood species for quality paper production.”

Centre for Aboriginal Economic Policy Research director Jon Altman said the Tiwi needed to explore all options for those living on the islands.

“If they have undertaken due diligence and see existing plantations as an unencumbered prospect then they should pursue it,” Professor Altman said. “But with realism, not as some silver bullet for Tiwi disadvantage.”

A spokeswoman for Indigenous Affairs Minister Jenny Macklin declined to say whether the government would contribute to the scheme.

“The Australian government believes the future of the Tiwi forests is a matter for the Tiwi Land Council to negotiate with potential alternative operators in the private sector,” the spokeswoman said.

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http://newsstore.smh.com.au/apps/previewDocument.ac?docID=GCA00995453GTP&f=pdf

..McGrathNicol… October 5th, 2009

“…The Tiwi Island operations are commercially unviable. The operating costs and capital expenditure requirements are extremely high. As we have been without funding for the Tiwi Island operations from 30 September 2009, we have commenced cessation of these operations. We also wrote to the landlords, the Tiwi Land Council, on 30 September 2009 advising that we will not be accepting any liability for the lease costs from 30 September 2009.
On 1 October 2009 the Tiwi Land Council terminated all head leases on the Tiwi Islands, relying on a clause contained in the head leases which entitled the landlord to terminate in the event of the insolvency of GSMAL. As a result of the termination of the head leases, investors with woodlots located on the Tiwi Islands will no longer have a licence or sub-lease in relation to their woodlot.
There is a high risk that the exercise of this right by the Tiwi Land Council will mean the loss of the Scheme timber on that land and any future harvest proceeds for investors.
A list of woodlots located on the Tiwi Islands has been posted on the investor portal (http://investors.great-southern.com.au). If you have not registered for the portal, please refer to the Great Southern website http://www.great-southern.com.au/investoronlineaccess.aspx) which details how to register.
Any investors with woodlots on the Tiwi Islands must carefully make their own assessment of the issues outlined in the Circular and should consider seeking independent legal advice. In particular, investors may want to obtain legal advice as to their ability to obtain a court order reinstating a terminated lease, subject to any conditions the court sees fit to impose.
Queries
Should you have any questions please refer to the Frequently Asked Questions on the Great Southern website (www.great-southern.com.au). Alternatively, specific questions may be emailed to gsp@great-southern.com.au or to fm-gs@mcgrathnicol.com or you may call the Investor Hotline on 1800 258 348…”

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One Response to “Tiwi CEO John Hicks says $80 million needed Oct 09”

  1. tiwiccbb said

    http://www.wabusinessnews.com.au/en-story/1/75719/Casualties-emerge-at-Great-Southern

    Casualties emerge at Great Southern
    6-October-09 by Jonathan Barrett

    Investors in several Great Southern schemes face having their agribusiness assets seized by third party land-owners, after receivers were unable to secure financing to keep paying the leases.

    The affected schemes include a range of assets such as almonds and timber.

    Investors have effectively lost all control over their assets located on the Tiwi Islands in the Northern Territory after a breach of lease arrangements.

    “As a result of the termination of the head leases, investors with woodlots located on the Tiwi Islands will no longer have a licence or sub-lease in relation to their woodlot,” receiver McGrathNicol said.

    “There is a high risk that the exercise of this right by the Tiwi Land Council will mean the loss of the scheme timber on that land and any future harvest proceeds for investors.”

    One-third of investors in Great Southern Plantations 2005 timber schemes – representing more than 3000 investors – face the same situation as their assets are located on third-party-owned property.

    About 1500 investors in the equivalent 2006 scheme are also understood to be affected

    There has been a breach of lease at all Great Southern almond schemes.

    McGrathNicol has secured emergency short-term funding for several other schemes.

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