Fenglin tries a third time in New Zealand

China’s Guangxi Fenglin Wood Industry Group is in talks with Trust Tairawhiti to develop a wood processing facility near Gisborne, New Zealand.

The firm, which had been planning a development at Kawerau, said it had recently signed a letter of intent to collaborate with the trust to develop a facility which ultimately could process up to two million tonnes of logs annually. Wang Gaofeng, chief executive of Fenglin’s New Zealand arm, said a feasibility study the company had been working on with the trust demonstrated the potential of the local forestry resource.

“We’re keen to use our capital and expertise to help unlock that potential by investing in projects that add value to New Zealand’s exports and support economic growth in the provinces,” Wang said in a statement. “Currently, some three million tonnes of raw logs go through Eastland Port every year. If we can turn them into finished products, we will create sustainable local jobs, boost export earnings, and provide the construction industry with an environmentally-friendly alternative to steel and concrete.

No-one from the trust, previously known as the Eastland Community Trust, was immediately available to comment. But it is actively trying to develop more local wood processing in the region. It bought the closed Prime sawmill site at Manutuke, south-west of Gisborne, in 2015. Last year it sold the main mill to Far East Sawmills but retained the 22-hectare site as part of a plan to develop a processing cluster there.

Far East received NZ$500,000 from the Provincial Growth Fund toward the recommissioning of the mill, and in July, an investment of up to NZ$19.5 million by the fund was announced to help develop the wood cluster.

While it’s still early days with the Fenglin proposal, Regional Economic Development Minister Shane Jones said the Crown may have a role in helping remove potential obstacles to the project, which may include increased power supply for an enlarged facility and transport of finished product, either through the port or by rail.

Work is already planned next year on studies of potential barge sites north of East Cape to help access logs that are otherwise landlocked by poor roads in the area, he said. Jones said he would work with Trade and Export Growth Minister David Parker to see what other infrastructure may be required and a seminar of interested parties is likely early in the new year.

Wang’s statement didn’t detail Fenglin’s proposal, which he said could create up to 300 jobs. In a statement to the Shanghai stock exchange last week, its parent company said it was looking at a particle board plant capable of delivering 400,000 cubic metres of particleboard annually.

A formal land purchase or lease would be required, along with resource consents and Overseas Investment Office approval. Construction could take about two years, it noted. In 2018, Fenglin was cleared by the OIO to lease 33 hectares at Kawerau from the Putauaki Trust to build a particle board plant. That was intended to produce about 600,000 cubic metres of board annually, cost about NZ$180 million to build and be operating by 2020.

The project, like an earlier one Fenglin investigated near Taupo with Contact Energy, was to have benefitted from the local geothermal energy available at Kawerau. Wang said that, despite the best efforts of the parties involved, the company hadn’t been able to complete the lease with Putauaki due to the potential risk of subsidence at the site if it was developed for further geothermal generation by Mercury NZ.

Jones noted that the original development discussions had been started by former Trade Minister Tim Groser and had had a “dinosaur-like gestation period.” While Kawerau would be disappointed by Fenglin’s withdrawal, he said it was important that the Gisborne opportunity be pursued if feasible.

Source: Business Desk