W.A. Blue Gum

W.A. Blue Gum Project 2016 ARSN 611 340 062 involves the establishment of Eucalyptus globulus (Tasmanian Blue Gum) plantations for the harvesting and sale of timber.

The Project will operate on high quality land chosen to meet strict criteria. As a result, the yield to Growers at the time of harvesting is expected to be significantly higher than any other past or present competitor. It is this aspect of the quality of the land which ensures that the Project will remain niche and premium, as it is not possible to obtain large parcels of land of the quality acceptable to the Project.

This years Project will include establishment by way of coppicing which will constitute two-thirds of the trees. Planting will make up the other one-third. As a result, the initial contributions will be much reduced. This was first done in 2014. The minimum initial contribution (including GST) will be $21,000 which will secure 5 hectares. This is to be compared with 2013 when the minimum initial contribution was $18,750, which secured only 3 hectares. That is to say that a grower will end up with 66% more trees for a very small increase in cost.

In addition to the payment of $4,200 (inc GST) per hectare, Growers are required to pay both an annual sum for rental of the leased property and fees for the ongoing management of the Plantations. The first annual sum for rental will be $400 (plus GST) per hectare (indexed from 30 June 2016) and is payable on 30 November 2016 and thereafter on the 30 September in each year. The first annual sum for tending will be $110 (plus GST) per hectare (Indexed from 30 June 2016) for Plantation tending, payable on 30 November 2016 and thereafter on the 30 September in each year.

Subsequent amounts for both rental and tending will be indexed in each year to take account of inflation.

The harvested timber will be sold to W.A. Chip & Pulp Co. (owned by the Marubeni Corporation of Japan but allowing the Project Manager to negotiate with any other potential buyers for a higher price. W.A. Chip & Pulp Co. then has the right to match these better terms, in which case W.A. Chip & Pulp Co. will be the buyer. The market for Blue Gum is usually competitive and there does not appear to be any reason why this will change during the life of the Project.

Any Carbon and other environmental credits which are received will be treated as equivalent to the sale of the wood and will be paid 100% to Growers. Forestry management is to be undertaken by Ents Forestry, whose principal has had vast experience in establishing and growing blue gum plantations. WA Blue Gum have the greatest confidence in the skills of Ents which provides the planting and maintenance of the trees. The trees will be harvested in about 10 years.

A finance package is available, being 80% of the Application Amount at 12.15% per annum interest. This is equivalent to 88% of the Application Amount, once the GST payable on the Application Amount is refunded by the Australian Taxation Office. The loan is repayable by way of direct debit by equal monthly instalments ending on 15 June 2021. Each instalment is of both principal and interest, with interest charged on the reducing principal. There is no loan establishment fee or other charges payable in respect of this finance package, and no break fees should a Grower wish to refinance with another source of finance.

All fees (including the Application Amount and the annual fees and rent) should be eligible for a 100% immediate tax deduction in the year they are paid. A Product Ruling has been applied for and is available here. Subject to land availability subscriptions can be accepted until 29 June 2016. Forestry is one of the very few carbon positive industries.