Norske Skog to sell forest assets in Tasmania to New Forests
Norway-headed pulp and paper major Norske Skog ASA has recently announced that it has entered into an agreement to sell its Tasmanian forest assets to a fund controlled by the Australian based investment manager New Forests Pty Ltd for a consideration of AU$62.5 million (NOK 388 million). The sale will be accompanied by a long term wood supply agreement to provide pulpwood to Norske Skog Boyer Mill located in southern Tasmania.
New Forests is an Australian-based international sustainable forestry investment manager. New Forests Pty Ltd and its subsidiaries manage investments in around 550 000 net hectares of forests and timberlands across a global portfolio of nearly 1 million hectares of forestry and conservation investments. New Forests has international reach, with offices and assets in Australia, New Zealand, Southeast Asia, and the United States (US).
Completion of the forest transaction is subject to customary closing conditions including approval from the Australian Foreign Investment Review Board (FIRB) and is expected to take place within the end of the second quarter of 2020.
The sale of the Tasmanian forest is a continuation of Norske Skog’s strategic asset review and is in line with Norske Skog´s communicated strategy of optimizing its portfolio and seek value-enhancing transactions. The sale is part of the Group’s long-term strategy where released funds will enable the necessary conversions, investments in new green projects and investor policy to be fulfilled. I am satisfied that we also have assured a long-term softwood supply agreement for the Boyer mill, said Sven Ombudstvedt, President and CEO of Norske Skog.
Supply Norske Skog Boyer
Situated in Southern Tasmania, Norske Skog Boyer Mill produced Australia’s first newsprint in 1941 and remains one of the state’s major employers. Annual production capacity is around 150 000 tonnes of newsprint and 135 000 tonnes of light-weight coated (LWC) magazine grade since the completion of the AU$85 million PM2 conversion project in 2014.
The plantations included in the sale have traditionally supplied around two-thirds of Boyer’s annual pulpwood consumption of approximately 550 000 tonnes of the softwood radiata pine.
Norske Skog Boyer will enter into a long term pulpwood supply agreement with the buyer for the supply of 360 000 tonnes annually which will commence from the completion of the transaction. At the same time, the existing contracts related to plantation assets such as forest harvesting and transport services will be transferred to the buyer.
Publication paper production will continue at Norske Skog Boyer. Norske Skog’s long-term strategy remains to improve the group’s core business, to convert certain of the group’s paper machines and continue to diversify the business into bioenergy, biochemicals and alternative fiber markets.