Trust Announces Purchase of Prime Sawmill in Landmark Investment

DATE 14 September 2015    

ECT has just made the biggest single investment decision in its history, approving a $7.4million purchase of the Prime Sawmill.

It occupies 22.32 hectares just south of the city and approximately 10ha and contains a modern, fully operational sawmill. It includes a green mill, capable of processing 500 cubic metres of timber in 10 hours, and a dry mill which dresses timber for market. The facility also includes an export shed and facilities for log storage, debarking, cutting, kiln drying, processing, dry storage and dispatching via rail. A further 3.4 hectares between the railway and the road has been planted in Pinus Radiata, while seven hectares has been leased for annual cropping.

ECT chairman Richard Brooking says the purchase demonstrates the Trust’s absolute commitment to improving the economic outlook of the region and says the Trust is excited about the transformational potential of this new venture.

“We are looking at a project that has the potential to create 120 jobs onsite, 300 jobs offsite and inject $6.7million in to the local economy within three years. In the short-term, we should see the creation of 50 jobs and the injection of around $1million into the local economy via site works,” he says.

Mr Brooking says market research has demonstrated that the time is right to invest in the site. The forestry and forestry services sector is important for Gisborne, with logging still rating amongst the fastest growing producing sector in the last three years.

“Key to this growth is our privately owned stock of wood, which is significantly higher than other regions in New Zealand. We have a substantial volume of uncommitted, clear-pruned, good quality, quick-grow logs close to the processing site.

“Tree rotations are anywhere from 23 to 28 years and we have been waiting for the right raw product to grow. It’s ready and so are we.”

ECT has undergone a robust due diligence process requiring risk analysis, economic and fiscal impact assessment, the creation of reasonable development assumptions, and a review of current information on the overall processing market and trends. Included in this was the scoping of demand for tenancy, which garnered immediate results.

“We already have a number of interested parties looking to commit to long-term tenancies. Those parties are excited by the project and the opportunities this will open up for our region,” he says.

The Prime Sawmill purchase now sees ECT taking an active leadership role in economic development, a space, Mr Brooking says, is consistent with community expectations and the strategic objectives of the Trust.

“One of the key messages we received from our community last year was that we must take an active leadership role in economic development.

“Our community told us what we all know - the key economic issues facing our region are job creation and the attraction of new business and investment.

“According to that same data, our community overwhelmingly felt the most important priority for ECT is to undertake projects that create jobs.”

Mr Brooking says economic development projects have the potential to carry risk and uncertainty. At times, the level of risk is one reason why projects need to be incentivised by suitably resourced organisations such as Eastland Community Trust. But he is quick to put the investment into perspective.

“We have been making investments of a similar scale, but more often in the community assets distributions. Our contributions to the Tairawhiti Navigations Project and the War Memorial Theatre upgrade combined totalled $8million.

Mr Brooking is also quick to recognise the critical involvement of Activate Tairawhiti, which was instrumental in the initial negotiations. He says their early involvement demonstrates Activate Tairawhit’s capacity to create change.

Mr Brooking says the Trust expects to complete negotiations and announce confirmed tenancies in the coming weeks.