Kangaroo Island Plantation Timbers' harvest plans for fire-damaged plantations take shape

Kangaroo Island Plantation Timbers Ltd (ASX:KPT) plans to harvest fire-damaged plantations on Kangaroo Island are taking shape with the company advising the three levels of government of its intentions. Salvage harvesting will begin in the area of fire-damaged pine trees which is most at risk of decay, in order to recover the higher value logs. Early work will start this year, prioritising trees along power lines in consultation with SA Power Networks, and it is expected that the pine harvest will start early in 2021. Salvage harvesting Managing director Keith Lamb noted that in the December 2019 company accounts, the board took the prudent step to reset the shareholder value of the fire-affected crop to zero, but said this did not mean the crop was worth zero. In the company’s estimation, there is sufficient residual value to justify the cost of harvest and transport, as well as building the KI Seaport at Smith Bay. This, in turn, presents significant benefits for the island's economy, through the creation of new well-paid skilled jobs in forest production. “We look forward to working with all stakeholders to maximise the benefits of the forestry industry for Kangaroo Island,” Lamb said. Recover higher value logs KPT's board has made the decision to move forward with salvage harvesting, taking into consideration the need for timeliness to maximise recoverable volume. The stockpiling strategy will be managed carefully, to take into account company cash reserves and value-at-risk, while the approval process for the KI Seaport is completed. Initial salvage harvesting plans follow advice to the company that these logs must be harvested within two years of the bushfires and stored in water or under sprinklers, to preserve value. This strategy will allow the company to maximise recoverable volume, as it awaits approval for the KI Seaport facility at Smith Bay. Harvest and haulage proposals An Expression of Interest (EOI) process started in 2019 for provision of harvest and haul services, and the company has received proposals from a number of operators to start initially in the pine and then move to the bluegums. KPT is also in talks with independent growers on the island in regard to the harvest of their fire-damaged trees. The company expects to salvage a total of three million tonnes of timber with sufficient value to support the building of the KI Seaport. Other uses are contemplated for a further 1.5 million tonnes of timber which is not considered suitable for log export. The salvage harvest is expected to generate in excess of $200 million in economic activity for the island over the next four years, excluding the beneficial impact of the port.