SOLOMONS LOGGING COMPANY CHANGES HANDS

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HONIARA, Solomon Islands (Solomon Star, Dec. 13) - An overseas-based [investment company] has taken over the majority shares in the Kolombangara Forest Products Ltd (KFPL.)

The signing of documents was done yesterday by the Government of the Solomon Islands, the Tropical Timber Fund (TTF) represented by managers New Forests Ltd, and Kolombangara Forest Products Ltd (KFPL), to formalizes a change in the majority shareholder of KFPL, with TTF becoming the new majority shareholder.

KFPL’s general manager Simon Le Gassicke said the deal would certainly boost the future of plantation forestry in the Solomon Islands.

"It will secure the availability of the skills and technical expertise required to back up the government’s policy of promoting sustainable plantation forestry and woodlots by customary landowners in rural areas, thus promoting long term sustainable development. And also contribute to national foreign exchange earnings and Government income, whilst fully respecting environmental and social values."

New Forests Ltd is the Sydney based asset manager for the Tropical Timber Fund, an investment vehicle which seeks to capitalize on the competitive advantage countries like the Solomon Islands have in growing plantation logs.

Mr Gassicke said the deal would see Tropical Timber Fund hold 60 percent of the shares in KFPL, and the government of the Solomon Islands increasing its shareholding from 18 percent to 40 percent as a result of financial support provided by the European Union through it’s STABEX 98 funds.

The EU funds are a grant to government, and will be used to replant some 3,750 ha of plantations over a 5-year period.

Also contributing is the European Investment Bank (EIB), which has agreed to provide a loan to allow KFPL to replace its machinery.

Gassicke stated that the company had not had sufficient funds to replace logging and roading equipment as required, and as a consequence the company would have had to close as the current machinery came to the end of its useful life.

"This would have resulted in the loss of about 660 jobs.

"Not only does the deal save the existing jobs, but in the longer term it will create an additional 240 positions, making KFPL one of the major employers in the country," he said.

KFPL has been planting and harvesting trees on Kolombangara Island since 1989, and with the help of the original majority shareholder, the Commonwealth Development Corporation, has developed an environmentally and socially responsible approach to plantation forestry.

[PIR editor’s note: Kolombangara Island is west of New Georgia in the Western Solomon Islands.]

The company achieved Forest Stewardship Council (FSC) Certification in 1999.

Gassicke said the FSC sets an internationally recognized set of environmental and social standards against which company performance is judged by independent assessors.

"The investment philosophy of the Tropical Timber Fund includes environmentally sound and socially responsible operations, and New Forests Ltd will support this highly commendable approach. In this sense, the Solomon Islands can be very proud of KFPL, which sets a responsible example for other tropical countries to follow."

He added that the FSC approach is strongly supported by the European Union and international NGOs.

"In the longer term plantation log production by KFPL will rise from the current 60,000 m3 per annum to a sustainable 180,000 m3 per annum, with the associated increase in national foreign exchange earnings.

"The Government revenue through income and corporate taxation, and it’s shareholding in the company through the Investment Corporation of the Solomon Islands will also rise."

The deal, which has now been completed, has had the strong support of the Government, whose policies focus on rural development.

Dr David Brand, Managing Director of New Forests Ltd, said his company is very pleased to take on the role of major shareholder in KFPL.

"We look forward to a bright future for the company. We also thank the many people and organizations that have contributed to this renewed commitment to KFPL as a key part of the future of the Solomon Islands forestry sector," Dr. Brand said yesterday.

Replanting and the purchase of capital equipment will commence in early 2007.

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