China Timber maps land acquisition spree

China Timber Resources Group, a Hong Kong-listed forestry operator and trading company, plans an aggressive acquisition of new forestry land to grab more market share, according to chief executive Stephen Lau.

The company acquired two forestry sites recently in the South American country of Guyana totalling 250,000 hectares - about 21/2 times the size of Hong Kong - and is now actively moving to acquire further sites in the mainland, said Mr Lau.

'China is full of resources and the government welcomes investments,' Mr Lau said, adding that although the acquisition in Guyana could offer the firm stable income in the first few years, the earnings driver in the long term would come from expansion in the mainland.

'Supportive government policy, tight supply and heavy demand, as well as lower operating costs, have lured us to accelerate our search for investments in China,' he said.

Under its expansion plans, China Timber expects each new investment will involve at least 100,000 cubic metres along with 50-year operation concessions.

A further new acquisition is expected to be completed before the end of the year.

The mainland is ranked fifth-largest in the world in terms of total forest reserves and is also the second-largest forest products importer with imports of US$10 billion in 2005.

The government officially opened the timber exploration market for private-sector participation in 2003. Soaring demand for timber on the mainland is driven mainly by the country's rapid economic expansion and development of the downstream wood processing sector, according to a report by Deutsche Bank.

China Timber is an upstream timber operator that engages in forest operation and management, logging and timber processing and trading. It also provides wood for downstream operators such as paper and furniture makers, as well as construction material suppliers.

Hungry for wood

China is the second-largest forest products importer in the world

The size of China Timber's forestry sites in Guyana compared with Hong Kong 2.5x