AAA analyst forecasts significant growth in Canadian
forestry investment from China.
After several miserable years of mill closures and staff layoffs, totaling as
many as 1,000 in a single month, Canada is now looking forward to a brighter
future for its forestry industry, according to an alternative investment expert.
The major surge in the desire for Canadian timber from China has marked a
turn-around for Canada, whose forestry industry suffered greatly as a result of
the US property slump and the global recession as a whole.
Anthony Johnson, an analyst partner at Alternative Asset Analysis (AAA), says
that there are several factors that have prompted major investment from China
in the Canadian forestry industry.
China traditionally sourced its timber from Russia, but the introduction of
Vladimir Putin’s decision in 2008 to apply a 25 per cent log wood tax on
exports resulted in inevitable changes. Although this was intended to increase
investment in Russia’s domestic forestry industry, its main effect was to drive
Chinese buyers elsewhere. Johnson claims that it was Canada’s timely move to
launch major trade delegation in late 2008 that won it the business.
It is not just this decision that has had such an impact on Canadian forestry.
China had the misfortune of suffering a major earthquake in Sichuan Province in
May 2008, which saw many of the area’s buildings razed to the ground, and they
obviously needed rebuilding. Mike Richmond, an analyst from Canada’s Salman
Partners Inc, explained, "The wooden homes held up a lot better [than
structures built with other materials] during the earthquake, so I think
Chinese officials took a look at this and gained a more favourable view of
lumber."
As a result of this new-found respect for timber, the building codes in
Shanghai were altered and the demand for timber soared.
Anthony Johnson has many years experience as an investor in the alternative
asset classes. He agrees that Canadian forestry is sitting on the edge of a
resurgence with investment in lumber increasing from all over the wider Asian
continent, prompted by the initial interest from China. "These are
exciting time for forestry investors," stated Johnson. He added,
"Canada has seen exports to Chinese double in the past year, while its
reliance on the US market has reduced considerably."
Another forestry market that is worth talking about, according to Johnson, is
Brazil, which has seen plantation managers, such as Greenwood Management, reap
the benefits of legislation primarily intended to protect indigenous forests.
Contact:
Anthony Johnson
Alternative Asset Analysis
71 Commercial St
Boston, MA 02109-1320
617-898-6317
