Investment portfolio

The Company’s investment projects were chosen from an array of investment opportunities that had been identified and assessed by the Investment Manager and are detailed below. The Investment Manager maintains a wide range of local and global relationships to ensure a strong pipeline of prospective investments at various stages in the investment process.

Name & Location Type & Species End Use Status
Ibiracu Project / Minas Gerais, Brazil Greenfield
Eucalyptus
Biocarbon Land acquired in 2008.
Aimara Project, in partnership with Klabin / Paraná, Brazil Greenfield with off-take Agreement /
Eucalyptus
Pulpwood/ sawlogs Investment made in 2008. Planting complete.
Antioquia Project in partnership with Cotopaxi / Antioquia, Colombia Greenfield and standing plantation with off-take Agreement /
Pine
Wood based panels/ sawlogs Investment made in December 2010. Additional investment in 2011. Local partner invested 10%.
Kaa Project / Parana, Brazil Standing
Pine plantation
Pulp/saw/ veneer logs Acquisition completed 2011
Frondosa Project / Minas Gerais, Brazil Standing Eucalyptus Plantation
Biocarbon Acquisition completed in 2011

Ibiracu Project, Brazil

Project typeAfforestation of previous cattle land
Ownership (%)100
End useCharcoal and bio-carbon for pig-iron production
Initial investment committedJuly 2008
Net productive area7,038 hectares
The Ibiracu project is located in the Pirapora region of Minas Gerais state in south-eastern Brazil. The region is rugged, with numerous gullies that limit the average available land for forest plantations. The Ibiracu project is an afforestation project covering total land area of approximately 13,272 hectares of previously unplanted land that was primarily used as grazing land for cattle. Due to the restrictions in the Brazilian Forest Code, which requires landowners to leave a buffer zone around valleys, rivers and gorges, the total expected plantation area is approximately 7,038 hectares.


Aimara Project, in partnership with Klabin, Brazil

Project typeGreenfield eucalyptus plantations with off-take Agreement
Ownership (%)80
End usePulpwood/ sawlogs
Initial investment committedSeptember 2008
Net productive area2,820 hectares
The Aimara Project is a corporate transaction with the biggest paper producer in Brazil as Project partner. The joint venture Project is located in the Curitiba region of the Paraná state in south-western Brazil. The Project has utilised the partner’s existing knowledge in the area regarding plantation establishment and management. Klabin has a long track record in sustainable forest management. The plantations of the joint venture are managed according to the same high principles and standards regarding sustainable forest management as Klabin’s existing plantations. The Project utilises existing planting material (seedlings and/or clones) that have been developed by the Project partner over several years to suit the growing conditions in the region. The wood fibre will be sold to the Project partner under a long-term sales agreement, the agreement is governed by a pre-determined price mechanism.


Antioquia Project

Project typeStanding pine plantations with off-take Agreement
Ownership (%)90
End useWood based panels/sawlogs
Initial investment committedDecember 2010
Net productive area6,980 hectares
The Company has entered into a joint venture arrangement with Cotopaxi, an Ecuadorian wood-based panel manufacturer with existing plantation assets, through a jointly-owned project company, MS Timberland Holdings Limited, in which the Forest Company holds a 90% stake. This vehicle completed the acquisition of Reforestadora el Guasimo S.A. in December 2011. Further, MS Timberland Holdings Limited acquired 2,569 ha of mature pine plantations in June 2011.

MS Timberland Holdings currently controls 10,536 ha of land located in the Antioquia region near Medellin Colombia. The net plantation area of 6,980 ha, of which 6,710 ha is planted primarily with existing pine plantations, in this traditionally pine growing area. The Company plans to harvest these plantations on a sustainable basis, replanting shortly after harvest.


Kaa Project, Brazil

Project typeStanding pine plantations
Ownership (%)100
End usePulp/saw/veneer logs
Initial investment committedFebruary 2011
Net productive area1,179 hectares
The Company has acquired an existing pine plantation in the Parana state, close to the border of San Paulo state, in Brazil and approximately 100 km north of Curitiba, the state capital of Parana. The region is a traditional pine growing area, with a significant cluster of saw and veneer mills and a range of service providers active in the forest industry, such as harvesting contractors, planting operators and forest consulting companies. The Company acquired existing pine plantations with a total area of 2,012 ha of which 1,179 ha are mature pine plantations available for harvest. The total standing volume is 715,713m³ ob corresponding to an average stocking of over 600 m³ ob per hectares.

The plantations would initially generate mainly pine saw and veneer logs that will be sold on the open market in the local region. The plantations will be replanted after harvest and managed by Timber Capital locally in a sustainable manner. The acquisition of mature pine plantations has the potential to generate free cash flow in the short to medium term which compliments The Forest Company’s existing investments in greenfield projects.