March 3, 2010 HUNDREDS of thousands of hectares of managed investment scheme plantations may be almost worthless.
And the fate of Gunns Forestry may be tied up in the MIS mess.
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The former Great Southern blue gum plantation estate lacks an environmental accreditation sought after by the all-important Japanese woodchip market.
Logging giant Gunns has become the responsible entity for 150,000ha of the Great Southern plantations in the "Green Triangle" on the Victorian and South Australian border and says many of the trees are bound for its planned Tasmanian pulp mill.
However, the Port of Portland cannot currently handle the amount of woodchip which needs to exit the region.
Gunns is yet to source finance for its mill and there is speculation the company has gone cold on the project and only continues to push for it publicly in order to inflate the value of its plantation estate.
The company recorded a profit of just $420,000 in the six months to the end of December last year, down from $33 million the previous year.
It owes just shy of $800 million and lists the book value of its plantation assets at $1.2 billion, but analysts say the trees could fetch far less.
Meanwhile scandal surrounds Gunns' Tasmanian plantations and exports of the tree Eucalyptus Nitens, as a toxin in the leaves of its trees have been matched to a toxin in drinking water which kills human cells.
Forest industry analyst Dr Judith Ajani said the failure of the Federal Government to pass the Carbon Pollution Reduction Scheme created the "perfect storm" as any fallback plan to claim carbon credits on the plantations was now redundant.
Gunns' share price plummeted to just 55c last week.
Forest Stewardship Council chief Mike Spencer confirmed Gunns would seek plantation accreditation but said the process could take 18 months.
Gunns external affairs manager Frances Duffy was "confident we'll be able to meet the standards" required by FSC but conceded "often changes need to be made".
The pulp mill was a "very real" project, she said.
Environmentalists have long been angry that logging of native forests has continued despite more than half a million hectares of plantations being established since the late 1990s - the plantation chips are exported.
GNS Price at posting:
58.0¢ Sentiment: Sell Disclosure: Not Held
