Kangaroo Island Plantation’s insurance claims mount as fires wipe out more crops
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Fires raging on Australia’s third largest island have cost Kangaroo Island Plantation Timber Plantation (ASX:KPT) more of its plantations.
The company told the market on the first trading day of the new decade that on top of the original 891 hectares lost initially, it had now witnessed damage to a further 971 hectares of plantations, or 7 per cent of its landholding, which it estimated had an insured value of about $8.5m.
Kangaroo Island Plantation came out of a trading halt this morning and immediately witnessed a 12.9 per cent drop in its share price to $1.96.
The company is Australia’s only listed timber company, with about 25,000 hectares of land where it grows pine and eucalyptus.
According to The Advertiser, the fires were caused by “tens of thousands of lightning strikes” that “sparked dozens of bush fires” in the Duncan and Ravine areas of Kangaroo Island, which sits off mainland South Australia to the southwest of Adelaide.
Kangaroo Island Plantation said another two fires started on Monday in the Ravine des Casoars Wilderness Protection Area and spread northward.
“Despite the efforts of National Parks and Wildlife Service South Australia, Country Fire Service, company staff and our contract partners, these fires could not be contained and affected two of the company’s plantations,” Kangaroo Island Plantation told investors.
“As was the case last week, the plantations included pines at various stages of maturity, and relatively mature eucalypts.”
Kangaroo Island Plantation says it has fire insurance, which covers the standing tree crop and allows for miscellaneous costs, including a contribution towards direct fire-fighting, clean-up, and replanting, among other things.
The company plans to begin salvage operations once the area is deemed safe.
In recent years, the company has looked to rebrand in the wake of the collapse of forestry managed invested schemes in the late 2000s which left thousands of mum-and-dad investors out of pocket.
Managing director John Sergeant said in late 2018 that plans to build a shipping port on the Kangaroo Island marked a pivot into infrastructure.
The goal would be to eventually ship the company’s crops as either logs or woodchips from the port. But there is still some way to go before that becomes a reality.
Kangaroo Island Plantation has been trying to get the port built since 2014 but has faced several roadblocks, including regulatory holdups and operational disputes with Yumbah, a neighbouring abalone farm.
While the company expects to receive environmental approval for the port “soon”, it noted that it would not be ready in time to facilitate salvage operations, which have to start straight away.
“The salvage of pines and eucalypts that have been killed, but not consumed, by a rapidly moving fire front must be carried out immediately, before the quality of the unburnt wood deteriorates,” Kangaroo Island Plantation said.
“Therefore, it will be necessary to bring forward harvest and replanting operations in affected areas and reschedule operations in unaffected areas that would otherwise have been harvested sooner.”
Kangaroo Island Plantation is considering other short-term options including barging.