Carter Holt wants deal after Kyoto

By BRIAN FALLOW

If New Zealand ratifies the Kyoto Protocol, Carter Holt Harvey will press for a deal with the Government to mitigate the impact on its existing mills and any new ones.

Chief executive Chris Liddell told the annual general meeting in Wellington yesterday that Kyoto, an international treaty which aims to curb greenhouse gas emissions, could severely hurt New Zealand's attractiveness as a destination for investment in the processing sector of the forestry industry.

The industry would need some $6 billion of further investment over the next 20 years if it was to maximise the potential of the coming "wall of wood".

After the meeting Liddell said if New Zealand did press ahead with ratification of the Kyoto Protocol, Carter Holt would be looking for a negotiated agreement which grandfathered emissions from its existing pulp mills and provided some form of shelter for new investment as well.

Grandfathering limits the extent to which an emitter is accountable for emissions to any increase above a baseline year. The forestry industry has advocated a similar kind of shelter for emissions from new plants.

"There are some encouraging signals that the Government has been listening to what we and others have been saying. Whether this is translated into action remains to be seen," Liddell said.

The Government is expected to outline its preferred policies for implementing Kyoto next week.

The competitive challenge the company faced was enormous, Liddell told shareholders. For example a new 3 million tonne pulp and paper plant - five times the size of Kinleith - had been announced in China, Carter Holt's fastest growing market.

"We also face tariff barriers that progressively increase in size the greater the value added in the product." That biased processing investment to be close to the consumer rather than the forest, increasing the risk NZ would be limited to exporting logs.

But the company continued to invest, including $300 million upgrading Kinleith and $100 million in a new laminated veneer lumber mill in Northland.

One shareholder said that when he had bought Carter Holt shares 17 years ago he had been told it would one day be a $5 stock. He was still waiting.

Chairman Sir Wilson Whineray sympathised. "Frankly we are just not earning enough. We need to be earning half as much again or more. But as the market for pulp and logs moves up our costs won't change and we should do well. We will have a happier result this time next year."

Another shareholder lamented the company's "lousy" dividend, of 3c for the nine months to December 31.

Three directors, Kerry McDonald, John Faraci and Evans Heath were re-elected unopposed and without dissent.

nzherald.co.nz/climate

Intergovernmental Panel on Climate Change (IPCC)

United Nations Environment Program

World Meteorological Organisation

Framework Convention on Climate Change

Executive summary: Climate change impacts on NZ

IPCC Summary: Climate Change 2001