By LIBBY MIDDLEBROOK
Chinese forestry investor Citic and Fletcher Challenge are holding a high-level management meeting in Beijing next week in a bid to resolve a dispute over New Zealand's largest forestry plantation.
Citic and Fletcher, which jointly own the 165,000ha Central North Island Forest Partnership plantation, have been arguing about how
the partnership company should manage its timber harvest since the 1997 Asian economic collapse, which crippled log exports from New Zealand.
Last year Citic - a wholly owned subsidiary of the Beijing-based China International Trust and Investment Corporation - sought a High Court injunction to stop Fletcher selling the partnership's logs to itself for domestic processing without the partnership board's permission.
But the court last week dismissed the injunction bid and suggested the two parties resolve the dispute through arbitration instead of Citic pulling out of the partnership.
Citic New Zealand's general manager of operations, Greg Molloy, said Fletcher chief executive Michael Andrews would go to Beijing early next week to meet Citic chairman Wang Jun and discuss the wrangle.
"The aim of the meeting is to make some progress, but I couldn't pre-empt what that might be," he said.
Mr Molloy said Fletcher Forests' claim last week that the dispute arose partly because Citic was keen to export more of the partnership's logs rather than add value through domestic processing was incorrect.
He said Citic was losing up to $30 million a year because Fletcher was selling too many of the logs to itself when the company could gain better returns in other domestic and export markets.
"One of the key issues in dispute is that Fletcher Challenge Forests determines the supply and price of logs to its own sawmills," said Mr Molloy.
"At the same time, other New Zealand domestic saw millers are being starved of high-quality logs and are not being offered contracts that give guarantees in relation to quality or supply."
Citic, Fletcher and Brierley Investments bought the former Government-owned plantation in September 1996 for $1.6 billion, net of debt. Brierley sold out two years later.
