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Foreign investment in Aotearoa/New Zealand
Overseas Investment Office - February 2022 Decision
Whatever Happened To Carter Holt Harvey?
These days the great bulk of the OIO's monthly Decisions involve approvals for foreign companies or individuals buying existing forestry blocks or rural land on which to create forestry blocks. We haven't looked at forestry for a while, so this month have decided to single out one of the very biggest players in the industry.
But, first, some background. The Japanese transnational corporation (TNC) in this Decision is the current owner of what used to be Carter Holt Harvey (CHH) Pulp and Paper, a name very familiar to CAFCA members. CHH was one of the select few TNCs to win the annual Roger Award for the Worst Transnational Corporation Operating in Aotearoa/New Zealand. CHH did so in 2001. Here are some quotes from the Judges' Report (the judges that year were Michael Gilchrist, Prue Hyman, Glenn and Sukhi Turner):
"Damage to the environment, physical and social, is also a feature of many of CHH's activities - from driving logging trucks through residential areas, through erosion and silting up of fishing grounds, to continued use of dioxin producing chlorine bleaching processes. Alternatives are available, and the only pulp and papers mills left in New Zealand using this process are CHH owned".
In November 2014 the OIO approved Oji Oceania Management (NZ) Limited of Japan buying 100% of CHH Pulp and Paper from New Zealand's richest man, Graeme Hart, for just over $1 billion. Linda Hill wrote in her analysis on the CAFCA Website: "According to the Commerce Commission, which has also approved the deal, the business assets affected by this acquisition will comprise the Kinleith pulp and paper mill, the Tasman pulp mill, the Penrose paper recycling mill, and packaging businesses in New Zealand and Australia. Oji is a global producer of paper and packaging products. In New Zealand, Oji owns 100% of Pan Pac Forest Products Limited, which owns forests and operates a sawmill and a thermo-mechanical pulp mill, all in Hawke's Bay".
"This appears to be the one of the last significant assets in the Carter Holt group of companies which Hart bought in 2006 and has been gradually breaking up and selling off to the highest bidder, so he can pay for his global packaging empire. The sale of this business, following on from the previous sale of its packaging and forestry interests, leaves Hart's company with a trans-Tasman building supplies group comprising Carter Holt Woodproducts and the Carters retail chain. See our October 2006 commentary for details of Hart's sale of over 240,000 hectares of Carter Holt forests to Hancock Natural Resource Group Inc. of the USA, and the fight by Māori owners of some of this land to stop the sale".
"Not A Transaction Of National Interest"
Which brings us up to the February 2022 Decisions. Oji Holdings Corporation, Japan (76.68%); United States of America (9.33%); United Kingdom (7.35%); Various (5.33%) and Luxembourg (1.31%), was approved by the Minister for Land Information and the Associate Minister of Finance, to buy, for $404 million, up to 100% of the shares in Oji Oceania Management Co., Limited, which directly or indirectly holds interests in 5,156.017 hectares of land, including:
- 4,704.8754 hectares of sensitive land; and
- 451.1416 hectares of non-sensitive land.
- 460 hectares of land located in forestry blocks in the Bay of Plenty;
- 2,306 hectares of land located at and around Kinleith Mill;
- 1,125 hectares of land located at Ngaruawahia Forest; and
- 350 hectares of land located at and around Tasman Mill;
The OIO writes: "Oji Holdings Corporation (the Applicant) owns 60% of the shares in Oji Oceania Management Co., Limited (OOM) and wishes to acquire the remaining 40% of the shares in OOM from its joint venture partner Innovation Network Corporation of Japan, Limited. The investment will result in the Applicant (who is the existing majority owner of OOM) obtaining full ownership and control of OOM, and the land that OOM owns".
"OOM owns Oji Fibre Solutions (NZ) Limited (Oji Fibre). Oji Fibre was formerly known as Carter Holt Harvey Pulp & Paper. Oji Fibre operates the Kinleith and Tasman mills, which are major employers in the North Island forestry sector. Oji Fibre is New Zealand's largest domestic processor of wood fibre, a major domestic manufacturer of kraft pulps and packaging papers, and New Zealand's only domestic recycler of paper. While Oji Fibre also owns significant interests in forestry land, this is for the purpose of supplying the mills with raw materials".
"The Applicant wishes to retrofit the Kinleith pulp and paper mill with state-of-the-art wastewater treatment technology. This is expected to result in a significant improvement in the quality of the water being discharged into the Waikato River. This Investment will likely result in the creation of job opportunities and the introduction of an estimated $200 million of additional investment for development purposes into New Zealand. The investment will also advance Government policies relating to water quality and the Waikato River. The Applicant has undertaken previous investments that have provided benefits to New Zealand".
"Ministers were satisfied that the benefits likely to occur as a result of this investment were substantial and identifiable. Ministers were satisfied that the overseas investment was not a transaction of national interest...". The fact that a major forest products processing player is completely owned overseas is definitely "not in the national interest", particularly when it is considered just how central forestry now is to the NZ economy. If this sort of deal is "not a transaction of national interest", then what is?
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