| Standing Timber - China |
| Growing trees takes dedication, heart and time. That is why while we are nurturing our fast growth plantations, we diversified our expertise to develop standing timber forest assets. |
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| We acquire standing timber properties in China after considering issues such as location, quality, valuation and most importantly, potential for replanting to enhance productivity. As we inherit the management responsibility for the standing timber property, we apply modern silviculture practices to increase its productivity. One such practice is thinning. Standing timber properties in China are often overly dense due to poor scientific knowledge. Through thinning, we aim to achieve optimal number of trees per hectare, the trees would grow not just taller but wider as well. The net result is higher yield per hectare and higher return on investment. |
| Cathay's standing timber strategy in China is to acquire rights to the standing timber and in return sell parcels of harvest rights to local wood industry interests. These properties are more capital intensive in the short-term as compared to poplar plantations; however, this is an attractive model because of the ability to sell the trees immediately. |
| The company has signed contracts with local forest bureaus in Jiangxi, Huanan, and Guizhou, giving Cathay Forest approximately 12,000 ha of standing timber. Forest areas in these regions contain mature stands of pine, fir, and bamboo. |
Jiangxi - Cathay's standing timber forest assets in Jiangxi are the Tong Gu, An Fu, and Cha Huan Shan plantations. The plantations are collectively owned by local entities and the government, and are harvested under the revenue share model. Sustainable harvesting of these mature trees provides Cathay with immediate revenue. |
| Hunan - Cathay's standing timber forest assets in Hunan are the Tong Wei Yanxi Shuanghe and Mo Dao Keng plantations. These plantations are also collectively owned by local entities and the government with a revenue share model. |
| Guizhou - In jinping, Guizhou, Cathay Forest has interest in a plantation that was subsidized by the World Bank and planted from 1995-1998. Cathay has secured a 51% interest in a joint venture with a local company that will together develop 6,660 ha of standing timber in 2007. With the successful implementation of a sustainable harvesting plan, an additional 33,000ha of standing timber will be developed by the joint venture over a two-year period. Cathay is pioneering a new quota system in Guizhou by negotiating with the local government for a quota based on Cathay's own schedule of sustainable harvesting, rather than the traditional government-imposed quota. |
