TOKYO -- Sumitomo Corp. seeks a 60% increase in its New Zealand lumber capacity by the year ending in March 2020, as the Japanese trading house anticipates growing demand in China and other parts of Asia.
Sumitomo subsidiary Summit Forests New Zealand owns forests on the country's North Island totaling some 29,000 hectares, as of the end of March. The unit plans to spend around 7 billion yen ($64.1 million) to expand its holdings to 36,000 hectares. Summit inked an agreement with landowners to acquire some 4,000 forested hectares on the North Island by September.
Summit plants pine trees that grow to harvesting size in 30 years. The subsidiary can supply 500,000 cu. meters of lumber annually, and it aims to boost that figure to 800,000 to 900,000 cu. meters by March 2020. The value of its forest assets will rise to 20 billion yen from 13 billion yen at present.
Some 80% of Summit's lumber and timber goes to New Zealand, Australia and Japan, with about 20% exported to China. The wood is processed into construction items such as wall and flooring materials.
China accounted for 39% of the world's 136.6 million cu. meters of imported logs in 2014, Japanese government statistics show. The global total rose 10% from 2004, while China's imports doubled.
Deforestation in China caused massive flooding in 1998. The country in recent years has strengthened policies to protect forests, so import volumes are expected to continue rising. Sumitomo projects increased lumber demand in India and Indonesia as well.