Posted by: davidgarnerconsulting | October 5, 2009

New Zealand pays millions to timber firms after forecast failure

Marking the end of a long-running disagreement between four timber mills on New Zealand’s west coast and Timberlands West Coast, the New Zealand government is making a NZ$ 4 million ex-gratia payment to the mills.

Gerry Brownlee, the economic development minister, said the payments were being made in light of Timberlands’ failure to supply forecasts for timber harvests from 2000. He said an independent investigation found that Timberlands, “may not have acted fairly to the west coast timber industry over log projections.”

He went on to explain, “a good faith ex-gratia payment has been offered to the mills which made significant investment decisions to process pruned logs based on over-estimated projections.”

The timber mills that were affected have agreed that they will decide how to best split up the payment. The government made it clear that the payments were goodwill and that it had no legal requirement to pay the money to the mills.

The mills that received the investment included Westimber Ltd, Westco Lagan Ltd, Inangahua Sawmilling Ltd and W.E Whiley and Co ltd. The latter two mills were closed in 2008.

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