First bushfire payout for Kangaroo Island timber firm
Kangaroo Island Plantation Timbers has received the first $10 million from its insurance claim over the summer bushfires that affected 95 per cent of its tree crop.
A view of the damage done to the area around Parndana after bushfires swept through on Kangaroo Island. Photo: David Marius / AAP
The company is in the process of “determining its options for rebuilding the business” as it comes to terms with the fallout from the disaster.
KIPT reported to investors this morning that its insurer, Primacy Underwriting Management Pty Ltd, had accepted its claim for losses and provided the timber company with a $10 million “progress payment”.
“The balance of the claim is being progressed by the insurer, and further details will be released once the claim has been finalised,” the company said in a statement to the ASX.
“The Company is revising its business plan, taking into account short and longer term opportunities following the fire events disclosed previously.
“… The Company will continue to advise the market as it determines its options for rebuilding the business.”
KIPT managing director Keith Lamb told InDaily the insurance policy was capped at $65 million annually, which it would be seeking in full.
The company now faces a massive salvage operation to monetise the fire-affected timber, as it continues argue for a deep-sea port on the island.
Lamb said building the port was the best option to deal with the timber, warning that without it, the company would have to fell and burn much of what remains – which would emit huge quantities of carbon dioxide – or using barges to take the timber off the island; a process that could take 20 years to complete.
He estimated the earliest possible timeline to get the necessary approvals for a port, and build it, at 12-to-18 months.
Meanwhile, much of the fire-affected timber is in the process of degrading.
“In the absence of a port on KI, it’s very difficult to achieve an economic outcome,” said Lamb.
“It might take, say, 20 years to remove the wood from the island if we were to rely on the existing barging (infrastructure). The alternative would be to push the trees over and burn them … the environmental impact would be very significant.
“There’s just no feasible alternative to getting the wood off the island.”
Lamb said the company was close to completing its final environmental impact statement for the port, following a second round of public consultation on the proposal last year.
“We could have the port up and running within 12 to 18 months,” he said.
“Time was on our side (before the bushfires).
“Time is no longer on our side – the trees already starting to degrade.”
Concern about the environmental impact of the port includes its potential impact on Kangaroo Island’s abalone industry.
Lamb stressed that although there has been extensive damage to the plantation, some areas had been less fire affected than others – and so the company was implementing a thorough monitoring program to assess the trees following the blaze.
He added that KIPT “is very well placed despite the devastation … and has received very strong support from its stakeholders, including the Commonwealth Bank”.
KIPT was ranked 46th in InDaily’s SA Business Index annual listing of South Australia’s top 100 businesses in 2019.
