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Timber company's KI bushfire payouts top $55 million

Business

Kangaroo Island Plantation Timbers has received its biggest insurance progress payment to date, taking its compensation for the summer bushfires to more than $55 million.

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The company is claiming its $65 million tree crop insurance policy in full following the December and January fires that damaged 95 per cent of its crop.

In a statement to the Australian Stock Exchange this morning, KIPT announced it had received the latest progress payment of $19.6 million following three previous payments of $10 million earlier in the year.

Last month it also reported it had agreed to a $5.9 million payout to cover the replacement of fire-damaged houses and sheds under its building insurance, which is separate to its $65 million tree crop cover.

KIPT has used some of the funds to pay off its Commonwealth Bank loans in full and has said it intends to use the remainder “to fund future operations of the company”.

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’ north coast, which it has been planning for almost four years.

It says it can salvage 4.5 million tonnes of fire-affected timber but only if it can be done relatively quickly.

Earlier this year KIPT managing director Keith Lamb told InDaily the deep-sea 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.

He said the other option would be to use barges to ship the timber off the island but that could take 20 years to complete and result in much of the timber rotting before it could be moved.

Concern about the environmental impact of the $40 million port at Smith Bay, between Stokes and Emu bays, includes its potential impact on Kangaroo Island’s abalone industry.

KIPT lodged its Environmental Impact Statement Response document with the State Government in March following public submissions. A decision on the project is expected to be made by Planning Minister Stephan Knoll in the coming months.

The Kangaroo Island fires began on December 20 and burnt 210,000ha – almost half of the island – across a 612 km perimeter before being declared contained on January 21.

KIPT’s share price was up five cents to $0.88 following the announcement this morning.

However, its value has more than halved since the fires started with its shares closing at $2.35 on December 20.

KIPT was ranked 46th in InDaily’s SA Business Index annual listing of South Australia’s top 100 businesses in 2019.

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