One of the investments I made last
year must be one of the most difficult to spell: Eucalyptus!
Eucalyptus is a type of tree that is
very common in Australia and was introduced to Brazil in 1910,
for timber
substitution and the charcoal industry. It has thrived in the local environment,
and today there are around 5 million hectares planted. The wood is highly
valued by the charcoal and pulp and paper industries. Brazil's plantations have
world-record rates of growth, typically over 40 cubic metres per hectare per
year, and commercial harvesting occurs after year 5. The local iron producers
in Brazil rely heavily on sustainably grown Eucalyptus for charcoal;
this has greatly pushed up the price of charcoal in recent years. The
plantations are generally owned and operated for national and international
industry by timber asset companies such as Thomson Forestry,
Greenwood Management or cellulose producers such as Aracruz Celluloseand Stora Enso
(Source: Wikipedia.com).
This particular investment has been
made with Greenwood Management, which is one of the leading forestry asset
management companies in Europe. Greenwood Management has offices in several countries
in Europe such as Denmark, Spain and Portugal but also in North America
(Canada).
The investment idea is to have
private investors to invest in large scale forestry operations. In this case
Eucalyptus in Brazil, and during the investment period (6-8 years) Greenwood
Management will actively manage the investment. Once the investment period is
over, the Eucalyptus will be used for char-coal.
According to the investment prospect,
the Brazilian congress has recently passed a law that required all steel
producers to use char-coal from non-native species instead of using the fossil
fuel coking coal, in order to lower CO2 emissions. And the use of
charcoal made from naturally growing native trees will be banned to combat
deforestation. The underlying profitable assumption for this investment is that
the price of charcoal made of eucalyptus will increase.
I have this far had a positive impression of Greenwood Management. The initial investment process was easy, the account manager was professional, and I have this far received several newsletters describing the progress of the investments and Greenwood Management’s co-operation with local university focusing on agriculture. However, if I would have been them I would have given me calls more often (I haven’t received any since I made the investment) to try to sell more investment products! But on the other hand, it is nice with a company not pushing the investment portfolio too much. Also, a referral scheme has been available which could be beneficial for the investor if he/she has friends that might be interested to invest!
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Investment summary
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Investment
level
(Low: 0-5 000 EUR/7 000USD, Medium: 10 000 EUR/14 000 USD, High: >10 000 EUR/14 000 USD) |
Medium.
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Risk
(low,
medium, high)
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Medium.
In
general forestry investments are considered
low risk, but the char-coal
prices have fluctuated
quite a lot during the past. Since the investment
is
based on this parameter I see this as a
medium risk.
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Estimated
ROI per year
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Around
11%.
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Length
of investment
(<1 year
short, 1-5 years medium, > 5 years long)
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Long.
Around
5-7 years
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I will keep you updated on my blog about the progress of this investment since I still have a few years to go before the investment is done. So stay tuned and subscribe to my blog (at the top right on my blog) - don’t miss out on more interesting stories!
Note: photos above come from the Eucalyptus investment
prospect of Greenwood management