Investment Review

 

The planned port in the East Cape will take 10,000 logging truck trips off the road, put $22 million a year back into the local community and open up new economic opportunities in tourism, coastal shipping and more, according to Dave Fermah whose company Terrafermah leads the wharf project in conjunction with the Māori owners of the land on which the deep water port will be sited.

“The East Cape area has large tracts of commercial forest reaching maturity, much of it on Māori land, but commercial viability has been hurt by high transportation costs. The port solves this by putting the logs directly onto ships at a direct annual saving of $14 million to the Māori land and forest owners, compared to the barging option,” says Mr Fermah.

In addition to local community gains, taxpayers win too, with savings of $165 million a year as a result of fewer trucks on the road, according to figures from an Opus Consulting report. Mr Fermah’s project is up against a competing bid that proposes to barge logs to the Gisborne port from a site at Te Aroha just to the west of Hicks Bay. From the barge, logs would then be loaded onto ships. But this double-handling comes at a significant cost, both economic and environmental, says Mr Fermah. “A barge decision could set the region and its vital forest industry back for 50 years,” he says. “From a commercial point of view, barging adds costs and provides none of the long-term economic opportunities that a general-purpose deepwater port can open up in the region, he says. The environmental harm from the barging operation, which seeks to dredge the foreshore and cut into a pristine beach has also led to widespread opposition and protests from the Te Aroha community who are calling for an end to the barging project. “We need this port project for our communities,” says Allen Weanga who chairs the Potikirua Trust whose land has significant forests. This week, ministers and Crown Infrastructure Partners will make its decision on which of the two competing bids will receive the $45 million in funding. For Mr Waenga it’s clear. “It’s not just our hapu who will benefit, but all of the East Cape hapus and people. A wharf, not a barge, is what we need down here to get our people back on their feet.”

Deepwater Port Will Spur New Industries And See Gains Shared Widely

Terrafermah estimates gains from the port will inject $28,000 to $47,000 per family annually into the East Cape economy compared to the barging option. In addition, there will be employment income from the 165 full and part-time jobs created. “Putting in this deepwater port and facilities will remove the tyranny of distance, one of the reasons why the East Cape region is one of New Zealand’s most economically-deprived areas,” Mr Fermah says. “Very high transportation costs mean that money paid for uncut trees is often well below the cost of replanting and pruning for the next harvest. So for the beneficiaries of Māori land trusts, there may never be any payments unless this changes.”

There are further significant benefits that a deepwater port offers over barging. While both projects are seeking the same amount of funding, a port has multiple uses, opening the region up to new opportunities. It can be used for regional coastal shipping — “the new blue highway” as Shane Jones, former Minister For Economic Development, has put it. While coastal shipping fell out of favour in the 1960s when trucks took over, it is now being seen as a sustainable way of reducing trucks on roads and transport costs.

The Provincial Growth Fund, MPI, and Seeka have all identified areas in the East Cape where kiwifruit and avocado orchards could be established. Coastal shipping can take this agriproduct directly to the Auckland domestic market or Tauranga port for export, improving East Cape grower returns.

Cruise New Zealand has estimated that up to nine cruise expedition boats a year could visit the deepwater wharf. These high spending tourists on day trips would spend an estimated $3 million per year on cultural activities, with local communities providing all the cultural activities, tours and creative sales.

A weekly passenger ferry service to Gisborne or Whakatane is also being investigated. This could improve access to supermarkets and other essential services for East Cape locals.

Mr Fermah says Eastland Group, who operate Gisborne’s Eastland Port, are interested in taking over operations once the port is built.

 

Breakdown of benefits of a port:

($millions) (per annum)

Community benefits $21.44m

  • Saving direct loading from the wharf to ship (as opposed to barging) $14.4m

  • The road used charges from private access roads to wharf $1.64m

  • Tourism – expeditions ships 9 per annum gross revenue  $3.0m

  • 50% share dividends from wharf operation to community $2.4m

Taxpayer benefits from reducing logging trucks $165.5m, ex Opus report

  • Reduced road wear $58.2m

  • Reduced road accidents $98.9m

  • Reduced CO2 emissions $8.4m

 

The Hapu partnership East cape area

250 Owners

2000 Beneficiaries that link back to the lands

 

Social Impact and Employment: (Ruawaipu)

This covers only the direct employment impact of the required services to operate the wharf, additional job creation within the Township is expected to follow suit:

  • Port management and Stevedores:                           12 permanent positions

  • Contract drivers:                                                     80 permanent positions

  • Ancillary service contractors:                                   10 business owner /operators

Our investment initiative will enable continued and sustainable employment to grow, for the Rohe and in this regard is mandated by the NZ Government.

Proposed scope of port usage:

  1. Whole log export

  2. Bulk fuels receiving and storage

Development horizon:

  1. Honey

  2. Aquaculture marine harvest

Resource summary: Whole log export

  1. 156,000 Hectares of harvestable exotic forest within 50 kilometers of the new port

  2. Yield over 30 years = 78 million tonnes

  3. This would represent 20% of the current Gisborne port volumes

  4. $150 million additional income returned to Maori land owners over 30 years

Export capacity at wharf:

Wharf receiving capacity at commissioning:       

Shipping capacity:                                                     60,000 tonnes monthly (2 vessels)

 

Reference sources:  https://www.mpi.govt.nz/news-and-resources/statistics-and-forecasting/forestry/

                                     http://www.nzfoa.org.nz/resources/publications/facts-and-figures