Simon Coveney (Cork South Central, Fine Gael)

I thank the Deputy for raising the matter, which is one on which I hope we will have conversations outside the Chamber also because I can understand the Deputy's views and concerns. It is a useful opportunity for me to update the House on the Government's thinking on this issue.

Members will know Coillte was set up 22 years ago under the Forestry Act as a semi-State company operating on a commercial basis. Its core business is to operate 442,000 hectares of land, 390,000 of which is commercial forest while much of the other land is for recreational purposes. It is the dominant player in the Irish forestry business, supplying 80% to 85% of timber to sawmills. Even though it has not been involved in afforestation to any great extent in recent years, as it is the private sector which has been doing that very progressively, it is a still a hugely dominant player.

The reason the questions are being asked today is predominately because Mr. Colm McCarthy's recent report on the sale of State assets recommends:

The state should initiate the disposal of Coillte's forest and non-forest assets (but not its forest land), possibly using the New Zealand Crown Forest Licence template modified to make it suitable to Irish conditions. Unforested land surplus to Coillte's requirements should be sold and the proceeds remitted to the Exchequer by way of special dividend.

I remind the House that Mr. McCarthy's report makes many recommendations. It is the Government's job to consider those recommendations and to make a political decision as to whether it is appropriate to pursue them. That is the process we are in at present. I followed the McCarthy recommendations by asking Deloitte on a pro bono basis to examine Mr. McCarthy's recommendations as they apply to my Department, to value the assets referred to and to make a series of recommendations around how one would go about a sale, given certain considerations I had in regard to those assets and in order that we would have more information before any decisions are made.

The State will not sell the land Coillte owns - this is an issue I feel strongly about. I am considering whether it is appropriate to sell immature forest, as Coillte itself has done. More than 11,000 hectares of immature forest has been sold in recent years by Coillte. It is the harvesting rights for the timber that was sold, so, in other words, the company cashes in when the crop is immature and the timber is harvested at some stage in the future. Therefore, one can raise capital from the asset now without losing or having to sell the underlying asset, which is the land on which the forest is grown.

This is the kind of approach Mr. Colm McCarthy is recommending. We are considering whether that is appropriate in the context of the contributions the forest will make towards carbon sinks in the future, and the State will certainly want to hold on to that asset. We are also examining whether it is appropriate to sell the entire company as a forestry company with harvesting rights without selling the strategic asset, which is the land. Coillte owns a number of companies in the wood panel industry, including SmartPly Europe Limited and Medite Europe Limited. They are profitable companies, which are exporting significant volumes of wood panelling. My preference is not to break Coillte up into various parts and then sell them off independently. That would not be the best way to realise the full value of the company but I am not convinced yet that Coillte or its forests should be sold at all.

We are a long way off making that decision. Currently, I am maximising the information available in order that I can make an informed, sensible, well-thought-out decision which will not compromise the State's core asset, which is the land it owns. Coillte manages 7% of our land mass and we will not sell out in the context of land ownership. The calculation we need to make is whether we should realise value from a company that does not necessarily need to be in State ownership and from the forest assets, most of which are immature or semi-mature, by selling harvest rights in the future. I am informing myself about, and putting a valuation on, these questions in order that I can come back to the House and the Cabinet with properly thought out recommendations.

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