Case 202200036 OIO Assessment Report Redacted alias.pdf

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Hon Dr Megan Woods
Hon Damien O’Connor
Agree
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Agree
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Disagree
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Disagree
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8.
I am satisfied, in relation to the special forestry test, that:
8.1
the Land is likely to be used exclusively or nearly exclusively for forestry
activities;
8.2
the Land does not include residential land;
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8.3
the Land is not likely to be used or held for future use for any residential
purposes except forestry worker accommodation permitted under section
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16A(4)the of the Act;
8.4
the requirements set out in clause 29(2) of the Overseas Investment
Regulations 2005 are likely to be met (being requirements to continue existing
arrangements, comply with existing conditions of consent, and comply with
existing log supply obligations);
8.5
whenever a crop of trees is harvested on the Land, a new crop is likely to be
established to replace the crop that is harvested; and
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8.6
the farm land offer criteria have been met.
Hon Dr Megan Woods
Hon Damien O’Connor
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Agree
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Agree
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Disagree
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Disagree
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the
National interest assessment
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9.
I note that the overseas investment in sensitive land is not a transaction of national
interest under section 20A of the Act and the Minister of Finance has not notified it is a
transaction of national interest under section 20B of the Act.
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Hon Dr Megan Woods
Hon Damien O’Connor
Noted
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Noted
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Decision about whether to grant or decline consent
My ultimate decision is to:
Hon Dr Megan Woods
Hon Damien O’Connor
Grant consent subject to the
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Grant consent subject to the
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conditions in the Proposed
conditions in the Proposed
Decision in Attachment 1
Decision in Attachment 1
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Grant consent with amended
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Grant consent with amended
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conditions provided on:
conditions provided on:
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Decline consent
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Decline consent
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Hon Dr Megan Woods
Hon Damien O’Connor
Date:
11 /
07  /
22
Date:         /         /
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9.
The sensitive land certificate dated 26 January 20227 confirms that the terrain is rolling,
cultivatable with moderate to steep land. Some of the steeper country is in both native
bush and exotic plantation forestry. The terrain rises from 400 metres above sea level
to a high point of 1089 metres asl. It is drained by several tributaries of the Mata River,
to which it has some frontage.8
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10.  An  area of approximately 1,190 ha at Huiarua Station is subject to Part 4A
Conservation Act 19879.This reserves the marginal strips of any streams or rivers that
are over 3 metres wide. However, there are no such rivers within that area.
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11.  There is a freshwater area (Mata River) on Huiarua Station, as confirmed by the
Applicant and the sensitive land certificate, which notes that the entire rohe is prone to
erosion. This is of concern to local hapu and the Gisborne District Council, as outlined
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in the Waiapu River Catchment Study Summary (which includes the Mata River).
12.  The Land contains 12 residential dwellings. The Applicants plan to subdivide and sell
11 of the dwellings but retain one dwelling as accommodation to support forestry
activities. The Mata School contains a residential house for the School Master currently
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subject to a Licence to Occupy with the Crown.
13.  Images of the Land can be found at Attachment 7.
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7 Peter Port, LINZ Accredited Crown Property Supplier and Principal of Port Glen Limited.
8 The sensitive land certificate states that parts of the southern and eastern boundaries of Lot 1 DP
9828 adjoin the true left bank of the Mata River. The river flows east and northwards at this point.
There are no notations as to the width of the Mata River on either GS6D/207 DPs 7690 or 9828 but by
scaling it appears to be around 30 metres. However the two relevant frontages are subject to 10 metre
wide esplanade easement strips registered in Instrument 6175886.14. under s. 232 of the Resource
Management Act 1991. Although the esplanade strip is covered in a legal instrument the strip remains
in the ownership of the landowner.
9 Record of Title GS5C/245, Lot 5 DP 7690.
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D.  Application of the Act
14.  The Land is sensitive because it is non-urban land over 5 ha in size,10 so consent is
required.11  Because the Land is likely to be used almost exclusively for forestry
activities, the following criteria for an investment in sensitive land apply to this
application:12
14.1
The investor test must be met.13
14.2
The benefit to New Zealand test must be met under the special test relating to
forestry activities.14
14.3
The farm land must have been offered for sale on the open market.15
14.4
You must also note whether the investment is a transaction of national interest
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and, if so, whether the Minister of Finance has decided that the investment is
contrary to New Zealand’s national interest.16
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15.  In order to satisfy the special test relating to forestry activities, the decision-maker must
be satisfied that:17
15.1
Use of land:  The Land—
a)  is likely to be used (nearly) exclusively for forestry activities
b)  is not exclusively residential land and
c)  is not likely to be used for any residential purposes, other than forestry
worker accommodation.
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15.2
Requirements:  The following requirements are likely to be met—18
a)  existing arrangements are maintained
b)  existing conditions of consent are complied with
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c)  logs continue to be supplied under existing supply obligations and
d)  whenever a crop of trees is harvested on the Land, a new crop is likely to
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be established to replace the crop that is harvested; and
16.  As this transaction includes fresh or seawater interest(s), the automatic condition
relating to fresh and seawater areas applies.13 The Crown must acquire, and the owner
of the Land must allow the Crown to acquire, the fresh and seawater interest(s).14
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However, the Crown need not acquire the fresh or seawater interest(s) if the owner is
notified of a decision not to acquire.15
17.  We assess the investor test in Part D, the special test relating to forestry activities in
Part E, the farm land offer test in Part F, and discuss national interest matters in
Part G.
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10 Table 1, Part 1, Schedule 1 of the Act.
11 Under sections 10(1)(a) and 12(a)(i) of the Act.
12 Set out in section 16(1) of the Act.
13 Section 16(1)(a) and 18A of the Act.
14 Section 16(1)(c)(ii) and s16A(4) of the Act.
15 Section 16(1)(f) of the Act.
16 Section 16(1)(g) of the Act.
17 Section 16A(4)(a)-(f) of the Act.
18 As set out in clause 29(2) of the Overseas Investment Regulations 2005, and s 16A(4)(e) of the Act.
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E.  Applicant and investor test
18.  This section describes the Applicant and assesses whether the investor test is met.
Business Activities
19.  Two limited liability companies, each incorporated in New Zealand in December 2020
for the purpose of making the Investment, are together the Applicants.
20.  Ingka Investments Forest Assets NZ Limited (Company No. 8148262) intends to
acquire the Land and will grant the Forestry Right to Ingka Investments Management
NZ Limited (Company No. 8148260).
21.  The two New Zealand companies are referred to respectively as Ingka Forest Assets
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NZ and the Ingka Management NZ, or as the context requires, collectively as the
Applicants.
22.  The Applicants are subsidiaries of Ingka Group (meaning Ingka Holding B.V. and its
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controlled entities) as described further below.
Ownership
23.  Ingka Forest Assets NZ and the Ingka Management NZ are both 100% owned by Ingka
Investments B.V. (Ingka Investments). Ingka Investments is the investment arm of
Ingka Group.
24.  Ingka Investments is a wholly owned subsidiary of Ingka Pro Holding B.V.
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(incorporated in the Netherlands in 1978), which itself is a wholly owned subsidiary of
Ingka Holding B.V. (incorporated in the Netherlands in 1982).
25.  Ingka Holding B.V. is the ‘parent’ holding company for all subsidiaries that jointly form
the Ingka Group.
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Stichting Ingka Foundation
26.  The ultimate parent of Ingka Group is Stichting Ingka Foundation (Ingka Foundation),
also registered in the Netherlands. Ingka Foundation, which has a charitable purpose,
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does not and cannot have any shareholders or other types of legal owners, but holds
its assets only on its own behalf. It has a charitable purpose which is achieved by
making funds available to Ingka Holding B.V.
27.  The Kamprad family can occupy up to two of the five seats on the Ingka Foundation
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board, but the family does not control Ingka Foundation. Funds can be spent only in
pursuit of the charitable purposes and not for the benefit of the Kamprad family.19
Ingka Group
28.  Ingka Group is a large multinational corporation with 166,350 employees and had total
revenue of EUR 37.4 billion in the 2020 financial year. It has 378 IKEA stores in 30
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countries and 45 shopping centres in 15 countries.
29.  Ingka Group is the largest franchisee of IKEA stores internationally. The IKEA concept
is owned by Inter IKEA Systems B.V. (part of the Inter IKEA Group), also based in the
Netherlands, which franchises the IKEA concept globally. The Inter IKEA Group and
Ingka Group are two separate groups of companies with different management and
different owners.
30.  Ingka Group’s strategy is to invest in forestry in countries relevant for the IKEA supply
chain. The Applicants have stated that planning is underway for the Ingka Group to

19 Link to Ingka Foundation website with information on the founder and Kamprad family: Governance |
INGKA Foundation.
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bring IKEA stores to New Zealand in the near future. In April the OIO granted consent
to IKEA New Zealand Limited for an investment in significant business assets, being
the establishment of an IKEA store retail home furnishings and distribution business, to
be located in Auckland, with an opening date in December 2024.20
31.  Ingka Group has three business areas, each with its own management and corporate
structure, which sit under the Ingka Group corporate structure.
32.  The three business areas of Ingka Group are:
(a)
IKEA Retail Business.
Ingka Group’s core business is IKEA Retail, which is the world’s largest home
furnishing retailer, operating 378 IKEA stores in 30 countries. These IKEA
stores had 706 million customers in the 2020 financial year.
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(b)
Ingka Investments Business
Ingka Investments is the investment arm of Ingka Group. This is the relevant
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part of the Group for the proposed Investment and is described in more detail
below.
(c)
Ingka Centres Business
Ingka Centres develops shopping centres with each anchored by an IKEA
retail store. Currently there are 45 shopping centres across Europe, Russia,
and China.
33.  Each of these entities within Ingka Group has a management board responsible for
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making any decisions relating to that entity.
Ingka Investments
34.  Ingka Investments was incorporated in the Netherlands in 2014. The Applicants submit
that it makes responsible investments to secure long-term growth for Ingka Group and
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shares the knowledge it gains from its investment collaborations with IKEA Retail to
support its business development. Ingka Investments has a diverse portfolio, mainly
invested in securities with low-risk profiles.
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35.  Ingka Investments is divided into these six sub-businesses:
(a)
Financial Market Investments
(b)
Business Development Investments
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(c)
Renewable Energy
(d)
Forestland
(e)
Circular Economy
(f)
Real Estate
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36.  Ingka Investments itself has a large global reach. It owns about 250,000 ha of
responsibly managed forests in the United States, Romania, Estonia, Latvia and
Lithuania. Ingka Investments’ strategy is to invest in forestry in countries relevant for
the IKEA supply chain. The Applicants have stated that planning is underway for the
Ingka Group to bring IKEA stores to New Zealand in the near future.
Previous Investor Tests

20 OIO case number 202200041.
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37.  The Applicants have been granted four consents under the Act. Their first consent,
under the special forestry test, was granted in August 2021 for the acquisition of 5,499
ha of land in Clutha, Otago (known as ‘Wisp Hil  Station’).21
38.  This year the Applicants have received three further consents for farm to forestry
conversions under the special forestry test. These relate to acquisitions of land at:
38.1
86 Koneburn Road, Gore (1,188 ha),
38.2
708 and 668 Old Hil  Road, Porangahau, Central Hawke’s Bay (609 ha), and
38.3
254 Wilder Road, Porangahau (670 ha)22.
39.  Accordingly, the Applicants have previously met the investor test in s18 of the Act. As
with all consents, the Applicants (including ‘relevant overseas persons’ and ‘individuals
with control’) must remain not unsuitable to own or control any sensitive New Zealand
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assets.
40.  The Applicants have also submitted another two applications for consent being
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processed23 along with this application (202200036).
41.  A diagram of the Applicants’ ownership structure, simplified to show the Ingka
Investments part of Ingka Group, is in Attachment 2.
Control
42.  Ingka Forest Assets NZ and the Ingka Management NZ are controlled by their
directors. Both companies share the same two directors, Andriy Hrytsyuk and Anna
Gustafsson.
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43.  In New Zealand the Applicants will be responsible for making decisions with respect to
the investments being made, and the day-to-day management of them. Ingka
Investments, as the parent of the Applicants, approves certain investment decisions.
The directors of Ingka Investments are Juvencio Maeztu, Jesper Brodin, and Krister
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Mattsson who stepped down as of 31 May 2022 (replaced by peter Van Der Poel).
44.  Ingka Investments, as one of the three businesses of Ingka Group, has its own
management board, including its three directors, which is responsible for monitoring of
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performance and execution of the strategy and the annual asset allocation plan for
Ingka Investments. The Renewable Energy & Forestland Portfolio Council is one of a
number of Investment Portfolio Councils established to support the work of the Ingka
Investments Board.
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45.  Ingka Investments has a New Zealand forestry project team that is responsible for
advising the board of the Applicants on identification of, and recommendation to make,
the investment, the ongoing day-to-day oversight of the investment, and any
recommendation to dispose of the investment.
46.  The New Zealand forestry project team is made up of Iulia-Andreea Simion (Legal
Counsel, Ingka Group), Ray Raiesmaa (Portfolio Operations Manager, Ingka Group),
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Costel Bucur (Portfolio Business Risk & Compliance Manager, Ingka Group) and Gijs
Menting (Forestland Portfolio Acquisitions Manager).
47.  The financial commitment for the total investment amount (including during the project
lifetime) comes from Ingka Investments, the parent and sole shareholder in both
Applicants.

21 OIO case number 202100045.
22 OIO case numbers 202200038 (86 Koneburn Road), 2021000767 (708 and 668 Old Hill Road), and
2021000739 (254 Wilder Road).
23 OIO case numbers 202200215 and 202200216.
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Mata School
69.  Huiarua Station includes about 2 ha of land subject to a licence to occupy granted to
the Crown in respect of Mata School. This also includes a residential dwelling
(additional to the 12 dwellings mentioned above) that is used as the School Master’s
house.
70.  Mata School is an isolated rural school about 45 minutes inland from Tokomaru Bay,
staffed with one full-time sole-charge principal, with a “highly transient roll” (six students
in 2019).27
71.  Several third party submissions (as well as the petition) have objected to the granting
of consent on the basis that the sale of the two farms would lead to the loss of the Mata
School which serves the families of the surrounding farms.
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72.  The Ministry of Education has exercised its final right of renewal for seven years from 1
September, and the licence term is due to expire on 31 August 2029. The School
Master’s house, classrooms, ancil ary buildings and swimming pool belong to the
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Crown, and will be removed at the end of the licence term.
73.  The Applicants have told us they are supportive of the licence to the Crown continuing
for Mata School, or alternatively are open to subdividing and selling the area containing
Mata School to the Crown, should they wish to acquire it.
74.  The Ministry’s view is that the Mata School was established to support farm station
workers in the area. Currently there are only 5 students at Mata School and all of these
are children of workers on these stations. As such, if the stations are acquired and
converted into forestry land, it is unlikely that there will continue to be a need for this
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school. It is therefore unlikely that the Ministry would want to look to acquire the
existing licenced land if OIO consent was granted.
75.  Special Condition 10 imposes an obligation on the Applicants to consult with the
Secretary for Education as to whether the licence for the Mata School will continue
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after planting is complete. In the event it does then the Applicants will need to
subdivide and sell the Mata School premises, and Special Condition 10 provides for the
continued residential use of the School Master’s house for a temporary period. In the
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event it does not then the Applicants will not need to subdivide and sell the Mata
School premises. (See the proposed decision in Attachment 1).
76.  Attachment 3 shows the Mata School on a map as well as a map of the part of
Huiarua Station on which the School is situated.
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Consultation with Ngāti Porou
77.  We received detailed submissions from Ngāti Porou, opposing the investment for
reasons associated with wellbeing of people in the region. We engaged further with
Ngāti Porou to request further information, and to inform them of the special forestry
test criteria.
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78.  In particular, Ngāti Porou raised their Treaty settlement and a Memorandum of
Understanding (MoU) entered into in 2014 between Ngāti Porou, the Crown (MPI), and
Gisborne District Council (GDC). The MoU relates to the Waiapu Catchment. The
Waiapu River has very high sediment levels due among other things to historic
deforestation and erosion problems. The Mata River is one of the main tributaries of
the Waiapu river.
79.  Ngāti Porou expressed concerns that increased waste from pine forestry may be
detrimental to the Mata River, but also that there are wider economic and social
consequences due to the significant role played by this farm in the region. The MoU is

27 Review Report of Education Review Office (18 June 2019).
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intended to try and recognise the need to address the state of the Waiapu catchment
and sets out a number of plans. It also recognises the significant role Ngāti Porou has
in the protection of the region and the adverse impact failure to protect the river can
have on the people of the region, including economic and social.
80.  Further comment received from Ngāti Porou expanded on their reasons for objecting to
the application. These reasons, in summary, included that:
•  forestry is not the best use of this productive farm land;
•  the establishment of plantation forests will replicate experiences after the Tolaga
Bay floods and add to sediment in the Waiapu catchment, in turn impacting the
coastal environment which is a source of food for Ngāti Porou; and
•  while Ngāti Porou have a joint management agreement with Gisborne District
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Council intended to provide for shared decision-making in their rohe, in practice
they are let down by the compliance capability of the Council and it will be the
hapu of Ngāti Porou who wil  live with the impacts.
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81.  [ s 9(2)(g)(i) ]

However, we have provided the Applicants with a copy of the submissions
received from Ngāti Porou and encouraged them to consider the issues raised and
engaged proactively with this iwi to share their investment plans and listen to the issues
of importance to Ngāti Porou.
82.  The Applicants have told us that there will be a number of forestry management
practices employed to ensure that the impact of harvesting is minimal.  This includes
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that riparian setbacks around the Mata River (to be planted in mānuka and other
natives) will be 20 metres, exceeding the minimum requirements required by law. The
National Environmental Standards for Plantation Forestry (NES-PF), made under the
Resource Management Act 1991, provides a framework for managing the
environmental effects of forestry.  Official
83.  Further, the Applicants submit that their proposed investment will be consistent with the
key aims of the Waiapu River catchment programme and the MoU, namely, to treat
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erosion, prevent greater physical damage, and to bring social and economic gains to
iwi and landowners. Ingka say they are committed to a number of measures to
minimise erosion and prevent damage to the Waipu River catchment, including riparian
planting, sustainable harvesting methods, and monitoring of water quality.
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84.  We understand that the Ingka’s advisors have recently met with Ngāti Porou, and that a
further meeting was scheduled to take place when Ingka Group representatives visited
New Zealand in June.
Third Party Submissions
85.  There is strong community opposition to the proposed investment. We have to date
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received 40 third party submissions, including a petition28, all opposing the conversion
of the farms to forestry.
86.  Common themes from submissions include that the investment will have an adverse
impact on the environment, be detrimental to the economy and local community
(including possible closure of Mata School), opposition to “overseas carbon farmers”,
and claims that forestry will not be commercially viable on the Land.

28 In April we received a submission attaching a hard copy of a petition signed by 371 individuals and
informing us of an online petition on change.org (which at that the date of writing has gathered over
8,000 signatures), subsequently presented to Hon Kiri Allan on 13 May 2022.
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87.  We have sought further information from the Applicants regarding issues raised in a
number of submissions, including about the viability of the Land for commercial
forestry. This has subsequently informed our assessment of the application. The
common themes from third party submissions, and the Applicants responses, are
summarised below.
Use of land
88.  This section considers whether the Land –
88.1
is likely to be used (nearly) exclusively for forestry activities
88.2
is not exclusively residential land and
88.3
is not likely to be used for any residential purposes, other than forestry worker
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accommodation.
Used (nearly) exclusively for forestry activities
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89.  It is a fundamental criterion of the special forestry test that the relevant land is used
exclusively, or nearly exclusively, for forestry activities.29  We provide details about
particular constraints on the use of the Land in this part, and our assessment as to why
these factors do not prevent this criterion from being met.
Plans for obtaining resource consent for red zoned land
90.  We have requested further information from the Applicants regarding the proportion of
the Land that will require resource consent for forestry activities, and their plans to
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apply for consent.
91.  The Applicants have told us that resource consent will be required for forestry activities,
including afforestation and harvesting, in areas where the erosion susceptibility risk is
‘very high’ (red zoned land). 819 ha at Huiarua Station and 95 ha at Matanui Station is
red zoned and will require resource consent. Of the red zoned plantable land, about
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150 hectares will be planted in native species as riparian setbacks.
92.  The Applicant’s forestry managers have advised (Logic Forest Solutions Limited) that,
the
based on their due diligence and discussions with GDC, they do not believe there will
be any issues with gaining the resource consents required.
93.  The Applicants’ advisors have already engaged GDC regarding an application for
resource consent, and GDC advised that it supports forestry on the area of plantable
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red-zoned land provided that riparian planting of permanent species is proposed.
Carbon lease
94.  The Land at Huiarua Station is subject to a lease (the Carbon Lease) in favour of New
Zealand Forest Leasing No.3 Limited (the Lessee).30  This allows the Lessee to plant
trees on Huiarua Station to be registered under the New Zealand Emissions Trading
Scheme (ETS) and earn emissions units for the growth of the trees planted.
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95.  The Carbon Lease was originally registered over an area of 1,532 ha. However, the
Vendor and Lessee have agreed that the Carbon Lease will be surrendered over the
majority of that area as it was not planted as originally anticipated. This means that the
area subject to the Carbon Lease will be approximately 552 ha.
96.  The Applicants have confirmed that the area subject to the Carbon Lease can be used
for forestry activities without consent of the Lessee.  Under the terms of the Carbon

29 Forestry activities means maintaining, harvesting, and/or establishing a crop of trees for the purpose
of plantation forestry but excluding permanent forestry.
30 The Carbon Lease commenced on 1 January with a term of approximately 25 years.
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Lease the Applicants can harvest the trees in this area on the expiry of the Carbon
Lease, which will fit with their timeframe for harvesting.
Opposition to ‘carbon farming’
97.  Numerous third party submissions raised objections related to ‘carbon farming’. This
includes statements that the trees will not be harvested, or that the return from the ETS
is better than the return from harvesting, and therefore the investment should not be
eligible for consent under the special forestry test.
98.  A detailed submission from Dame Anne Salmond stated that “the large scale
establishment of production pine plantations that can also be used for carbon farming
is beneficial to New Zealand is ill-informed and short-sighted, and contrary to current
international scientific advice on how best to tackle climate change”.
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99.  The Applicants have confirmed to us that Ingka Group does not use its forests for
carbon offsetting, but that the business model for their forestry portfolio is based on
timber sales.
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Erosion Control Funding Programme
100.  There are areas that are subject to grants under MPI’s Erosion Control Funding
Programme (ECFP).
101.  Approximately 1,728.09 ha at Huiarua Station and 124.36 ha at Matanui Station (being
a total of 1,852.45 ha across both stations) is subject to ECFP grants. Under the terms
of the grants the owner must not clear or cause any loss, damage, or destruction to any
part of the area covered by the grant unless with the authority of the MPI.
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102.  We have consulted with MPI regarding the ECFP grant programme, and the
implications for the viability of commercial forestry on the Land. Based on information
received from MPI and the Applicants, and our assessment to date, we expect the
Applicants will likely be able to satisfy this criterion.  MPI said that radiata pine
plantation grants were approved with MPI having the intention that these forests would
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be harvested.
Leaseback arrangement - grazing lease
the
103.  The Agreements provide for an interim pastoral and grazing lease in favour of Rimanui
Farms Limited (a related party of the Vendor) for three years. The land area covered by
the lease does not include the areas under the Carbon Lease, the registered forestry
rights, the licence to the Ministry of Education, and an area of approximately 500 ha
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forecasted to be planted in the first year of the term of the interim pastoral and grazing
lease.
Economic viability of the Land for plantation forestry
104.  Several submitters stated that it would not be economic to harvest trees planted on the
Land due to factors including the distance from the nearest port at Gisborne, the state
of the roading, and cost of transport. We consider these submissions are relevant as
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this goes towards the likelihood of the Land being used for forestry activities.
105.  We have tested this claim with Ingka, including requesting further information about
their due diligence, silvicultural practices, and the forest manager to be appointed.
106.  Before entering the Agreements Ingka engaged a number of advisors to conduct due
diligence to understand the economic viability of the Land for production forestry.
Advisors included Logic Forest Solutions, DLA Piper, Eland NZ, and NZ Forest
Advisory. The assessments and financial modelling provided by these advisors
generated an economic return acceptable to Ingka for commercial production forestry.
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107.  In particular, Logic Forest Solutions advised the Applicants on the costings for land
preparation, establishment, pruning, thinning roading and eventual harvest based on a
28 year rotation.
108.  The main points going towards viability for production forestry included the following:
•  there would be increased costs of establishment, silviculture and transport due to the
distance  of  the  Land  from  the  port,  however  this  would  be  countered  by  lower
harvesting  costs  due  to  the  contours  of  the  Land  allowing  for  the  majority  to  be
harvested via ground-based harvesting;
•  ground-based harvesting is significantly cheaper than hauler-based harvesting (by
approximately $10-$15 per tonne, representing a large cost saving given the scale
of the Land);
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•  the scale of the Land will enable Ingka to use economies of scale effectively reducing
what might otherwise be a high cost on a smaller property; and
•
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  Mata Road is set up for logging trucks at present with a significant number of trucks
using the road each day.
109.  Also, the Applicants have told us that many of the surrounding properties have been
developed in forestry for a significant period of time (with some being second rotation
forests) providing Ingka with good local information and comparisons to help inform
aspects of due diligence.
Applicants’ submissions - ‘nearly exclusively for forestry purposes’ criterion
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110.  We have tested this criterion with the Applicants, including requesting details of about
their silvicultural practices, and the forest manager to be appointed.
111.  The silviculture regime for radiata pine will involve pruning the 330 stems per ha to
three metres at five years, pruning again to six metres at seven years, and then
thinning the trees in year nine. The expected timeframe for harvesting would be
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between 27 to 30 years from planting.
112.  The Applicants will be engaging Logic Forest Solutions as its forestry manager for the
investment. Logic Forest Solutions is a
the   New Zealand company with over 20 years’
experience in forest management. Ingka has also engaged New Zealand company NZ
Forest Advisory, based in Gisborne, to oversee and report on the performance of the
forest manager.
under
113.  Figure 1 below shows the current and proposed use of the Land. As can be seen, the
Investment plan intends that there will be a total afforested area of 4,907 hectares (or
80% of the Land). The Applicants intend to plant 4,202 ha of new planting on the Land
in the 2023 to 2026 planting seasons.
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114.  The remaining portion of the Land not used for forestry activities (i.e. not existing
plantation and new afforestation comprising 80% of the Land) will be used as follows:
a.  remain unplanted due to native bush (including scrub), ridges, gullies, steep land,
infrastructure (roads, trucks), and buffer land, set-backs, riparian planting, and the
Mata School premises (approximately 19%); and
b.  to be subdivided and sold (approximately 1%).
115.  Ingka Forest Assets NZ intends to own the Land indefinitely, consistent with Ingka
Investments’ strategy for investment in forestry. The Ingka Group owns around 250,000
ha of forestry around the world, investing in countries relevant for the IKEA supply
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chain. The Ingka Group acquires forestry assets as a ‘hedge’ against the global market
for wood given that Ingka Group is such a large consumer of wood products for its
furniture, and to offset the Ingka Group’s environmental footprint globally.
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116.  The entire forestry portfolio of Ingka Investments is FSC certified. The FSC certification
of acquired forestry assets directly after take-over is a main priority for the Applicants.
Also, the Applicants confirm they will register the Land in the ETS.  (This is consistent
with the practice of other forestry operators and does not of itself preclude the ability to
harvest trees).
117.  Note that proposed Special Condition 2 meet the requirement for a condition that the
Land continue to be used for forestry activities.31  (See the proposed decision in
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Attachment 1.)
118.  In addition, proposed Special Condition 1 requires the Applicants to complete planting
a crop of trees on the Land by 1 October 2027. This condition requires that the crop of
trees cover an area of at least 3,990 ha.
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Not exclusively residential land
119.  The Land does not include residential land.  None of the Land has a property category
the
of residential or lifestyle in the relevant district valuation roll.
Unlikely to be used for residential purposes
120.  The Land will not be used for residential purposes, after a temporary period while
arrangements are made to separate and sell the land that contains the residential
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dwellings (not including the dwelling to be retained for use by forestry worker
accommodation).
121.  The Applicants plan to undertake a subdivision of the land containing the dwellings,
which would be subject to obtaining the required territorial authority consent. The
Applicants plan to commence the subdivision process shortly after settlement and
expect this will take about six months to complete.
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122.  Note that proposed Special Condition 7 meets the requirement for a condition that the
Land not be used for residential purposes.32  (See the proposed decision in
Attachment 1.)
123.  Also, we recommend you impose a condition of consent requiring the land containing
the dwellings to be divested by 1 August 2026 – see Special Condition 6 (which refers
to ‘Other Land’). We recommend that, in imposing the divestment condition, there be a

31 This condition is required by s 16C(4) of the Act.
32 This condition is required by s 16C(4) of the Act.
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short-term transitional provision allowing the dwellings to be rented prior to divestment
– see Special Condition 8.
Requirements
124.  This section considers whether the following requirements will be met—
124.1
maintain existing arrangements
124.2
comply with existing consent conditions
124.3
supply logs and
124.4
replace harvested crops.
Maintain existing arrangements
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125.  The following checks have been undertaken to identify existing arrangements:
125.1
the Vendor Information Form;
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125.2
the Applicants have carried out due diligence of the Land including reviewing
the records of title to the Land, sensitive land certificate, the Land Information
Memorandum report, and district plans; and
125.3
inquiries were made of Heritage New Zealand and the New Zealand
Archaeological Association via the Archsite archaeological site recording
scheme website to identify whether any known archaeological sites were
located on the property.
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126.  The decision-maker must be satisfied that any existing arrangements in respect of the
relevant land that are for one or more specified purposes (e.g. protection of indigenous
vegetation, indigenous fauna or wildlife habitats, wāhi tapu, historic places or areas, or
public access) will be implemented and maintained.
127.  Due to the nature of this proposed investment the OIO has consulted with the
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Department of Conservation, Walking Access Commission and Heritage New Zealand
to ascertain whether there are any existing arrangements that must be maintained.
the
128.  Based on information received to date we have not identified any qualifying existing
arrangements.
129.  The Applicants submit that there are no existing arrangements to be maintained or
implemented on the Land. For completeness, the Applicant notes that:
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a.  the GDC Tairāwhiti Resource Management Plan identified four scheduled
'Protected Management Areas' located on Huiarua Station. These are WR83 The
Pond Bush (17 ha), WR88 Mata/Manga-matukutuku confluence (a 12-hectare
area of high significance), WR89 Mata/Manga-maunu confluence (47 ha) and WR
137 Ohinepaka (17 ha).
b.  protected watercourses, waterbodies and/or riparian areas within the region that
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warrant specific riparian protection management due to their associated aquatic or
terrestrial biodiversity, habitat or ecosystem values and current or potential
impacts to these, or potential threats to water quality identified in the GDC
Tairāwhiti Resource Management Plan.
130.  The Applicants have undertaken to conduct their forestry activities so as to minimise
disruption to these areas as required by all applicable laws and any resource consents.
The Applicants intend to also plant riparian setbacks in Manuka or other native species
in these areas for additional protection.
131.  The Applicant submits, and we agree, that the above are not an arrangement for the
purposes of clause 29 of the Regulations. Existing arrangements do not include
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obligations that are imposed by any other legislation or which are registered against the
title of the land. No conditions are required to address those as they are legally
enforceable in their own right.
Special conditions regarding existing arrangements
132.  We recommend you impose our usual ‘back stop’ condition requiring the consent
holders to implement and maintain any existing arrangements, whether or not these
were identified in the application. We reiterate that the Applicants are committed to the
Mata School remaining on the site, including public access to the property.
133.  Note that proposed Special Condition 9 meets the requirement for a condition that the
any existing arrangements (including those not identified in the application) must be
maintained.33 (See the proposed decision in Attachment 1). Special Condition 10
contains a condition specifically requiring public access to the Mata School for as long
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as it continues to exist. The Applicants will have to consult with the Secretary for
Education as to whether the school will continue.
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Freshwater area on the Land
134.  The Applicants have notified us that the Land includes a river which qualifies as a
“fresh or seawater area” (FSA interest) under the Act.  The FSA interest is in the form
of rights associated with the bed of the Mata River.34 If consent is granted the Crown
will have the right to acquire this FSA interest.
135.  The sensitive land certificate states that parts of the southern and eastern boundaries
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of Lot 1 DP 9828 adjoin the true left bank of the Mata River. The river flows east and
northwards at this point. There are no notations as to the width of the Mata River on
either GS6D/207 DPs 7690 or 9828 but by scaling it appears to be around 30 metres.
However, the two relevant frontages are subject to 10 metre wide esplanade easement
strips registered in Instrument 6175886.14. under s. 232 of the Resource Management
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Act 1991. Although the esplanade strip is covered in a legal instrument the strip
remains in the ownership of the landowner.
136.  An extract from the ETS eligibility map (below) for Huiarua East Coast shows the Mata
the
River running alongside the eastern boundary of the base of Huiarua Station.
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33 This condition is required by s 16C(4) of the Act.
34 The landowner has ad medium filum aquae rights to the centre of the river.
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Comply with existing consent conditions
the
137.  There are no existing consent conditions to comply with. As noted on page 2 of this
report, the Vendor is a non-overseas person.
Supply logs
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138.  The Vendor has confirmed that there are no existing log supply obligations in relation to
the Land (the Land is currently predominantly farm land with a small area of existing
pine).
Replant harvested crops
139.  We are satisfied that whenever a crop of trees is harvested on the Land, a new crop is
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likely to be established on the Land to replace the crop that is harvested.
140.  The Applicants intend to practice rotational forestry, harvesting approximately every 27-
30 years after planting and replanting the Land within two years of harvest.
141.  Note that proposed Special Condition 3 also requires that the crop of trees be
harvested within 35 years of planting (for radiata pine) and within 50 years (for
alternative commercial forestry species). Special Condition 3 is subject to limitations
under the:
•  Timbergrow Forestry Right Interest and the Port of Gisborne Forestry Right Interest
as defined in the conditions,
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some with production forestry focus), and more limited interest from non-forestry
buyers.
H.
Not a transaction of national interest
145. The investment does not involve a transaction of national interest under the mandatory
criteria of the Act.40 This is because the investment does not involve a non-NZ
government investor, or an investment in a strategically important business (as defined
in the Act).
146. We are directed41 that the starting point is the assumption that overseas investment is
in New Zealand’s national interest and that we should only seek the Minister of Finance
to exercise his discretion for a national interest assessment if the proposed investment:
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•
could pose risks to New Zealand’s national security or public order
•
would grant an investor significant market power within an industry or result in
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vertical integration of a supply chain
•
has foreign government or associated involvement that was below the 25 per
cent threshold for automatic application of the national interest test, but granted
that government (and/or its associates) disproportionate levels of access to or
control of sensitive New Zealand assets or
•
would have outcomes that were significantly inconsistent with or would hinder the
delivery of other Government objectives.
•
raises significant Treaty of Waitangi issues, or
•
relates to a site of national significance (e.g. significant historic heritage).
147.
[ s 9(2)(g)(i) ]
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the
.
148.
[ s 9(2)(g)(i) ]
under
149.
[ s 9(2)(g)(i) ]
A schedule
of third party submissions received can be found in Attachment 5.
150.
[ s 9(2)(g)(i) ]
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I.
Conclusion and recommendation
151. We recommend you grant consent to the Investment as we consider all of the relevant
criteria have been met.
40 Under s 20A of the Act.
41 Ministerial Directive Letter (24 November 2021).
42 Section 20B of the Act.
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152.  The conditions we recommend are set out in the Proposed Decision (Attachment 1).
These conditions include all required mandatory conditions and additional discretionary
conditions.

Daniel White
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Manager, Applications
Overseas Investment Office
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Date:  1/07/2022

J.  List of Attachments
1.
Proposed Decision and Conditions
2.
Applicants’ Ownership Structure
Information
3.
Submissions relevant to discretionary national interest assessment
4.
Third Party Submissions
5.
Land use capability
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6.
Images of the Land
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ECFP Grants means the Ministry of Primary Industries’ funding through the Erosion Control
Funding Programme to Gisborne district landholders to help reduce wide-scale erosion
problems in the Gisborne district.
Forestry Activities means maintaining, harvesting, and/or establishing a crop of trees for
the purpose of plantation forestry but excluding permanent forestry.
Forestry Right means the forestry right to be granted between Ingka Investments Forest
Assets NZ Limited (Grantor) and Ingka Investments Management NZ Limited (Grantee) to be
registered over the Land.
Forestry Land means the Land which is still to be identified in the Planting Plan and which
you intend to use exclusively, or nearly exclusively, for forestry activities (which, for the
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avoidance of doubt, may include areas of native bush, and reasonable allowances for roads,
set-backs, buffer area, riparian planting and other land reasonably deemed “non-
productive”).
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Mata School House means the School Master’s house on the Mata School Premises.
Mata School Premises means the premises situated at Tokomaru Bay, Gisborne, being
more particularly described as the associated grounds located at Lot 1 DP 9828 containing
an area of approximately 2.0 ha.
Planting Plan means a plan that describes how the Forestry Land will be planted and
identifies and explains: the area of land suitable for planting, the area you will plant with
trees, the type of trees you will plant, and a map showing the same.
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Fresh or seawater areas has the same meaning as in the Act.
Other Land means Land that is not Forestry Land and which is still to be identified.
Port of Gisborne Forestry Right Interest means the forestry right contained in instrument
number 206772.1 to Port Gisborne Limited, which is due to expire on 31 July 2027, and in
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terms of which the Consent-Holders will only be entitled to replant on the 25.6 hectares if the
Port of Gisborne choose not to exercise their first right of refusal.
the
Regulations means the Overseas Investment Regulations 2005.
Replanting Forestry Covenants means the following covenants registered against the Land
pursuant to Regulation 13(4)(a) Forestry (East Coast) Grants Regulations 2000:
under
(a)
instrument number 9158774.1 registered on 20 August 2012 against Record of
Title GS5C/245 (Huiarua Station);
(b)
instrument number 9391335.1 registered on 8 May 2013 against Record of Title
GS5C/245 (Huiarua Station); and
(c)
instrument number 9158774.1 registered on 20.August 2012 against Record of
Title GS6D/207 (Huiarua Station).
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Timbergrow Forestry Right Interest means the mutual forestry right in instrument number
5921058.2, registered against Record of Title GS6A/814, which grants the Vendor forestry
rights over approximately 9.5 hectares of neighbouring land and simultaneously grants the
owner of neighbouring land (being Timbergrow Limited company number 2499269) forestry
rights over approximately 17 hectares of the Vendor's land at Record of Title GS6A/814
known as Matanui Station..
Vendor means Christopher's Management Services Limited.
WAAN means water areas acquisition notice.
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Dispose of the Land: dispose of the Land to a third party
Within six months of our
who is not your associate.
notice.
Offer without reserve: if you have not disposed of the Land
Within nine months of our
within six months of our notice, offer the Land for sale by
notice.
auction or tender without a reserve price or minimum bid and
dispose of the Land.
Report to us about marketing: tell us in writing about
By the last day of every
marketing activities undertaken and offers received for the
March, June, September
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Land.
and December after our
notice or at any other
time we require.
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Report disposal to us: send us, in writing, evidence of the
Within one month after
following:
the Land has been
disposed of.
(a)
that you have disposed of the Land (including
copies of sale and purchase agreements,
settlement statements and titles showing the
purchaser as registered proprietor), and Information
(b)
that the purchaser is not your associate.

Reporting conditions
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We need information from you about how your investment plan is tracking so we can monitor
your progress against the Conditions.
the
In addition to Settlement reporting (as set out in Standard Condition 2), you must provide the
OIO with reports detailing the progress of the investment. The reports must:
1.
be submitted via our Webform or sent to [email address] by these dates:
under
(a)
30 November 2023;
(b)
30 November 2026; and
(c)
30 November 2029.
2.
contain information about:
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(a)
your progress in implementing the special conditions (which can include
photographs, maps or aerial imagery as evidence of compliance with relevant
conditions),
(b)
your progress maintaining engagement with Ngāti Porou including in your
making of plans for planting and any impact of Forestry Activities on them
(c)
your progress in continuing to implement and maintain the Protected
Management Areas and the protected watercourses, waterbodies and/or riparian
areas identified in the Gisborne District Council Tairāwhiti Resource
Management Plan, and establish an agreed protocol around these protected
areas as part of your forest management practices,
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(d)
your most current forecast or schedule for harvesting (including harvesting trees
under Special Condition 3 within 30 years of acquisition of the Land) and
replanting of various areas of the Land (including maps indicating the particular
areas and likely schedules), and
(e)
your Planting Plan and its compliance with special conditions 1, 5, and 6.
3.
follow the format of the template annual report published on our website.
If requested in writing by the OIO, the Consent Holder(s) must provide a written report within
20 working days (or such other timeframe as specified) on any matter relating to its
compliance with:
(a)
the representations and plans made or submitted in support of the application
and notified by the regulator as having been taken into account when the
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Consent was granted, or
(b)
the conditions of this Consent.
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Information
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Attachment 2: Applicants’ Ownership Structure

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Attachment 3 – Extract from map showing subdivision areas on Huiarua and Matanui Stations
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Attachment 4:
[ s 9(2)(g)(i) ]

Adverse impact on the community and local economy
1.  A large proportion of the third party submissions raised objections based on the negative
impact that the conversion of Huiarua and Matanui Stations to forestry would have for the
community and local economy, including consequent loss of employment opportunities.
2.  Submitters have told us that because these are the largest farms in the region the
viability of other farms, and ancillary businesses are dependent on their continued
farming operations. Huiarua and Matanui Stations are also considered a training ground
for young farmers.
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3.  Ngāti Porou have also told us there are wider economic and social impacts due to the
significant role played by the farming stations in the region.
4.  While we acknowledge that these are important issues, these are outside the criteria of
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the special forestry test.
[ s 9(2)(g)(i) ]


Adverse impact on the environment
5.  A common issue from third party submissions relates to adverse impact on the
environment from forestry. The themes raised include debris in the Mata River and the
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Waiapu Catchment, pine forests creating a lack of biodiversity, and increased fire risk
due to the effects of climate change.
6.  Of particular note, Dame Anne Salmond submitted that the large scale afforestation of
Tairāwhiti in conifer plantations is contrary to international scientific advice, and to
regional and national economic, social and ecological interests. She submitted that the
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[ s 9(2)(g)(i) ]

7.  Also, as noted above, the MoU between Ngāti Porou, MPI and GDC is intended to
the
recognise the significant role Ngāti Porou has in the protection of the region and the
adverse impact failure to protect the Mata River can have on the people of the region.
8.  These issues are also outside the special forestry test criteria, and as already mentioned
above, the NES-PF provides the appropriate legislative framework for managing the
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environment effects of forestry.
[ s 9(2)(g)(i) ]

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Attachment 7: Imagery of Land
Imagery of Huiarua Station (from advertising material)
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Imagery of Land (Showing Property Boundaries)
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