It’s reported that China Investment Corp (CIC), one of the world’s largest sovereign wealth funds, is close to closing a $100-million deal to purchase a stake in Vancouver Island forest company Island Timberlands. Some interesting spin outtakes from the full story in The Vancouver Sun:

“CIC is believed to be making the investment in Island Timberlands as a hedge against inflation, according to the Journal, but Mason said the fact that CIC is also acquiring an asset in high demand in China likely plays into the investment. ‘We know we have assets that the world wants. This is proof of that,’ said Mason. ‘If this plays out as it has in other commodities, I think we are going to see the Chinese making more investments in fibre-related areas.'”

“CIC already has a large stake in Vancouver-based mining giant Teck Resources, buying a 17.2-per-cent stake in 2009 for $1.5 billion. Teck president Don Lindsay has stated in the past that CIC’s holding in Teck has enabled the mining company to form important business relationships in China. Mason said he expects CIC’s reported investment in Island Timberlands could also open doors in Asia. ‘At the end of the day, what do we have a competitive advantage on? It’s our fibre. Our fibre gives us an edge. It isn’t easily replicated,’ said Mason. ‘We have a comparative advantage in growing trees and that’s where we get the best value. It’s something we’ve got and they need. We should focus on growing more of it.'”

“China has been investing in the B.C. forest sector already, said Gerry Van Leeuwen of the consulting firm International Wood Markets. He said Wood Markets forecasts that China will have a wood shortage of 200 million cubic metres a year by 2017, about three times the amount of the annual B.C. timber harvest.”

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