Canberra: A Middle East sovereign wealth fund has more than doubled its investment to about A$100 million (Dh385 million) in a large sandalwood plantation in Australia's remote northwestern region.
The investment by the unidentified fund will allow for the planting of a further 322 hectares of Indian sandalwood in an area near Kununnura, according to the project's manager TFS Corp (TFC). The deal builds on an initial investment last year that funded the planting of 376 hectares, the company said.
Oil from sandalwood is widely used in perfumes, cosmetics and toiletries and for alternative medicines. Its main markets are found in the Middle East, India and China.
The fund is pumping an additional A$43 million into the plantation to take its total investment "to just under A$100 million into our project so far," said Quentin Megson, Chief Financial Officer of TFS in an interview with Dow Jones Newswires on yesterday.
Agricultural land is among the top asset classes in Australia being eyed by Middle East investors, according to Michael Yabsley, chief executive of the Australian Gulf Council, which promotes trade, investment and cultural interests between Australia and Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE — the six states that comprise the Gulf Co-operation Council.
Australia's government has placed building stronger trade and investment links with the Gulf states as a key priority. Foreign Minister and former Prime Minister Kevin Rudd has become a frequent visitor to the region, which accounts for about A$4 billion of two-way trade, and has opened talks with Abu Dhabi over the sale of uranium to fuel its nuclear-power programme.
TFS began planting the boutique Indian sandalwood in 1999 and now claims to be the world's biggest plantation manager. Indian sandalwood has a history as a tradable commodity for thousands of years but is now endangered through illegal logging.
As a result, it is the world's most expensive tropical hardwood, increasing in price each year, TFS says.
"It's heartwood currently trades in excess of A$110,000 a metric ton, having risen at a compounded rate of over 18 per cent per annum over the past 18 years," the company reported in May.