Woodbois Ltd (LON:WBI) shares moved higher on Monday after the firm unveiled a new reforestation and carbon credit division which it said represents “a valuable add-on” to its existing forest management operations.
The AIM-listed firm said it has identified an “attractive commercial opportunity” to deliver reforestation projects in Africa as well as generating carbon credits for corporate actors in the expanding voluntary carbon markets.
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Woodbois said the opportunity will diversify the revenue stream of the business while also being “significantly [earnings] accretive” and expanding the firm’s hardwood asset base.
The company also said its carbon credit generation will deliver a bespoke call option on the price of carbon, providing investors with “new exposure to a growing environmental asset class”.
Looking ahead, Woodbois said it is in discussions with government representatives in West Africa to seek access and carbon rights to areas of degraded land suitable for reforestation, adding that it plans to design, implement, manage and market the projects with its own team and the support of local labour.
The firm also said it is analysing potential acquisition opportunities with the view to securing already established teams that could add strength to the new reforestation division.
"Entering the rapidly growing carbon credit market is a natural next step in the Woodbois growth story. It plays to our expertise in African forestry and laser focus on sustainability, whilst also being a significant commercial opportunity as we strengthen our position within the asset class. Entering the carbon credit market will see Woodbois offering businesses the chance to purchase carbon credits via the Voluntary Carbon Markets initiative, thereby helping them to offset their emissions while simultaneously helping to preserve and restore Africa's carbon-storing natural forest habitats,” Woodbois chairman and chief executive Paul Dolan said in a statement.
“To summarise the scale of the opportunity, the Voluntary Carbon Market is forecast to have a value of up to US$30bn in the coming decade. To meet the high demand for quality carbon credits there must be supply of transparent and verifiable credit generating projects. We believe that forests currently represent the safest, proven and economically viable method of capturing carbon at scale. Consequently, the establishment of this new division is a very important and exciting step for Woodbois and we look forward to updating investors as we start to execute initiatives in this regard," he added.
The company’s shares jumped 3.5% to 6.2p in early deals.