This sandalwood plantation is about to make its owners a lot of money

PERTH/NEW DELPHI (Feb 22): In a climatic sweet spot running across the far northern Australian outback, 15 years of patience may be about to pay off for two of the world’s biggest growers of plantation sandalwood trees.

The parasitic trees—prized for their aromatic wood and essential oil that’s used in perfumes, cosmetics and medicines—are approaching maturity, more than a decade after they were planted.

The trees are maturing just as prices soar amid a production shortfall from the biggest producer India and rising demand from China. A kilogram of Indian sandalwood oil now sells for about US$3,000, or about five times as much as silver, and prices are rising by at least 20 to 25% a year, according to the South India Sandalwood Products Dealers & Exporters Association. That makes the mature trees on the Australian plantations run by TFS Corp. and KKR & Co.-backed Santanol Group worth about US$1,500 apiece.

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