OVERVIEW Forestry Demand
OVERVIEW Forestry Demand for sawn timber is high. Forestry is ideally suited to help grow the provincial economy of Mpumalanga in downstream sectors. Beneficiation of timber and energy generation using biomass are two obvious areas where there is great potential in a sector that already boasts a considerable infrastructure. Forestry accounts for about 8% of Mpumalanga’s Gross Domestic Product. At national level, the sector makes up 12% of South Africa’s agricultural GDP while the forestry-products sector contributes about 1% to national GDP. The sector comprises logging, saw-milling, wood product and pulp and paper manufacture. Pulp and paper are the main exports, along with sawn lumber, wood chips and wattle extract. The country is experiencing a shortage of sawn timber with very few new permits having been issued in recent times due to concerns about water availability. Most sawn timber in South Africa is used in the construction sector. Mpumalanga has the ideal climate and topography for forests. Sabie and Graskop represent the hub of the industry, but commercial forests are also found to the east and south along the Swaziland border. About 11% of the land mass is forested, with 4% of that being natural forest. The province is the national leader in total hectares under forest (514 000) and in export earnings. Plans to develop an Agriculture and Forestry Technology Park are being drawn up by the Provincial Government of Mpumalanga. The intention is to promote manufacturing and trading opportunities through the clustering approach. The Department of Economic SECTOR INSIGHT York Timbers celebrated its centenary in 2016. • An Agriculture and Forestry Technology Park is planned. Development and Tourism (DEDET) will spend R3.9-million in the 2017/18 year on statutory compliance for this park and other parks, which will include an incubation element for SMEs. The Mpumalanga Economic Growth and Development Path (MEGDP) intends to expand the industrial base of the provincial economy, with a focus on beneficiation, agri-processing and value chain development. York Timbers owns and operates five processing plants, including the MPUMALANGA BUSINESS 2017/18 40
OVERVIEW largest sawmill and plywood plants in South Africa and it has 60 470 planted hectares. The company has expressed interest in investing heavily in biomass energy generation. The Industrial Development Corporation (IDC) has a stake in York Timbers and a 42.6% share in Hans Merensky Holdings, a company with timber and processing interests in three provinces. Merensky is responsible for 20% of South Africa’s sawn pine lumber. The Mondi Group has extensive forestry holdings in the province and has been working on introducing a higher degree of mechanisation in its operations. Mondi has also instituted an ecosystem management plan throughout its forestry operations with the intention of better managing the impact its work has on the environment. Some areas have been set aside to cater for biodiversity and endangered species. Although local demand is dwindling, the export market for pulp and paper from South Africa remains strong. Pulp production figures have been on the rise for several years and companies like Mondi are increasingly focusing on pulp export because of better margins. Global paper giant Sappi has two large facilities in the province. The Ngodwana Mill, which produces its own energy, has been making dissolving wood pulp since 2013 when a major conversion of the plant was undertaken. About 70% of the mill’s product is exported. It produces paper-grade pulp together with newsprint, containerboard and dissolving wood pulp. It is located near Sappi’s commercial forestry operations and produces 210 000 tons of dissolving wood pulp and 380 000 tons of paper (including kraft linerboard). Sappi’s Lomati Sawmill in Barberton produces kiln-dried Southern African pine lumber from sawlogs supplied by Sappi Forests. In 2017, Sappi built a sugar extraction demonstration plant at its Ngodwana Mill. Findings from the plant will help to improve the process of extracting bio-renewable chemicals. Sappi is partnering with Valmet, a Finnish company. PG Bison has a board plant in Piet Retief. Sonae Rauco runs large plants at White River and Panbult. Komatiland Forests, a 100%-owned subsidiary of state company SAFCOL, has big plantations in several districts. TWK is a R6-billion agricultural company with its headquarters in Mkhondo (Piet Retief). The commercial-forest sector offers attractive business opportunities for small-scale entrepreneurs, particularly small-scale growers, contractors and sawmillers. The pulp and paper industry is ideal for recycling. Forested areas lend themselves to bee-keeping and honey-making. Asset management company Global Environment Fund created Imvelo Forests and in 2015 the company investigated using thermal imaging to detect fires. Among the other private timber growers in the province are Pull Scar Timber Co and United Forest Products. The Community Conservation Resilience Initiative (CCRI) has been introduced to Mpumalanga, on the basis that local communities can play a big role in biodiversity conservation and restoration. The first two communities to be part of CCRI are Mariepskop and Houtbosloop Valley. Private rail operator Sheltam specialises in transporting paper and pulp, and has extensive operations in Mpumalanga. The Lowveld Botanical Gardens in Nelspruit has more than 650 of the 1 000 trees indigenous to South Africa. The Council for Scientific and Industrial Research’s (CSIR) forestry-research unit aims to improve tree breeds. ONLINE RESOURCES Forestry South Africa: www.forestry.co.za National Department of Agriculture, Forestry and Fisheries: www.daff.gov.za Paper Manufacturers of South Africa: www.thepaperstory.co.za Sawmilling South Africa: www.timber.co.za South African Institute of Forestry: www.saif.org.za Technical Association of the Pulp and Paper Industry of South Africa: www.tappsa.co.za Wood Foundation: www.thewoodfoundation.co.za 41 MPUMALANGA BUSINESS 2017/18
