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Mpumalanga Business 2018-19 edition

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  • Africa
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  • Forestry
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  • Mpumalanga
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Mpumalanga has several investment and business opportunities in a wide range of sectors. In addition to the regular articles providing insight into each of the key economic sectors of the province, there are special features on major projects in Mpumalanga and informative articles on what incentives are available to investors and how to establish a business in South Africa. The Mpumalanga Economic Growth Agency (MEGA) outlines in this journal what lies in store for potential investors in the province. This is the ninth edition of this annual guide to business and investment in the Mpumalanga Province of South Africa.

OVERVIEW Forestry and

OVERVIEW Forestry and paper Sustainable resource management is a priority for timber companies. Mpumalanga has 40% of South Africa’s forestry resources. This fact presents an opportunity to exploit the sector’s by-products in the biomass-to-energy field. The Zebra Pellets plant in Sabie is to be converted by national utility Eskom into a torrefied pellet plant. The wood will be provided to the plant (owned by the Industrial Development Corporation) and then heated without the use of oxygen (torrefied) which creates a coal-like product without the carbon. Plans to develop an Agriculture and Forestry Technology Park are being drawn up by the Provincial Government of Mpumalanga. 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. When forestry managers, contractor and forestry equipment suppliers gather at the biannual Focus on Forestry conference in White River in 2019, the theme will be “Bridging the digital divide in the African forestry sector”. Sustainability is a key area for companies in the forestry sector and advances in the Internet of Things and AI are being keenly monitored for ways to enhance margins in an environmentally sound way. The conference, which also looks at topics such as silviculture, fire management and forest engineering, alternates between Mpumalanga and KwaZulu-Natal and will be jointly organised SECTOR INSIGHT The Focus on Forestry conference will target digital solutions. in 2019 by the Centre for the Modernisation of Forestry Operations (CMO), the Institute for Commercial Forestry Research (KZN University) and the Nelson Mandela University. Forestry accounts for about 8% of Mpumalanga’s gross domestic product. 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. Most sawn timber in South Africa is used in the construction sector. Mpumalanga has the ideal climate and topography for MPUMALANGA BUSINESS 2018/19 38

OVERVIEW 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 000ha) and in export earnings. York Timbers owns and operates five processing plants, including the largest sawmill and plywood plants in South Africa, and it has 60 470 planted hectares. The company is considering investing 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. Although local demand is dwindling, the export market for pulp and paper is 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. Big investment Ongoing investment at Sappi’s giant Ngodwana Mill will contribute R13-billion to the provincial economy over 20 years (Premier’s State of the Province Address). Sappi has two large facilities in the province. Ngodwana which produces its own energy, makes dissolving wood pulp. 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 ONLINE RESOURCES Centre for the Modernisation of Forestry Operations: www.cmogroup.net Forestry South Africa: www.forestry.co.za Institute for Commercial Forestry Research: www.icfr.ukzn.ac.za National Department of Agriculture, Forestry and Fisheries: www.daff.gov.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 kiln-dried Southern African pine lumber from sawlogs supplied by Sappi Forests. In 2017 Sappi built a sugar extraction demonstration plant at Ngodwana. Findings from the experiment will help to improve the process of extracting biorenewable 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). 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. 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. 39 MPUMALANGA BUSINESS 2018/19

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