6 months ago

Mpumalanga Business 2021-22

OVERVIEW Forestry and

OVERVIEW Forestry and paper PB Bison will spend R560-million at its Mkhondo plant. Credit: Ludwig Sevenster PG Bison, a subsidiary of KAP Industrial Holdings, is investing R560-million in a new front-end dryer for its particleboard plant in Mkhondo (Piet Retief ). The company is also building a new medium-density fibreboard (MDF) plant at its Mpumalanga plant, to complement its existing factory at Boksburg in Gauteng. The latter facility will start producing board in 2023. 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 000ha) and in export earnings. 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. Many in the timber industry are advocating for timber to be used much more in construction, arguing that it is a sustainable and renewable resource. The Forest Stewardship Council (FSC) certifies forests to ensure that they are sustainable. The average felled tree is replaced by two saplings and only 6% of South Africa’s current plantation area is harvested in a year. SECTOR INSIGHT York Timbers has started growing citrus trees. York Timbers, which has 60 470 hectares of plantation, has planted out 40ha in high-value crops as the first phase of a diversification strategy. The company expects its soft citrus investment to turn to profit by 2024. Sales of lumber suffered because of the Covid-19 lockdown and the accompanying slowdown in the construction industry but plywood sales rose and full production was resumed in July 2020. York sells solid wood and products such as doors. Forestry South Africa (FSA) and national government are engaged in a court action about the desirability of switching from MPUMALANGA BUSINESS 2021/22 38

OVERVIEW plantations of pine to eucalyptus. FSA says that the calculations about how much extra water will be needed by the latter type of tree are incorrect, and that if government regulations about the reduced size of plantations is implemented, it will have a negative impact on the sector. Sawmilling South Africa (SSA) and the Institute for Timber Construction South Africa (ITC-SA) made an offer during the Covid-19 lockdown to share with the South African Government their skills and expertise. Sawmilling South Africa is an industry association which represents the majority of sawmillers in South Africa. By building alternative housing (with wood), it was felt that this could contribute to thinning out densely populated informal settlements to slow the spread of the virus. The Provincial Government of Mpumalanga plans to develop an Agriculture and Forestry Technology Park. The Mpumalanga Economic Growth and Development Path (MEGDP) intends to expand the industrial base of the provincial economy with a focus on beneficiation, agro-processing and the development of value chains. Companies Sustainability is the modern watchword but finding a way to use resources for people is also popular. The MTO Group, which has 39 900ha of plantation under management in the Lowveld, has teamed up with mountain-bike enthusiasts of White River and Nelspruit to develop a set of trails through the hilly landscape of the area. One of the biggest operations in the forestry and paper sector in Mpumalanga is Sappi’s Ngodwana mill. The mill produces 320 000 tons of paper pulp for its own consumption, 255 000 tons of dissolving pulp and 380 000 tons of paper (newsprint and kraft linerboard used for packaging) annually. Exports account for 70% of the mill’s product. Ongoing investment at Ngodwana Mill will contribute R13-billion to the provincial economy over 20 years. Sappi’s other large facility in the province, the Lomati Sawmill in Barberton, produces kiln-dried Southern African pine lumber from sawlogs supplied by Sappi Forests. ONLINE RESOURCES Forestry South Africa: Institute for Timber Construction South Africa: www. Sawmilling South Africa: Technical Association of the Pulp and Paper Industry of South Africa: Forestry companies are looking into energy generation, including Sappi and AFCOL. Mpumalanga has 40% of South Africa’s forestry resources. This fact presents an opportunity to exploit the sector’s byproducts in the biomass-to-energy field. 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. 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. ■ 39 MPUMALANGA BUSINESS 2021/22

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