Safcol to put local wood processors first amid shortage of logs

SA’s third largest state-owned enterprise, the SA Forestry Company (Safcol), has vowed to prioritise the supply of logs to companies that process locally, as the group gears up to introduce hi-tech machinery in the logging process, and install new equipment at its sawmill in Limpopo.

The move comes in response to the high demand for logs that has outweighed supply in recent years. Companies such as York Timber have had to scale back operations due to scant supplies of logs.

On Tuesday Safcol CEO Tshepo Monaheng said demand for logs, which was boosted during Covid-19 by the do-it-yourself wave, has persisted on an upward trajectory. But a plethora of headwinds including timber theft, ageing infrastructure and unavailability of land for planting has plagued its ability to meet the full raw material requirements of all its customers.

Load-shedding — caused by inefficiencies at Eskom — has also negatively affected its processing operations, wiping off margins in the business unit that contributes about 20% to the top line, Monaheng said.

In a bid to pick up some of the slack inconveniencing local businesses, Monaheng said Safcol is reviewing how it sells logs in the short term.

The company runs an annual bidding process for pine and eucalyptus where interested parties are given an opportunity to secure volume allocation. However, Monaheng said the group has opted to prioritise local processing companies in the allocation process.

“So that means if a company has a processing plant locally, we prioritise those customers because they are creating jobs by processing here and employing hundreds of people,” the CEO said.

“But a customer that wants to buy logs and puts them on a truck to the port and exports only has one beneficiary plus the logistics company. So we said we are not going to prioritise those kinds of customers, we have to support our industry.”

Complaints

Customer complaints about Safcol not meeting contractual obligations due to operational capacity constraints have been in the public domain for some time. Most notably JSE-listed forestry group York Timber Holdings, which sources logs from Safcol, last year had to temporarily close all operations at its sawmill in Graskop due to a lack of raw material.

York said it made the decision as volumes awarded by Safcol were less than what it had bid for, but Monaheng said the strategy to prioritise local processors will see to it that entities such as York are fully serviced.

A large part of Safcol’s challenges to supply lies in the company’s inability to secure additional forest areas to plant more trees. The group is looking to access existing plantations of the department of forestry, fisheries and the environment and those belonging to municipalities “so that we can manage them well to allow our industry to have enough raw material to survive”.

Increasing plantable land will ensure that Safcol can produce enough timber to support local demand, Monaheng said. Pine, eucalyptus and wattle are the main variants planted. 

Two municipalities in Kaapschehoop, Mpumalanga, recently benefited from a land claim and the release of 1,199ha valued at about R7.4m. The communities have given the company the go-ahead to manage their forests, and Monaheng said the company is completing the documentation required.

Monaheng said consultations with the department of forestry, fisheries & the environment and the department of land reform & rural development continue. “The department of forestry is in agreement that we should be able to manage the plantations in and about Mpumalanga which are closer to our operations,” he said.

Moreover, the group is gearing up to mechanise it plantations by introducing hi-tech machinery in the harvesting process. Modernised equipment is due to be installed at its processing sawmill in Limpopo.

“Going forward we are looking at the mechanisation of our operations so that we eliminate manual harvesting because it’s too dangerous,” Monaheng said.

“So we are going to bring machines to work on the plantations,” he said, adding that the upgraded projects will be financed through the banks.​

With plantations in Limpopo, Mpumalanga and KwaZulu-Natal, as well as in the southern half of Mozambique, Africa’s oldest certified forestry company manages 189,000ha of land, about half of which is used to plant mostly pine trees.

gumedemi@businesslive.co.za