Source: Sawmilling South Africa
The South African Forestry Company, SAFCOL, is on a trajectory to meet the expectations of its many stakeholders. According to the Department of Public Enterprises (DPE), “SAFCOL’s mandate is to ensure the sustainable management of plantation forests, increase downstream timber processing, and play a catalytic role in rural economic development and transformation”.
Part of this transformation relates to the management of the impact of land claims on SAFCOL’s business. In terms of its Proactive Community Engagement Model, SAFCOL engages with all communities to involve them in the forestry value chain in mutually beneficial ways.
The entity is the only forestry company owned by the state and creates employment for thousands of local residents in surrounding rural settlements, villages, and towns. Its stakeholders, like those of private corporations, expect profitable returns. However, private businesses do not have the same socio-economic and political responsibilities as an SOC would.
2020 was a tough year, concerning both Covid-19 and the ongoing effects of the economic downturn. The hard lock down resulted in operating activities at SAFCOL coming to a halt for almost three months during 2020.
The company took immediate steps to respond to the crisis by conducting a scenario planning exercise to understand the impact and adjusting their business accordingly. As a result of its business agility, SAFCOL was able to minimise the impact of Covid-19 on its business operations.
SAFCOL, as we know it today, was shaped in the early 2000s through a process of restructuring of the State’s forestry assets. Komatiland Forests (KLF) is the principal operating entity and income generator and controls prime timber plantation assets in Mpumalanga, Limpopo, KwaZulu-Natal, and Mozambique.
In addition to the 189 747 hectares of pulp and saw log plantations, KLF manages a research facility, tree nursery, ecotourism facilities, the Platorand Training Centre, the Sabie Forestry Museum, Timbadola Sawmill, and IFLOMA in Mozambique.
KLF plantations are Forest Stewardship Council (FSC) certified, demonstrating SAFOL’s commitment to responsible forest management for the last 24 years. This expands access to markets for log procurers with FSC Chain of Custody certification. The trees grown for saw logs are felled at an average age of 28 years, crosscut, and sorted into log classes. The company’s sawmill customers prefer small and medium diameter Class A and B logs, followed by the pruned high-value Class C and D logs.
The market for SAFOL’s log and lumber products is positive, with a constantly growing industry demand both locally and internationally. SAFCOL’s own sawmill, Timbadola in the Limpopo province, has limited production capacity and is currently unable to fulfil the market demand for lumber. However, through its tender procurement processes, SAFCOL has started with developments to upgrade the sawmill to improve its productivity.
The sawmill is FSC CoC certified and produces a range of kiln-dried pine products. Most of the timber is stress-graded and sold locally as structural timber. It transforms large-diameter high-value logs into clear or furniture grade lumber bought by niche customers like furniture manufacturers.
Growth and development
SAFCOL believes there is potential to improve the socio-economic contribution from sustainable forestry. Combined heat and power systems using wood biomass is an opportunity the company is considering. Although it’s too early to assess the viability; SAFCOL is upbeat on the potential to increase efficiency from its processing activities.
SAFCOL is in on-going discussion with Department of Forestry, Fisheries, and the Environment (DFFE) to effect horizontal integration. The company manages some of DFFE’s plantations. As a flagship project, the company is optimistic that if it collaborated with land claimant communities and others as part of its vertical integration and beneficiation process – that would assist its sustainability as a business going forward.
“Together with our customers, employees, communities, and shareholders, SAFCOL seeks to be a driver to ensure a more sustainable environment. Our strategy will position us to grow the business and, at the same time, provide exciting opportunities for employees to develop and communities to thrive,” Says SAFCOL’S Head of Marketing and Communications Siphelele Sixaso.