Report Coverage
This report focuses on Forestry and Related Services and includes the sawmilling and treatment of poles subsectors. It includes comprehensive information on the state and size of the sector, production, trade and labour statistics and sector developments. There are profiles of 27 companies including major players such as Sappi and Mondi, Lion Match Forestry and PG Bison, the state-owned industry player Safcol and milling and timber product companies such as Plantation Sawmilling and Boards and Stevens Lumber Mills.
Introduction
This report focuses on the forestry industry, which includes forestry and related services, and the sawmilling and treatment of poles subsectors. Due to its significant contribution to economic growth and employment, the forestry industry is one of South Africa’s strategic economic sectors. The country’s 1.2 million hectares (ha) of timber plantations produce between 15 million and 18 million tons of timber every year. The forestry industry contributes 0.6% to GDP (R69bn annually) and supports multiple subsectors. The forestry industry and forest-related products collectively make up 9.8% of South Africa’s agricultural GDP and 4.9% of its manufacturing GDP. Valued at over R25bn, forest-related products are a major exporting industry. Commercial forests are a strategic national resource. Timber is a renewable resource and forests play an important role in climate change mitigation. Increasingly, processing plant by-products (biomass) are being used to generate electricity and as an alternative to petrol. There is a growing timber shortage in South Africa, and the industry is struggling to secure enough suitable land to plant new forests.
Strengths
• Major contributor to local economies.
• Strong industry networks.
• Strong linkages between private and community forestry operations.
• Strong partnerships with research institutes.
• Substantial investment in infrastructure in recent years.
• Sustainable (renewable resources) and carbon-neutral industry.
• Timber industry has the components of a circular bioeconomy.
• Vertical integration across the value chain.
• World class sustainable forestry management.
Weaknesses
• Bureaucratic water licensing process.
• Financial sustainability is challenging without vertical integration.
• Limited access to suitable land for afforestation.
• Reduced plantings since the mid-1990s constrain growth of timber plantations and downstream industry.
• Sensitive to cyclical swings in the global economy.
• Significant barriers to entry for small-scale growers.
Opportunities
• Africa’s electrification drive is increasing demand for poles.
• Buying and leasing state-owned land.
• Clear demand for timber and an existing processing capacity.
• Cost-cutting associated with using bioenergy to power processing plants.
• Domestic shortage of timber.
• Increase timber recovery rates (amount of productive wood and wood materials extracted from timber) to improve primary processing and supplies of raw materials.
• Investment opportunities in new technology such as the timber winch.
• New afforestation projects for small-scale growers, including the recipients of land reform.
• New applications for dissolving wood pulp.
• Shift to a bioeconomy: Involvement in the bioeconomy and renewable energy field – biomass by-products to be used as biofuel and bioenergy.
• Strong demand for housing amid government plans to erase a housing backlog of up to 2.9 million units by 2030.
• Timber-frame houses.
• Wood products as an alternative for products made from fossil fuels and non-renewable resources.
Threats
• Continued delays in water licence application processing.
• Decreasing paper markets.
• Drought and climate change.
• High costs of biomass power plants.
• Increased biodiversity loss, forest degradation and overharvesting due to increased demand for forest resources.
• Increased integration of alternative revenue streams, such as macadamia and avocado trees.
• Increasing risk of veld and forest fires due to negligent management, climate change and population growth.
• International competitors
• Minimum wage and mechanisation threatening employment.
• Ongoing risk of pests and diseases.
• Shortage of timber for small-scale processors.
• Slow uptake for use of biomass.
• Transmission pole exporters experiencing overdue payments owed by African state entities.
• Unresolved and new land claims.
Outlook
Forestry has a major role to play in the fight against environmental degradation and climate change. The risks of deforestation and forest degradation will increase as a growing population relies on forests for their livelihoods as a source of food, fuel, income, medicine and shelter. This reliance has grown during the pandemic, as the global economy has contracted. Unless vulnerable forest-dependent communities are supported and responsible forest management is upheld, there is the risk that countries’ commitment to sustainable timber production takes a back seat as they focus on recovering from the pandemic. Commercial forestry faces ongoing natural and man-made threats, including pests, pathogens, diseases, fire, drought, water shortages and ownership of and access to land. \r\n\r\nSouth Africa has entered its second recession in two years and the timber market has contracted. Decreasing global woodchip prices will continue to put downward pressure on domestic pulpwood prices. Once Sappi’s plans to expand capacity at the Saiccor Mill are realised, it is likely that there will be an increase in demand for hardwood pulpwood. Smaller sawmills that rely on external suppliers for their timber are struggling. South Africa is experiencing a growing shortage of timber, paired with limited suitable land available for new afforestation. While the private forestry sector is internationally recognised for its sustainable forestry management and has achieved synergy with local communities around land ownership and use, much of the state-owned forestry land remains underutilised and neglected. There may be opportunities for private companies, communities and individuals to take custodianship of state-owned land and increase South Africa’s timber reserves. \r\n\r\nIn downstream value-added segments, there is still much value to be derived through cost-efficiency measures, infrastructure rationalisation and upgrades, energy efficiency improvements and energy generation, and the re-use of materials and waste streams. Wood related products offer sustainable, carbon-neutral alternatives to those derived from fossil fuels and non-renewable resources, and sustainable forest management ensures that timber plantations’ capacity as carbon sinks is maximised. The rise of circular bio-economies in which waste is mitigated and biomass is a contributor to the renewable energy sector holds growing opportunities for the forestry industry. As oil refineries are replaced with bio-refineries, there will be increased demand for the biomass by-products of wood processing. These biorefineries offer alternatives for petroleum derivatives such as fuel, asphalt, adhesives, plastics, detergents, and paints. There are opportunities for maximising value in primary processing of timber, and in the manufacturing subsectors that use wood and wood derivatives to cater to the food processing and packaging, textile, construction, chemical and energy industries.
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Table of Contents
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PAGE |
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1.
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INTRODUCTION
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1
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2.
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DESCRIPTION OF THE INDUSTRY
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1
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2.1.
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Industry Value Chain
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3
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2.2.
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Geographic Position
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5
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3.
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SIZE OF THE INDUSTRY
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7
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4.
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STATE OF THE INDUSTRY
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11
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4.1.
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Local
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11
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4.1.1.
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Corporate Actions
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17
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4.1.2.
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Regulations
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17
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4.1.3.
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Enterprise Development and Socio-Economic Development
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19
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4.2.
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Continental
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22
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4.3.
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International
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25
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5.
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INFLUENCING FACTORS
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28
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5.1.
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Economic Environment
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28
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5.2.
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Legislation
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29
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5.3.
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Input Costs
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30
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5.4.
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Technology, Research and Development (R&D) and Innovation
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30
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5.5.
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Labour
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32
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5.6.
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Land Ownership
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35
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5.7.
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Environmental
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35
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5.8.
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Cyclicality
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38
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6.
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COMPETITION
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38
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6.1.
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Barriers to Entry
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39
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7.
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SWOT ANALYSIS
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40
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8.
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OUTLOOK
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41
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9.
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INDUSTRY ASSOCIATIONS
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42
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10.
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REFERENCES
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43
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10.1.
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Publications
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43
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10.2.
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Websites
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44
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APPENDIX 1
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46
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Summary of Notable Players
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46
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COMPANY PROFILES
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49
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AMATHOLE FORESTRY COMPANY (PTY) LTD
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49
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BEDROCK MINING SUPPORT (PTY) LTD
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51
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BRACKEN TIMBERS (PTY) LTD
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53
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C J RANCE (PTY) LTD
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56
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GEELHOUTVLEI TIMBERS CC
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58
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INDEPENDANT TIMBERS CC
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59
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KHULANI TIMBER INDUSTRIES (PTY) LTD
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60
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LAWA ESTATES (PTY) LTD
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62
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LIMPOPO LUMBER PRODUCTS (PTY) LTD
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63
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LION MATCH FORESTRY (PTY) LTD
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65
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MERENSKY TIMBER (PTY) LTD
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67
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MONDI SOUTH AFRICA (PTY) LTD
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69
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MTO FORESTRY (PTY) LTD
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72
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NCT FORESTRY CO-OPERATIVE LIMITED PRIMARY CO-OPERATIVE
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74
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PG BISON (PTY) LTD
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77
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PLANTATION SAWMILLING AND BOARDS CC
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80
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R AND B TIMBERS (PTY) LTD
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82
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SAPPI LTD
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84
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SINGISI FOREST PRODUCTS (PTY) LTD
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89
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SOUTH AFRICAN FORESTRY COMPANY (SOC) LTD
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91
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STEVENS LUMBER MILLS (PTY) LTD
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94
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SUREJOY INDUSTRIES (PTY) LTD
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96
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TIMRITE (PTY) LTD
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98
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TREATED TIMBER PRODUCTS (PTY) LTD
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100
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U C L COMPANY (PTY) LTD
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103
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VUKA TIMBERS (PTY) LTD
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106
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YORK TIMBER HOLDINGS LTD
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108
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Forestry and Related Services Industry in South Africa
2024
