It is expected that an action programme for the paper, pulp and timber sector, stemming from the findings of the National Industrial Policy Framework, will be completed for approval by the Department of Trade and Industry (DTI) in the next six months, after which the implementation process will begin, says DTI chief director for resource-based industries Masizakhe Zimela.

The Industrial Policy Action Plan was released in August last year after approval by Cabinet. This action plan outlines a number of projects that government will undertake in support of identified sectors, including forestry, timber, pulp and paper.

The DTI is currently working on expanding and implementing these key action plans and is also further developing new projects. The Strategic Framework for Forestry, Timber, Pulp and Paper outlines recommendations for the paper, pulp, forestry and timber sector, besides other natural resource-based sectors, and has identified and is developing programmes to deal with constraints to growth, such as regulation, development, competitiveness, and methods of reducing these constraints.

The main issue for the pulp and paper industry is that, because timber is the main input to pulp production and other processing industries, the unavailability of timber will to a large extent influence growth, says Zimela. The DTI will play a supporting role for small business, and businesses that want to enter the forestry domain, and will support small community development, and provide support for business plans for those entering plantations as well as wood and paper processing sectors.

It is expected that the programme will support small sawmill industry players developing their capacity, skills production efficiencies, and access to technology. In the sawmill industry, for instance, the DTI will consider the viability of upgrading capital equipment. Funding of projects will be committed by the Industrial Development Corporation (IDC). The IDC, which operates independently of the DTI, has already committed a significant budget for the forestry industry.

The Forestry Charter, spearheaded by the Department of Water Affairs and Forestry (Dwaf), which will spell out the necessary government contribution and the contri- bution of the private sector to transform-ation, is also being finalised. Communities, that own most of the available land for new plantations are expected to be issued with new licences for these plantations.

Previously, issuing a licence could take more than two years. Dwaf, however, has improved this process and in the Eastern Cape, for instance, the process has been reduced to about nine months from receiving applications to issuing licences.

The targets for employment and growth are expected to be announced at the programme’s completion.

CONSULTATION

The DTI, the Department of Agri-culture, the Department of Tourism and Environmental Affairs and Dwaf have been involved in a wide array of con-sultations around other uses of land, and are discussing environmental impacts on forestry.

The NCT Forestry Cooperative, a forestry sector cooperative that represents small and medium-sized players, has also been in discussions with the DTI.

The strategic framework developed for forestry had contributions from the private sector, the Paper Manu-facturers Association of South Africa and Forestry South Africa, as well as other government departments, including KwaZulu-Natal and the Eastern Cape provincial governments.

The Amahlathi Emerging Entrepreneurs Forum, representing small players in plantations and sawmilling, has also been consulted. “We continue to involve the private sector, [and] we’re not going to prescribe what kind of support they need,” says Zimela.

CONSTRAINTS

Zimela says that the slow growth of new plantations, owing to a decline in commercially planted area through lack of investments, has been one of the constraints over the years. Veld fires, although a serious problem in the past, have also contributed to supply-side constraints.

Additionally, the current demand for timber outstrips supply. The industry is vertically integrated in the sense that the major players own forestry, pulp and other activities in the value chain. This creates barriers to entry. To increase competition in the industry will require an increase of other companies’ investment in pulp as there are currently only two companies in this sector, namely Mondi and Sappi.

In the sawmill sector, production efficiency, skills development, and waste management that deals with environmental aspects also need consideration. Other aspects to consider include road and transport infrastructure. Around rural areas, for example, where most of the timber and forestry sectors are based, roads need to be developed.

Additionally, the transport infrastructure, required to transport materials to various destinations, must also be improved.

ELECTRICITY

Before the current electricity and power situation, there was discussion that the pulp sector would be considered as part of the developmental electricity pricing programme. However, the question mark over new projects owing to a decline in electricity supply, means that challenges are expected.

Electricity challenges will hit existing facilities in the paper value chain that use high amounts of electricity, including sawmills and woodchip industries, although Zimela is optimistic that the challenges will be dealt with in a framework developed by Eskom and the Department of Minerals and Energy.

This framework requires decreased levels of electricity consumption while at the same time providing guarantee of supply. Electricity is not viewed as a significant problem, says Zimela. The only issue is that the areas that have electricity will be affected when there are blackouts.

BEE

Black economic empowerment (BEE) is one of the key issues of transformation in the industry. Zimela says that it is also important to look beyond transformation in plantations and make sure that participants at primary and lower levels participate more in value-added processing activities.

“We want to see more previously disadvantaged individuals and groups partici- pating throughout the value chain,” he says, and adds that transformation is not only about equity, but also skills development and management of small businesses.