Aug 23, 2012
Safcol pins hopes on new business model to unlock R3bn project pipelineBack
Africa|CoAL|Environment|Eskom|Housing|PROJECT|Public Enterprises|SAFCOL|Sustainable|Africa|Mozambique|South Africa|Stellenbosch University|Energy|Komatiland Forests|Maureen Manyama-Matome|Power
© Reuse this
The company has earmarked potential investment worth R3-billion, but currently does not have the mandate, nor the financial wherewithal to implement them.
However, the group’s shareholder Minister, Public Enterprises’ Malusi Gigaba, stressed that privatisation was not an option being contemplated by the review, which was being conducted by the Stellenbosch University.
Instead, it would interrogate the economic impact of allowing Safcol to pursue a strategy of vertical integration – a strategy from which it was instructed by a Cabinet memo in 2007 to desist, after its Komatiland Forests were earmarked for privatisation.
The analysis would seek to understand the potential impact such a strategy would have on the competitive environment, as well as on job creation and the potential for downstream economic spinoffs.
It is understood that the plan would also be canvassed with South Africa’s competition authorities and other stakeholders.
Safcol, which comprises 18 plantations covering 187 320 ha, currently has one sawmill and rents capacity at two others. It is also an 80% shareholder in Industrias Florestias de Manica (Ifloma), in the Manica province of Mozambique.
“Once we have received the review, we will then take a decision,” Gigaba said, adding that every effort would be made to ensure that the decision did not “impair competitive business activities within this sector”.
The objective was to use Safcol to meet government’s stated economic and development objectives, including further regional integration.
Therefore, under the new structure, emphasis was likely to be given to Safcol’s role within the region, both as an investor and as a competent manger of forestry assets.
Besides Ifloma, which had growth potential, Safcol had also been awarded forest assets management contracts in the region and it planned to pursue further such opportunities.
Various funding options would be considered to enable Safcol to make its growth-supporting investments, which could not depend only on fiscal support.
Acting CEO Maureen Manyama-Matome indicated the group had undergone far-reaching restructuring and reorganisation in 2011/12, in a bid to reduce costs and increase efficiencies.
The group, which made losses in 2009/10 and 2010/11, reported an accounting profit of R209-million in 2011/12, on the back of a 22% rise in revenue to R862-million. Its full results would be published in its annual report, which is due for release in September.
However, Manyama-Matome argued that vertical integration was necessary for the group to be placed on a more sustainable growth path.
The company, which would be led in future by Nomkhita Mona, was also keen to pursue green-energy investments and was in advanced discussions with Eskom about the potential of supplying biomass for co-firing in the power utility’s coal-fired power stations.
It also saw growth prospects in the promotion of timber-frame housing and forestry expansion.
However, 61% of Safcol’s land was also currently under land claim and Gigaba indicated that the group would need to review its business model to include potential new landowners to “ensure continuity, development and an inclusive partnership”.
He said prevailing land ownership uncertainty had already resulted in a decrease in land under forestry to around 9.1%.
Edited by: Creamer Media Reporter© Reuse this
To subscribe email firstname.lastname@example.org or click here
To advertise email email@example.com or click here
Other Agriculture News
Recent Research Reports
Construction 2016: A review of South Africa's construction industry (PDF Report)
Creamer Media’s Construction 2016 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; key participants; local demand; geographic diversification; corporate activity; black economic...
Energy Roundup – February 2016 (PDF Report)
The February 2016 roundup covers activities across South Africa for December 2015 and January 2016 and includes details of a Government Gazette notice that confirms Cabinet’s decision to move ahead with the 9 600 MW nuclear procurement programme; State-owned power...
Energy Roundup - December 2015 (PDF Report)
The December 2015 roundup includes details of State-owned utility Eskom’s application to claw back R22.8-billion; South Africa’s ranking as an investment destination for renewable energy; and a nuclear expert’s thoughts on reactor designs for South Africa’s nuclear...
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
This Week's Magazine
Power and automation company ABB is in the launch phase of its highest payload, multipurpose industrial robot, the IRB 8700. The robot has a reach of 3.5 m and can handle a payload of up to 800 kg. “When designing the IRB 8700, we emphasised reach and payload, as...
Identity and Access Management (IAM) is a critical facet of a connected security ecosystem, as controlling the confidentiality, integrity and authorisation of data access and use is key to securing new digital business channels. However, companies face several...
Data underpins digital business models, the digital economy, the Internet of Things and the fundamental changes in the ways people interact and protecting data is crucial to securing new ways of doing business, says T-Systems South Africa information and...
The City of Cape Town will issue a tender for the procurement of electric buses for its MyCiTi service, in line with the council’s commitment to lower its carbon footprint, says executive mayor Patricia de Lille. The tender, to be advertised early in February, will...
The iSimangaliso Wetland Park Authority signed a R10-million contract last month with local tailings storage facility specialists Cyclone Engineering Projects to remove about 100 000 m3 of dredge spoil obstructing the natural course of the uMfolozi river, in...