Aug 23, 2012
Safcol pins hopes on new business model to unlock R3bn project pipelineBack
Africa|Business|CoAL|Environment|Eskom|Housing|Power|PROJECT|Public Enterprises|SAFCOL|Sustainable|Africa|Mozambique|South Africa|Stellenbosch University|Energy|Komatiland Forests|Maureen Manyama-Matome
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
To subscribe email email@example.com or click here
To advertise email firstname.lastname@example.org or click here
Other Agriculture News
Industrial equipment supplier Goscor Power Products (GPP) – which has been supplying equipment to the agricultural industry for several years – will for the first time, showcase its comprehensive and affordable product range at the Nampo Harvest Day event, held from...
Updated 2 hours 6 minutes ago A survey conducted by EY show that Acciona Energy's activities in South Africa have contributed $295-million to the country's gross domestic product (GDP) and created over 9 500 jobs. The goal of the survey, entitled ‘Acciona Energy in South Africa: A business...
Updated 4 hours ago The general perceptions, often misinformed, surrounding nuclear development and South Africa’s nuclear programme need to be unpacked and clarified, so that citizens can make their own informed decisions, rationally, around the subject, industry proponents urged on...
Updated 5 hours ago South Africa launched its third National Action Plan (NAP) on Friday, which includes a high-level commitment to creating a public register of beneficial ownership information. The NAP was part of the Open Government Partnership (OGP) discussions, which were held in...
Recent Research Reports
Energy Roundup – May 2016 (PDF Report)
The May 2016 roundup covers activities across South Africa for April 2016 and includes details of the National Energy Regulator of South Africa’s proposal to introduce a coal benchmark cost as part of its final decision on Eskom’s multiyear price determination...
Automotive 2016: A review of South Africa's automotive sector (PDF Report)
Creamer Media’s Automotive 2016 Report provides an overview of South Africa’s automotive industry over the past 12 months. The report provides insight into local demand and production, vehicle imports and exports, investment and competitiveness in the sector, as well...
Energy Roundup – April 2016 (PDF Report)
The April 2016 roundup covers activities across South Africa for March 2016 and includes details of a North Gauteng High Court Judge’s dismissal of a court application to postpone the 9.4% electricity tariff increase, which the National Energy Regulator of South...
Electricity 2016: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2016 report provides an overview of South Africa’s electricity sector, focusing on State-owned power utility Eskom and independent power producers, electricity planning, transmission, distribution and the theft thereof, besides other issues.
Energy Roundup – March 2016 (PDF Report)
The March 2016 roundup covers activities across South Africa for February 2016 and includes details of the Department of Energy’s plans to announce the preferred bidders for the first tranche of the coal independent power producer procurement programme; the Council...
Steel 2016: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2016 Report examines South Africa’s steel industry over the past 12 months. The report provides insight into the global steel market and and particularly into South South Africa’s steel sector, including production and consumption, main...
This Week's Magazine
Following the drop in commodity prices and China’s demand for Africa’s resources, African economies were slumping and gross domestic product growth was stagnating in most of the continent’s emerging markets, said the New Partnership for Africa’s Development, or...
The New Development Bank, a multilateral lender formerly known as the Brics Development Bank, will provide $811-million in a first round of loans for clean energy projects in four nations.
South African car and bakkie exports into Africa declined for the third year in a row in 2015, falling from 79 228 units in 2012, to 77 589 units in 2013, 60 189 units in 2014, and 41 446 units last year – this according to the Automotive Industry Export Council’s...
Networking systems multinational Cisco is training 75 people as part of a pilot project to develop specialist networking skills in South Africa, says Cisco South Africa CTO Vernon Thaver. The trainees were nominated by and selected from Cisco’s local partners and...
The threat landscape is changing, along with technologies, impacting on new fields, such as industrial infrastructure, which is becoming increasingly connected. Smart cities are also developing fast through connected devices, Web services and cloud solutions, but...