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Forestry group moves ahead plan to integrate Sabie site, extract more value

York Timbers CEO Pieter van Zyl discusses the company's R1.5-billion site integration project at its Sabie facilities. Camerawork: Duane Daws. Editing: Darlene Creamer.

10th May 2013

By: Samantha Herbst

Creamer Media Deputy Editor

  

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Forestry and forest products group York Timbers is hoping to break ground early next year on its R1.5-billion site integration project at its Sabie facilities, in Mpumalanga, once it receives a record of decision from the Department of Environmental Affairs on its environmental-impact assessment submission.

The group has already received Development Facilitation Act (DFA) approval from the Mpumalanga DFA Tribunal for the intended developments, which include upgrading the sawmill and plywood plants and constructing a cogeneration facility.

York Timbers also plans to construct a medium-density fibre (MDF) plant, which will exploit the tree fibre currently not being used in the plywood and sawmilling process.

The JSE-listed company embarked on the concept of an integrated site two years ago to strategically enhance the value of its product by improving supply chain efficiencies and raw-material processes with upgraded technology.

Engineering manager Schalk Grobbelaar says the company is drawing 90% of its revenue from the usable 40% of each tree planted and, therefore, aims to increase the use of the remaining 60% of its product.

The integration process will start with the establishment of a log-merchandising yard. York Timbers will use a scanner to examine the external and internal properties of each log, which expedites and enhances the decision-making process in terms of extracting more value from each log by optimising the length and width of the log for specific processes.

The log-merchandising yard, which will integrate the log yards at Sabie’s plywood and sawmill plants, is expected to handle one-million cubic metres a year of softwood timber.

York acting CFO Sean Pretorius says integrating the log yards will significantly reduce the company’s processing and transport costs.

Currently, about 25 000 truck loads are needed to transport the timber York requires in a year to the company’s three sawmilling operations in Mpumalanga – Sabie, Graskop-based Driekop and White River-based Nicholson & Mullin – where the necessary processing infrastructure, such as loading and materials handling units, warehouses, infor- mation technology systems, among other infrastructure components, has been duplicated.

Integrating the sawmilling infrastructure into one site will eliminate the duplicated infrastructure, thereby reducing logistics costs.

“We’ll invest once in the necessary upgraded infrastructure, thereby creating economies of scale. The integrated site will also help signific-antly in terms of planning, as everything will need to go through only one channel,” says Pretorius.

“Currently, York Timbers moves about one million cubic metres of timber into the proces- sing plants, 50% of which goes back out to market as lumber and plywood. It’s a massive logistical exercise. However, once you have the ability to dispatch from one area, you put a stop to duplication and save a massive amount on cost,” he adds.

York plans to establish Sabie as the company’s primary sawmilling site, thereby increas- ing its intake from a current 513 620 m3/year to 750 000 m3/year. With the underlying demand for eucalyptus-sawn board in South Africa, it plans to convert the Driekop mill into a hardwood processing plant, while the Nicholson & Mullin mill is likely to be converted into a value-adding component plant targeting the lamination, interior decorative and furniture component markets.

Meanwhile, York Timbers is in talks with State-owned power utility Eskom to negotiate power supply in terms of supporting the planned expansion. However, should Eskom be unable to support the company, it will postpone constructing the MDF plant until the cogeneration plant is fully operational.

The cogeneration plant will use by-products that cannot be used in the plywood, timber or MDF-board manufacturing processes to generate between 12.5 MWe and 25 MWe to power the Sabie plant and generate much-needed heat to dry the plywood veneer, the timber and the MDF boards.

“The energy requirement for the integration project as a whole is quite critical, therefore, from an efficiency point of view, the cogeneration plant will be the deciding factor, should Eskom not be able to supply us with energy from the grid,” says York CEO Pieter van Zyl.

He adds that York Timbers will consider partnering with other companies in the area to increase the intake of electricity produced by the cogeneration plant.

Meanwhile, York has already partnered with civil engineering contracting company PD Naidoo & Associates to assist with the site integration project as a whole and is also in talks with a process flow specialist from the University of Pretoria.

“This is a major investment for the Sabie area as a whole,” says Van Zyl, who tells Engineering News that York Timbers regards itself as a major player in the southern hemisphere timber market and as the dominant player in South Africa.

“We’re going to get a significant return on our investment in raw material and we feel bullish about the future of the sector and the future use of timber and timber-related products. Subsequently, our statute will move away from being only a sawmilling company to moving down the value stream and being a company that is establishing itself in the timber-products market,” he concludes.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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