Good prices won’t last, foresters warned

Members of NCT Forestry Cooperative Limited, which markets timber produced by private and independent timber growers, has been cautioned not to assume that the current shortage of all categories of timber in South Africa, which has resulted in high prices for these products, will persist in the long term.

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The cooperative’s management pointed out that the history of the SA forestry industry indicates alternating cycles of timber over- and undersupply, and that it would be irresponsible for NCT to ignore this fact. In this regard, NCT said that it was currently preparing for another cycle of oversupply, by introducing guaranteed timber supply contracts, protecting the interests of suppliers loyal to NCT, expanding the numbers of markets for and buyers of the co-op’s wood chips, and seriously investigating value-adding processes.

“This current general undersupply of timber has given rise to intense and difficult competition for timber resources,” said NCT chairperson Dr Carl Seele, at the co-op’s 2007 Annual General Meeting held recently in KwaZulu-Natal. “However, let us not forget that without competition, economic development comes to a standstill. NCT and its members have to embrace competition.” Dr Seele added that, in the current highly competitive environment for timber resources, the NCT was sometimes unable to meet, or beat, prices being offered. Fortunately, the NCT members had generally accepted that this situation was inevitable from time to time. NCT committed itself to rewarding its loyal members with preferred access to markets if timber is oversupplied.

To bolster its capacity as a viable timber marketer at the international level, NCT has been conducting a feasibility study into developing a pulp mill, together with Sweden’s Rottneros Group, at Richard’s Bay. It announced this study was still underway. Dr Seele said that Rottneros’ ambitions for the pulp project were better suited to the co-op than those of Södra, the previous partner in the planned project which subsequently pulled out of the deal.

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“The feasibility study is nearing completion and serious decisions will have to be made in the forthcoming months. The final decision on whether or not to go ahead with the pulp mill project will be made by the members of NCT,” said Dr Seele. “NCT has also consolidated its position in the wood chips exporting field to a large degree through the co-op’s acquisition of the controlling shareholding in ShinCel. This acquisition, which had mainly long-term strategic objectives for NCT, has already started showing short-term benefits such as profits and a far greater marketing flexibility for us.” – Lloyd Phillips