29 August, 2012
INTERESTING ARTICLE REGARDING FUTURE OF SAFCOL
Below is an article that appeared in the Business Day on the 24th August 2012, relating to the future of SAFCOL. Cori Ham of Stellenbosch
University is undertaking a Report for the DPE on the matter.
Day: 24th August 2012
South African Forestry Company Limited (Safcol) is seeking to expand its
operations beyond its current geographic footprint in SA and Mozambique, says
Public Enterprises Minister Malusi Gigaba.
The company, which holds 80% of Industrias Florestais de
Manica, a joint venture with the Mozambican government, has commissioned a
review of its growth prospects from Stellenbosch University.
Mr Gigaba said yesterday that the study would be completed
before the end of March, and would provide guidance to his department on the
future strategic direction of the forestry business.
The Department of Public Enterprises had decided in 2009 to
reverse an earlier decision to privatise the company.
Under consideration, apart from a desire to expand within
the Southern African region either through acquisitions or services, was an
investigation into the vertical integration of the business.
This may result in the company becoming more involved in
milling, Safcol CEO Maureen Makole Manyama-Matome said yesterday at the
company's annual general meeting in Pretoria.
Safcol reported an improved financial performance for the
year ended March 31, with a 22% improvement in sales to R862,3m from a year
For the year under review, an operating profit of R51m was
reported, a satisfying recovery from the previous year's R32m loss.
The turnaround in performance was due to interventions
including a freeze on hiring while the business was being restructured; using
debt to finance purchases instead of the company's former practice of paying
cash; and a cut in capital expenditure spending.
Mr Gigaba said that the Mozambican investment could be a
"beachhead" for Safcol making further investments in forestry in
He said closer intergovernmental relationships and
interaction with Safcol's Mozambican partners were required to make the most of
the investment opportunity.
"We have not serviced that investment as well as we
should have in order to realise the value from it," Mr Gigaba said.
Department of Public Enterprises director-general Tshediso
Matona said Safcol had world-class forestry stewardship and management skills
that could be shared with other African countries where these skills were
scarce or did not exist. This form of co-operation with SA's neighbours could
assist Safcol by providing a soft entry into the forestry industries of other
African countries, without it having to make acquisitions.
Safcol owns 18 forestry plantations which cover 187,320ha.