Addressing journalists on the sidelines of the state-owned company’s annual general meeting, Gigaba said the profit came against the backdrop of a difficult time for the forestry industry. The industry had been faced with subdued demand and slower household consumption, particularly from traditional export markets such as the US and Europe, Gigaba said.
“This has left the Asian countries as the critical market for many countries, with China becoming the largest importer of logs, followed by Japan.” Safcol owned 121,000 hectares of plantation in South Africa.
Group CEO Nomkhita Mona said the company generated over R855m in revenue for 2012/13. “We are trailing last year’s revenue by less that one percent, Mona said.
She said log sales had decreased because the market came under pressure, and predicted the trend would continue in the current financial year. The reason the company did not lose more revenue was because of the class and value of the logs it sold.
Safcol’s performance decline had Gigaba worried. “Slowed demand particularly in its biggest client industries, which is construction and mining, has impacted on the performance of Safcol whose performance over the past five years declined by 11 percent,” Gigaba said.
He ordered Safcol’s management and board to develop a plan for its sustainability. “This will require that the company must become innovative and bold in reassessing its current business model and value proposition,” the minister said.
The company was playing a big role in sustaining rural communities and would continue with enterprise development in these areas. “The industry continues to have a critical role to play in achieving green development objectives during the transition from the energy intensive to the green economy.
“The bio-fuels and bio-mass production of forestry residuals and eventually dedicated plantations is an opportunity that is a game changer for the sector.” The revival of rural economies was an area where Safcol had a critical role to play.
“I have therefore directed that the company should… develop alternative products and explore other international export markets.” Government would also be using Safcol to help with its build programmes and eradicating infrastructure backlogs.
“We are pleased there are already rural development initiatives underway, including working with schools and clinics using timber frame structures in a number of rural communities… I’ve seen them in use and they compare favourably with brick and mortar structures,” Gigaba said.