Johannesburg — FURNITURE manufacturer and distributor Steinhoff International says the formation of a R1,2bn timber cluster, which includes the construction of a sawmill, in the Eastern Cape, forms part of its strategy of securing timber supply and moving production to low-cost areas.

Steinhoff CEO Markus Jooste said the group was close to finishing its acquisition of paper company Mondi's forest in the region, which would be the basis of the timber cluster in the northeastern part of the province.

The cluster will create jobs for at least 3000 people in the economically depressed area. Jooste said that the formation of the cluster was one of the reasons it took complete control of board maker PG Bison.

Since Steinhoff bought the remaining 65,01% of the shares in the company it did not own, PG Bison has been consolidated into the group's timber division.

In Steinhoff's annual report it said the PG Bison management team was already contributing to its timber division and was expected to "enhance the opportunities in this division even further".

Jooste said the group has received "fantastic" support from the Eastern Cape government in setting up infrastructure for Steinhoff to operate in the rural area.