24 August 2006

South Africa: Komatiland Forests to Be Retained in Public Ownership

Cabinet has approved the recommendations of the Economic Cluster Committee at its meeting on Wednesday to retain public ownership of the forests managed by Komatiland Forests for the foreseeable future.

A comprehensive review of the South African Forestry Company Limited's (SAFCOL) strategy will be undertaken and its wholly owned subsidiary KLF, by the Department of Public Enterprises.

The review will aim to ensure that the state-owned forests contribute optimally to Government's objectives for the forestry, timber, pulp and paper industry.

This comes after concerns were raised with regard to the structure of the sawlog supply industry in Mpumalanga and Limpopo during hearings of a tribunal into the proposed merger of the KLF with the Bohneur consortium.

The consortium tried to buy a 75 percent stake in Komatiland.

But in 2004, the Competitions Commission found the sale would create a monopoly in the sawn timber market as Global Forests Products (GFP) was the majority shareholder in the consortium and already owned about 25 percent of Mpumalanga's sawn timber business.

"Government views concerns regarding the industry structure in a serious light and this decision [to keep KLF in public ownership] allows a transition period for the best available solution to be found," public enterprises spokesperson Gaynor Kast said.

Komatiland is a wholly owned subsidiary of the South African Forestry Company Limited (SAFCOL) - a state-owned forest management company.

It includes approximately 130 000 hectares of forestry plantations mainly in the Mpumalanga and Limpopo provinces, two saw mills, a veneer slicing plant and an export facility.

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