An estimated 2 500 jobs are on the verge of disappearing from an impoverished part of Mpumalanga as private sawmills prepare to shut down in the face of an abrupt decision by state-owned Komatiland Forests (KLF) to stop supplying them with timber.
Eleven small to medium-sized mills have seen the delivery of logs from KLF’s sprawling plantations dry up completely, despite what they say was a firm commitment made by the parastatal on June 13 to give them a ‘soft landing†as the industry is restructured.
Millers were told on June 28 that deliveries would stop in three days, and those affected said this week that they would have to close their plants and lay off workers if deliveries did not resume by Friday.
About 30 other independent millers in the area are worried that they will go next, taking thousands more jobs with them.
According to Manny Ferreirinha, a spokesperson for the millers, the industry has been jittery for some time about the consequences of the government’s proposed sale of KLF to the Bonheur consortium, which is 70% owned by industry heavyweight Global Forest Products. When the deal was announced, he says, they expected to be frozen out gradually .
Privatisation is now on hold after the Competition Commission blocked the Bonheur deal, saying it would create a vertically integrated behemoth and distort the market. But Ferreirinha suspects KLF is pushing up the pace of consolidation to eliminate opposition.
‘Their strategy now is to wipe the millers out,†he says.
There does appear to be unusual pressure on the supply of logs at the moment: fires that swept across Komatiland in 2003 only boosted supply temporarily, and the building boom is pushing up demand for South African pine.
But Ferreirinha reckons that doesn’t explain why smaller players were given just a few days notice that they would no longer be able to buy any logs from the company.
The supply of raw timber is organised into two tiers, he explains: large companies are ‘contract†buyers, and they take off a guaranteed volume, at a low price.
Smaller players buy on ‘quotationâ€, or tender. Generally they pay considerably more than the big groups.
KLF’s Kobus Breedt says it was inevitable that some millers would lose out as the supply of logs contracted — there is about 300 000m3 less timber available this year and prices have shot up because of the building boom.
‘After long-term contracts had been filled, we allocated the remaining 500 000m3 to customers who showed an interest in the tender. We said we would try to provide a soft landing, but we never promised that everyone would get it.â€
It would have been impossible, he says, to make an arrangement equally trimming back the allocations of all customers, and ensuring that everyone got some kind of allocation without attracting the attention of the competition authorities.
The millers set up a forum to discuss the issue with Minister of Water Affairs and Forestry Buyelwa Sonjica, who delegated an adviser to attend on her behalf, and Ferreirinha says they have not yet had any response to the issues they raised.
The Democratic Alliance is now weighing in, with provincial leader Clive Hatch asking Mpumalanga Premier Thabang Makwetla to intervene urgently. ‘It is an area where there is just about no other employment, and these 2 500 jobs probably support 20 other people each,†says DA MP Watty Watson.