Joint Statement by Jeff Radebe, Minister of Public Enterprises, and Ronnie Kasrils, Minister of Water Affairs and Forestry
Cape Town, 14 September 2000
We are delighted to announce that substantial progress in the restructuring of the state's forest assets has been made. Government's decision to revisit the whole question of the disposal strategy of state forest assets has resulted in agreements that pro vide better financial returns to the state, improved community involvement and development benefits, and the retention of jobs for workers.
The concise details are as follows:
1. Forestry will be phased out of 12 000 hectares on the Eastern and Western shores of Lake St. Lucia. The land will be transferred to the Greater St. Lucia Wetland Authority and will be incorporated into the conservation area falling under the World Herit age Site. Forest plantations will be phased out within 5 years and thereafter the land will be incorporated into the Greater St. Lucia Wetland Park.
2. The remaining 20 000 hectares of forest plantation in the KwaZulu-Natal package will be sold to the Siyaqhubeka Consortium comprising Mondi Limited and Imbokodvo Lemabalabala, a black empowerment company representing communities living near the forest p lantations. This area will be sold for a consideration of R100m in addition to the lease rentals that are valued at R48m. The bidders have agreed to take over all operational staff and have undertaken not to retrench any of these staff for a minimum period of three years. The transaction is subject to Competition Board approval.
3. the Eastern Cape North package will be sold for a total of R45m to Singisi Forest Products which is a consortium involving Hans Merensky Holdings and community groups living in the areas adjacent to the forest. The Eastern Cape Development Corporation h as facilitated the involvement of the communities in the area. The bidders have agreed to take over all staff and have undertaken not to retrench any of these staff for a minimum period of three years The transaction is subject to Competition Board approva l.
4. Three parties have been shortlisted to bid for the Mpumalanga/Northern Province area that has now been consolidated into a single package. The three short-listed bidders are GMO Renewables Resources of the USA, Pahapur of India and the African Forest Co nsortium of South Africa. These parties will now enter a bidding process.
5. An in-principle agreement has been reached between South African National Parks (SANP) and the management of the South African Forestry Company Limited (Safcol) to the effect that the Tokai and Cecilia plantations situated within the Table Mountain area will be incorporated into the Cape Peninsula National Park. The areas will however continue to operate as commercial timber plantations and Safcol will manage these on an agency basis. Tourism facilities will operate under the National Park and the planta tions will continue to serve as important public recreational areas. The parties will now work on a detailed agreement that will involve the Department of Water Affairs and Forestry, the Department of Environment Affairs and Tourism, Safcol and the Cape Pe ninsula National Park. The parties aim to sign an agreement by the end of 2000.
6. Forestry will be phased out of 15 000 hectares in the Boland area of the Western Cape and 30 000 hectares in the southern Cape currently managed by Safcol. These plantations are not commercially viable and timber no longer represents the best land use o ption in these areas. This will open opportunities for other land uses including agriculture (particularly fruit and grapes), tourism and conservation. The process of conversion will be carefully managed over a period of 10-15 years. Various studies are no w underway to examine the best mechanisms for making this land available. The remaining forestry areas (3000 hectares in the Western Cape and 30 000 hectares in the Southern Cape) will be managed by Safcol and may be re-offered in coming years.
7. Negotiations have been suspended until further notice in the Eastern Cape South package. Progress on this package has been hamstrung by the fact that members of the bidding consortium have unpaid debts with Safcol. Sale discussions cannot continue until these can be resolved.
The Safcol transactions have been complex and sensitive. Government is however satisfied with the progress that has been made. What is clear is that the process involved has not simply been a disposal of assets, but reflects what government means by restr ucturing in very clear ways, thus illustrating that it is our policy to go beyond simplistic definitions of privatisation. Thus, this transaction includes far- reaching decisions to remove forestry from 57 000 hectares of land (17% of the area) in favour o f better land uses. It is particularly important that the 12 000 on the shores of Lake St. Lucia will be transferred to the Greater St. Lucia Wetland Park. This gives impetus to the establishment of the World Heritage Site. This reflects Government's commi tment to the environment and will encourage tourism investment through the Lubombo Spatial Development Initiative. The matter has been extensively discussed with the Minister of Environmental Affairs and Tourism and the Minister of Trade and Industry.
Futhermore, it is important to note that international bidders are again involved in the process for the Northern Province/Mpumalanga package which at 135 000 hectares is the largest asset on offer. This involvement echoes recent private sector indications of international interest in South Africa's forest sector.
It is with great satisfaction that government notes that communities are being incorporated in the process. In both the KwaZulu-Natal and Eastern Cape North transactions the communities will become shareholders and in the Mpumalanga/Northern Province packa ge community trusts will be established to warehouse the 10% community shareholding.
Government would also like to pay tribute to labour and the various trade unions involved in the process. The unions have been strongly involved in the process and have added value to the restructuring. The restructuring process involves a merger of Safcol and the forests managed by the Department of Water Affairs and Forestry in certain regions. As a result of this, a portion of DWAF workers will transfer to Safcol. In the process they have accepted Safcol wages and working conditions. The unions have been willing to be flexible under difficult circumstances and Government in turn has been willing to enter into a real partnership with the unions.
Contact details:
Dept of Public Enterprises: Mr Andile Nkuhlu
083-675-8277
Dept of Water Affairs and Forestry: Ms Lael Bethlehem
082-804-2866