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AFRICA FIBRE RESOURCE AVAILABILITY AND WOODCHIP SUPPLIERS

John Swaine

jswaine@twkagri.com

RISI International Wood Fibre Resource and Trade ConferenceFebruary 2017Da Nang, Vietnam

Content

Africa Wood fibre Supply

Africa Woodchip Exporters

South Africa Wood fibre Supply

South Africa Woodchip Exports

15 February 2017 NAME OF PRESENTATION PAGE 1

AFRICA : 56 Countries

Africa : Interesting facts

Worlds longest river – Nile

Worlds largest:desert – Saharaland animal – elephantprimate – gorillareptile – Nile crocodile

Worlds tallest animal – giraffe

Worlds fastest animal – cheetah

The oldest human remains

2nd largest continent in the world by size and population - 1.2 billion people set to double in the next 33 years

Over 25 % of all languages are spoken only in Africa with more than 2000 recognized languages

AFRICAA continent of extremes:

LargeDryPoorYoung – half the continents population of 1.2 billion is under the age of 25 years

Africa Natural Resources

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Africa has the largest reserves of precious metals with over 40% of the gold, over 60% of the cobalt and 90% of the worlds platinum .

OIL Natural Gas

AFRICA : INDUSTRIAL PLANTATIONS

<100 K ha

>1 mill ha

400-500 K ha

200-300 K ha

100-200 K ha

South Africa

Africa : New plantation developments with some export potential

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Tanzania

Ghana

Sierra Leone

Mozambique

Beira

Maputo

Mozambique

Nacala

ATFCPlan 50k ha mainly Eucs + Acacia for sawlogs and poles

PortucelPlan 250k ha planted with Eucs for future pulpmill (2023)

Mozambique Tree Farms1k ha planted with Eucs with potential for 20k ha

Green ResourcesLand use rights for 126K ha for the establishment of hardwood plantations8000 ha established

Tanga

Dar es Salaam

Tanzania

Some Euc along coastPotential to establish 50k ha

Mtwara

50 k ha plantedSW -sawlogs pulp, Teak, Acacia, EucGovernment, Tanwat, Green Resources, New Forests

Ghana

Tema

Miro ForestryTeak , Pine, Eucs15k haMainly to service domestic fibre markets

APSDEucs + Acacia33k ha energy plantations for 60MW powerplant150k ha pulpwood plantations for future pulpmill

Takoradi

Sierra Leone

Freetown

Miro ForestryLeased 21k ha for the establishment of Eucalyptus and Acacia plantations

Africa Woodchip Exporters

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EFC(MAG Industries)

Durban Woodchips - NCT

TWK

Shincel - NCT

Bayfibre- NCT

South Africa

Mozambique

CongoPointe Noire

DurbanRichards Bay

Maputo

Somacel

Richards Bay WoodchipsNCT

Ghana

TakarodiEnergyRenewablesLtd

Mozambique

Exporter : SomacelNo exports in 2016Sold to NHR Investments and Nollen TradingMarkets

Bioenergy: Europe and AsiaPulp and Paper : Asia

Fibre sourced from South Africa and Swaziland

Congo

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PortugalSpain Turkey

Exporter : Eucalyptus Fibre Congo (EFC) owned by Mag IndustriesSpecies : EucalyptusMarkets: Turkey, Portugal, SpainLogs sourced from 48 k ha plantations owned by MAG Industries around Point NoireNo exports in 2016Future ? – Government wants to terminate the land lease

Ghana

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Exporter : Takarodi Energy Renewables LtdSpecies : Rubber woodInfield mobile chippingMarkets: Energy markets EuropeLogs sourced from ageing rubber plantations

SOUTH AFRICA FIBRE RESOURCE

Landuse in South Africa

15 February 2017 NAME OF PRESENTATION PAGE 17Total RSA Land Area = 122.3 million ha

South Africa land use crop comparison

South Africa plantation areas

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Richards Bay

Durban

South Africa plantation area by genus

51%42%

7%

0%

Pine Eucalyptus Wattle Other

Total – 1 224 456 ha

Trend :< Pine> Euc= Wattle

South African plantation area by ownership

62%

17%

17%

4%

Corporate Commercial FarmersState/ Municipalities Small Growers

Total – 1 224 456 ha

Eucalyptus Utilization

Domestic Pulp ,Paper and board

69%

Mining Timber 4%

Poles3%

Saw Logs9%

Woodchip exports

15%

8.2 mil tons

Pine Utilization

NAME OF PRESENTATIONPulp ,Paper and Board 32%

Poles + other 5%

Sawn timber 63%

6.1 mil tons

Wattle Utilization

Woodchips for export 97%

Charcoal & other

3% Bark for tannin

1.4 mil tons

South African plantation area development

19 % decrease

6% increase

South Africa total roundwood production ex plantations

51% increase

South Africa : pulp and paper production trend

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South Africa hardwood pulpwood supply and demand

Acaciacurrently balanced -1.4 mill tonssome decrease in supply from 2020 (Wattle to Euc conversions)Most of the fibre exported as woodchips

Euccurrently balanced – 8 mill tonsincreasing supply

- Pine + wattle to euc plantation conversions

Increasing domestic demand- Sappi – DP capacity

expansion ??

South Africa woodchip export products

Mixed Eucalyptus speciesSpecifically selected and bred for the domestic pulp and paper industry (Mondi + Sappi) optimizing:

- Growth- Pulp yield- Fibre properties – pulp and

paper- Disease and drought

resistance.

Acacia mearnsii (black wattle)Plantations initially established to provide wattle bark for the tannin production industry.Fibre not used domestically

South Africa Installed Chipping Capacity

Chipping capacity > available HW pulpwood volume

3.7 mil tons 2.5 mil tons

South Africa woodchip exporters : Richards Bay Richards Bay 4 chip mills

Close proximity to port

All linked with good road and rail

Conveyor link to woodchip berth

Pneumatic shiploading 800-1000 t/hr

Woodchip berth

Richards Bay

TWKMill capacity = 800k gmt Wattle + Euc to Japan and IndiaFSC COC certified

Bayfibre NCTMill capacity = 800k gmtWattle to JapanFSC COC certified

Richards Bay

Shincel (NCT)Mill capacity = 700k gmtEuc to Japan and IndiaFSC COC certified

Richards Bay Woodchips (NCT)Purchased from MondiRe-commissioned and resumed production and export 2016Mill capacity = 750K gmtEuc to Japan and India and biofuel to EuropeFSC COC

DurbanDurban Woodchips (NCT)

Mill capacity = 650k gmtWattle + Euc to JapanFSC COC certifiedLocation : Durban

South Africa Wattle export remains steady with increasing Euc exports

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42%

58%

Over aged fibre

Japan remains South Africa’s biggest market with increasing volumes followed by India

Future export volumes depend on ?

Market demandCompetitive pricingFX rate

Domestic demandAsian fibre resourceBioenergy

?

Bioenergy chips

2 shipments from South Africa to Europe by Nollen Group

Low cost fibreDrought, diseased and fire damaged timber not suitable for other higher value products.Residual chips in close proximity to export facility

Exports are planned to increase in 2017Richards BayMaputo

Woodchip price and currency movements

A continued downward price trend not sustainable given a 16% strengthening of the ZAR vs USD over the past year

South Africa in summarySustainable plantation fibreFSC Good road and rail infrastructure for sustained log deliveriesWorld class production and export facilitiesExperienced exportersCompetitive low cost fibreProximity to markets

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Sailing days

THANK YOU FOR YOUR ATTENTION !!

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