GARDEN ROUTE NEWS - The economic hardship prevailing in the Tsitsikamma community might worsen if MTO Group, the local timber company, keeps on trucking all its saw logs from there to its George sawmill. 

This while the sawmill in Tsitsikamma was set up specifically to serve forestry operations in that area where forestry has been a mainstay of the community for over a century. 

So warns Swartland Investments, a manufacturer of wooden windows and doors that is in a long-term log purchasing contract with MTO that expires on 31 December.

Swartland Investments CEO Hans Hanekom says in a recent media statement that the Tsitsikamma community was already hit hard by the 2017/18 fires and more recently by the collapse of tourism and the economy due to Covid-19, and now this company and other milling operations will experience "massive" job losses. Swartland employs 1 550 people.

Hanekom is also concerned about pollution, traffic congestion and degradation of roads. The transfer of the saw logs to George also contravenes a number of FSC (Forestry Stewardship Council) guidelines, among which the requirement that trees should be replanted after the timber is felled. 

FSC certification also requires the organisation to use local processing and services as far as possible, the opposite of what MTO is doing in Tsitsikamma.

MTO chief stakeholder relations officer Itumeleng Langeni in response says MTO's decisions since the ravaging fires and other major recent setbacks were necessary to ensure that its business, and numerous businesses and jobs that depend on it, remain viable. 

The fires have decimated 16 635ha of plantations, but 8 863ha have been replanted.

He says MTO is audited annually by the FSC and the company remains committed to growing sustainable plantations in a responsible manner. Its 2025 forecast planting schedule has been agreed upon with government and will enable job creation for the company's existing and potential contractors in the Cape region. 

Also, the termination of Swartland Investments' contract in December makes way for a more equitable tender process that will provide an opportunity for all to gain access to the industry, particularly previously disadvantaged stakeholders.

Langeni says as part of the plantation exit strategy from state land that was required by Government, MTO has handed over about 60% of forestry land to the State that had been part of the company's original land management areas in the Cape region. The process was completed in September.

He says they are now engaging with stakeholders regarding the realities of exits, coupled with the aftermath of the fires, namely that there will be a shortage of wood flow in the region which will most likely be felt by the market after 2020.

Here is MTO Group's full statement:

Itumeleng Langeni, MTO’s Chief Stakeholder Relations Officer, said the following in a statement issued in response to Hans Hanekom's warning: 
MTO Group deems it most unfortunate that a customer with whom the company has enjoyed a long-term relationship has made public statements from its perspective on the effect of MTO’s business activities. MTO’s business has suffered several major setbacks in recent times, most notably on account of the fires in the Southern Cape in 2017 and 2018. 

The decisions which the company has made since then were necessary to ensure that MTO’s business, and the numerous businesses and jobs that depend on it, remained viable. This is to the clear and obvious benefit of the wider local community.

MTO supplies saw logs to several customers in the Cape region including Swartland Investments whose long-term contract along with other long-term contracts with MTO is due to terminate on the 31st of December 2020. 

This termination, which was communicated through a consultation process that commenced in 2012 , makes way for a more equitable tender process without prejudicing any party, and provides an opportunity for all, in particular previously disadvantaged stakeholders, to gain access to the industry. 

In anticipation of the contract termination, MTO held various engagements with its stakeholders including customers (Swartland Investments and others), communities and contractors in the region. 

The company is also cognisant of the fact that, in accordance with the Forest Sector B-BBEE codes, it is required to support Exempt Micro Enterprises, Qualifying Small Enterprises, 51% Black Owned or 30% Black Women Owned entities, by supplying such entities with saw logs.

MTO plantations were significantly impacted by the 2017/2018 Southern Cape fires, with 16 635ha being decimated. To date, 8 863.79ha have been replanted. It is expected that the value of the replanted trees will only be realised in 15 to 22 years’ time. 

MTO remains committed to its operational objective of growing sustainable plantations in a responsible manner and is audited annually to this effect by an independent and credible agency, FSC. Additionally, MTO has submitted and agreed upon its 2025 forecast replanting schedule with government – aligned to international forestry practices – which enables job creation for the company’s existing and potential contractors in the Cape region.

In September 2020, MTO exited the last of its major plantations in the Western Cape in line with the conditions of its lease requirements with government. To provide context, 20 years ago the government decided to phase out large scale forestry operations in the Cape. 

State-owned forestry exit areas were earmarked to be utilised for various government initiatives including housing; conservation; community forestry and agricultural projects. In 2005, MTO signed an exit lease agreement with government for the following areas: Grabouw (exited); Kluitjieskraal (exited); La Motte (exited); Bergplaas (exited); Jonkersberg (exited); Buffelsnek (exited); Homtini (exited); and Tokai/Cecilia (2024).

 To date approximately 60% of forestry land forming part of the company’s original land management areas in the Cape region has been handed over to the government. MTO has engaged, and continues to engage, with stakeholders regarding the realities of exits coupled with the aftermath of the fires – that there will be a shortage of wood flow in the region which will most likely be felt by the market post 2020.

At the core of its strategy, MTO is committed to ensuring that its business is viable, sustainable, aligns to the government’s transformation strategy and is profitable in order to benefit all its stakeholders, including the local community. MTO employs 2 344 people in the Cape Town, Boland, Garcia, Outeniqua, Tsitsikamma and Lowveld areas. 

The company’s Longmore Sawmill and George Sawmill provides employment to 362 people. From a social investment perspective, MTO is committed to building sustainable communities in its areas of operation which is in line with President Cyril Ramaphosa’s announcement whereby he pledged commitment to redress past injustices by creating opportunities through land reform, to empower black farmers and bring them into the mainstream economy. 

The company’s economic transformation strategy is anchored by the three pillars of enterprise development, supplier development and socio-economic development. 

This is demonstrable in the projects the company has sponsored in partnership with the community and relevant government departments and agencies. MTO will continue to drive sustainable economic transformation in the Tsitsikamma region to alleviate the social challenges of poverty, malnutrition and 50% unemployment rate (Koukamma municipality 2020/1 IDP).

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