SOUTH AFRICAN FORESTRY AND FOREST PRODUCTS INDUSTRY 2016 SEPTEMBER 2017 By Roger Godsmark

Presentation Outline Introduction The importance of the Forestry Industry The importance of the Forest Products Industry Industry Contribution to Employment Investment Industry Contribution to GDP Industry Contribution to Foreign Trade

Section 1 INTRODUCTION

Land Use in South Africa Total RSA land area 122.3 million ha

Land Use in Mpumalanga 495 247 ha Total MP land area 8.2 million ha (6.7% of total)

Land Use in KwaZulu Natal 486 956 ha Total KZN land area 9.1 million ha (7.5% of total)

Land Use in the Eastern Cape Total E. Cape land area 17.1 million ha (13.9% of total) 141 408 ha

Land Use in the Western Cape Total W. Cape land area 12.9 million ha (10.6% of total) 44 030 ha

Land Use in Limpopo 12.0 million ha (9.8% of total) 53 085ha Total Limpopo land area 12.0 million ha (9.8% of total) 53 085ha

Plantation area as % of land area by province

Land use comparisons: 2006, 2011 & 2016 Drop in forestry area: 61 000 ha (4.8%)

Plantation Area Comparisons 2016

Section 2 THE FORESTRY INDUSTRY

Plantation Area by Species 2016 Total – 1 220 726 ha

Plantation Area by Ownership 2016 Total – 1 220 726 ha

Plantation Area by Province 2016 Total – 1 220 726 ha

Plantation Area by Province and Genera 2016 Total – 607 815 ha (softwood); Total – 612 911 ha (hardwood)

Plantation Area by Province and Genera 2016 Total – 607 815 ha (softwood); Total – 612 911 ha (hardwood)

Planted Area Comparisons by Province & Species 2016

Pine Plantation Area by Province 2016 Total 607 815 ha (49.8% of total)

Eucalyptus Plantation Area by Province 2016 Total 521 347 ha (42.7% of total)

Wattle Plantation Area by Province 2016 Total 87 101 ha (7.1% of total)

Other Hardwood Plantation Area by Province 2016 Total 4 463 ha (0.4% of total)

Plantation Area by Management Objectives 2016 Total – 1 220 726 ha

Softwood Plantation Area by Management Objectives 2016 Total – 607 815 ha

Hardwood Plantation Area by Management Objectives 2016 Total – 612 911 ha

Plantation Area by Province and Ownership 2016 Leased Safcol packages included in “Private” KLF included in “Public” Total Private – 1 004 389 ha (82.3%) Total Public – 216 337 ha (17.7%)

Percentage Plantation Ownership by Province 2016 Total Private – 1 004 389 ha (82.3%) Total Public – 216 337 ha (17.7%)

Plantation Area by Species and Ownership 2016 Total Private – 1 004 389 ha (82.3%) Total Public – 216 337 ha (17.7%)

Percentage Plantation Ownership by Species 2016 Total Private – 1 004 389 ha (82.3%) Total Public – 216 337 ha (17.7%)

Planted Area Comparisons by Province & Product 2016

Roundwood Production by Product 2016 Total – 6.6 million m3 / 6.9 mt (softwood) Total – 9.8 million m3 / 7.3 mt (hardwood)

Roundwood Production by Province and Genera 2016 Total – 6.6 million m3 / 6.9 mt (softwood) Total – 9.8 million m3 / 7.3 mt (hardwood)

Roundwood Production by Province and Genera 2016 8.419 5.261 1.507 0.729 0.527 Total – 6.6 million m3 / 6.9 mt (softwood) Total – 9.8 million m3 / 7.3 mt (hardwood)

Roundwood Production ex Plantations by Province & Product 2016 Total – 16.4 million m3 or 14.2 million tons

Roundwood Production ex Plantations by Province & Product 2016 Total – 16.4 million m3 or 14.2 million tons

Total Roundwood Production ex Plantations by Province 2016 Total – 17.9 million m3 or 15.3 million tons

Total Roundwood Production ex Plantations by Product 2016 Total – 16.4 million m3 or 14.2 million tons

Softwood Roundwood Production ex Plantations by Product 2016 Total – 6.6 million m3 or 6.9 million tons

Hardwood Roundwood Production ex Plantations by Product 2016 Total – 9.8 million m3 or 7.3 million tons

Total Roundwood Production ex Plantations by Species 2016 Total – 16.4 million m3 or 14.2 million tons

Composition of Roundwood Production by Product 2016 Overall: Softwood = 40% & Hardwood = 60%

Total Plantation Area 1980 to 2016 19.6% decrease 297 412 ha decrease 59 319 ha increase Total increase in planted area over period 59 319 ha (5.1%)

Total Roundwood Production ex Plantations 1980 to 2016 Total increase in production over period: 38.4% Total increase in afforested area over period: 5.1%

Index of Roundwood Production vs. Plantation Area 1980 to 2016 Total increase in production over period: 38.4% Total increase in afforested area over period: 5.1%

Average Productivity per Hectare 1980 - 2016 Total increase in productivity over period – 3.2 m3 per ha p.a. (32%)

Production Comparisons 2006, 2011 & 2016

Value of Roundwood Production 2016 Total R9.0 billion (R0.5bn less than 2015)

Value of Roundwood Production ex Plantations by Product 2016 Total – R8 988 million

Value of Roundwood Production ex Plantations by Province 2016 Total – R8 988 million

Value of Roundwood Production ex Plantations by Province & Product 2016 Total – R8 988 million

Value of Roundwood Production ex Plantations by Province & Product 2016 Total – R8 988 million

Value of Roundwood Production 1980 to 2016 Nominal increase over period: R8.8 bn (5 364%) Real increase over period: R5.0 bn (124%)

New Afforestation by Region 1980 to 2016 AVERAGE New afforestation over period: 390 912 ha Average per year: 10 565 ha

Total New Afforestation by Region 1980 to 2016 Total – 390 912 ha

Total New Afforestation by Region 10 Yr Period - 2007 to 2016 Total – 17 299 ha

New Afforestation by Region 10 Year Period – 2007 to 2016 AVERAGE New afforestation over period: 17 299 ha Average per year: 1 730 ha

New Afforestation by Province 2016 Total – 1 107 ha

New Afforestation by Species 1980 to 2016 AVERAGE PER ANNUM 1980 to 1985: 10 974 ha (16.8% of total) 1986 to 1990: 24 558 ha (31.4% of total) 1991 to 1995: 24 406 ha (31.2% of total) 1996 to 2000: 7 019 ha (9.0% of total)

Total New Afforestation by Species 1980 to 2016 Total – 390 912 ha

New Afforestation by Species 2016 Total – 1 107 ha

New Afforestation by Product 1980 to 2016 AVERAGE PER ANNUM 2001 to 2005: 5 044 ha (6.5% of total) 2006 to 2010: 2 225 ha (3.3% of total) 2011 to 2016: 1 163 ha (1.8% of total)

Total New Afforestation by Product 1980 to 2016 Total – 390 912 ha

New Afforestation by Product 2016 Total – 1 107 ha

Area Converted Out of Timber Production by Species 1980 to 2016 Area converted over period: 92 257 ha Average p.a.: 2 493 ha

Area Converted Out of Timber Production by Species 2007 to 2016 Area converted over period: 7 906ha Average p.a.: 791 ha

Total Area Converted out of Timber Production by Species 1980 to 2016 Total – 92 253 ha

Total Area Converted out of Timber Production by Species 2016 Total – 638 ha

Net New Afforestation by Species 1980 to 2016 Net new afforestation over period: 98 657 ha Average p.a.: 8 072 ha

Net New Afforestation by Species 2007 to 2016 Net new afforestation over period: 9 391 ha Average p.a.: 939 ha

Net New Afforestation by Species 1980 to 2016 Total – 298 657 ha

Net New Afforestation by Species 2016 Total net new afforestation - 469 ha

Area Converted Out of Timber Production by Region 1980 to 2016 Area converted over period: 92 257 ha Average p.a: 2 493 ha

Area Converted Out of Timber Production by Region 2007 to 2016 Area converted over period: 7 910 ha Average p.a.: 791 ha

Total Area Converted out of Timber Production by Region 1980 to 2016 Total – 92 257 ha

Net New Afforestation by Region 1980 to 2016 Net new afforestation over period: 298 657 ha Average p.a.: 8 072 ha

Net New Afforestation by Region 2007 to 2016 Net new afforestation over period: 9 389 ha Average p.a.: 939 ha

Net New Afforestation by Region 1980 to 2016 Total – 298 657 ha

Conversion of Plantations out of Production & to Other Species 1980 to 2016 Net loss to production area over period: 92 254 ha Average p.a.: 2 493 ha

Conversion of Plantations out of Production & to Other Species 2007 to 2016 Net loss to production area over period: 7 907 ha Average p.a.: 791 ha

Total Area Converted out of Production & to Other Species 1980 to 2016 Net loss to production area over period: 92 254 ha Average p.a.: 2 493 ha

Area Converted out of Production & to Other Species 2016 Land taken out of timber production: 638 ha

Net Addition to Planted Area by Species 1980 to 2016 Total net addition to production area: 298 656 ha Average p.a.: 8 072 ha

Net Addition to Planted Area by Species 2007 to 2016 Total net addition to production area: 9 390 ha Average p.a.: 939 ha

Total Net Addition to Planted Area by Species 1980 to 2016 Total net addition to production area: 298 656 ha Average p.a.: 8 072 ha

Net Addition (Loss) to Planted Area by Species 2016 Total net gain in production area: Plus 469 ha

Damage to Plantations by Genera 1980 to 2016 Total area damaged over period: 1 117 434 ha Average p.a.: 30 201 ha

Damage to Plantations by Fires 1980 to 2016 Total area damaged over period: 1 117 434 ha Total area damaged – fire: 653 294 ha (58%) Total area damaged - other causes: 464 140 ha (42%)

Damage to Plantations by Fires 2007 to 2016 Total area damaged over period: 384 412 ha Total area damaged – fire: 261 674 ha (68%) Total area damaged - other causes: 122 738 ha (32%)

Damage to Plantations by Fires 1980 to 2016

Damage to Plantations by Genera 2016 Total – 27 802 ha (2.3% of total planted area)

Damage to Plantations by Cause 2016 Total – 27 802 ha

Damage to Plantations by Fire 2016 Total – 14 223 ha

FSC Certificates RSA vs. Africa: as at September 2017 of African Total RSA 38% of African Total RSA FMU certificates cover 1.417 million ha or 18% of African total coverage of 7.709 million ha

FSC Certified Forest Areas in Africa as at September 2017 Total FSC certified area in Africa: 7 708 888 ha

FSC Certified Forest Areas in Selected Countries as at September 2017 Total FSC certified area in world: 198 million ha

FSC Certified Forest Areas Top 5 Countries as at September 2017 Total FSC certified area in world: 198 million ha

FSC Certified Forests by Region as at September 2017 Total FSC certified area: 198 million ha in 84 countries

FSC Certified Forests by Ownership: as at September 2017 Certified Area – 1 416 953 ha (incl. planted & non-planted areas)

FSC Certified Forests by Ownership as at September 2017 Total FSC certified area: 1 416 953 ha

THE FOREST PRODUCTS INDUSTRY Section 3 THE FOREST PRODUCTS INDUSTRY

Number of Processing Plants by Type 2016 Total number of plants: 151

Intake of Roundwood into Processing Plants 1980 to 2016 Total increase in intake over period: 5.3 m m3 (48%) Biggest increase that of pulpwood: 7.0 m m3 (166%)

Intake of Roundwood into Processing Plants 2016 Total – 16.4 million m3

Roundwood Intake into Processing Plants by Province & Product 2016 Total – 16.4 million m3

Roundwood Intake into Processing Plants by Province & Product 2016 Total – 16.4 million m3

Average Size of Plant by Intake 1980 vs. 2016 Overall average intake has increased by: 137% Average intake of Sawmills has increased by: 112% Only average intake of MT Mills has declined by: 61%

Sales of Certain Products from Processing Plants 1980 to 2016 Biggest increase that of chips: 1.8 million tons (+335%) Biggest decrease that of mining timber: 1.3 million tons (-79%)

Value of Sales from Primary Processing Plants 2016 Total R25.5 billion

Value of Sales from Primary Processing Plants 2016 Total R25.5 billion

Value of Sales from Primary Processing Plants 1980 to 2016 Nominal increase over period R24.8 bn (3 563%) Real increase over period R8.5 bn (50%)

Value of Roundwood Sales from Processing Plants by Product & Province 2016 Total R25.5 billion

Value of Roundwood Sales from Processing Plants by Product & Province 2016 Total R25.5 billion

Gross Value of Output Comparisons 2006, 2011 & 2016

Gross Value of Output Comparisons per Planted Hectare 2006, 2011 & 2016

Value Addition in Primary Processing Industry 2016 Note: excludes secondary processing (e.g. paper manufacturing)

Value Addition Comparisons in Primary Processing Industry 2016 Note: Based only on input value of raw fibre (i.e. excludes all other input costs)

CONTRIBUTION TO EMPLOYMENT Section 4 CONTRIBUTION TO EMPLOYMENT

Forest Sector Employment – RSA 2016 Sub-sector No. of employees Total Employment Direct Indirect Forestry 60,200 28,000 88,200 Pulp and Paper 13,200 10,800 24,000 Sawmilling 20,000 8,000 Timber Board 6,000 n/a Mining Timber 2,200 Other 10,000 Total 111, 600 46,800 158 400 Direct jobs in Forestry = 60 200 Indirect jobs in Forestry (158 400 less 60 200) = 98 200

Direct Employment in Forestry Industry by Province 2016 Total 60 200

Direct Employment in Forestry Industry by Region 2016 Total Employment 2 556 000 1 180 000 1 366 000 1 293 000 2 257 000 Total est. direct jobs in industry: 60 200

Direct Employment in Forestry Industry as % of Those Employed in 2016 Total employed in RSA: 15 545 000

Indirect Employment Created by Forestry Industry by Province 2016 Total Employment 2 556 000 1 180 000 1 366 000 1 293 000 2 257 000 Total estimated indirect jobs created by industry in forestry and wood processing activities – 98 200

Indirect Employment Created by Forestry Industry as % of Those Employed in 2016

Direct & Indirect Jobs in & Created by Forestry Industry by Province 2016 Total Employment 2 556 000 1 180 000 1 366 000 1 293 000 2 257 000 Estimated total – 158 400 jobs

Total Employment in Industry as % of Those Employed in Formal Sector 2016

Dependants of Those Working in Forestry Industry by Province 2016 19 000 Est. total – 534 000 dependants

Total Number of People Dependent on Forestry Industry by Province 2016 Est. total – 692 000 livelihoods

Estimated % of Population Dependent on Forestry Industry 2016 Total Population 4 328 000 11 080 000 55 909 000 7 061 000 5 804 000 6 293 000 Total RSA population: 55.9 million

INVESTMENT IN THE SECTOR Section 5 INVESTMENT IN THE SECTOR

Investment in RSA Forestry Industry 2016 Total Investment R42.9 billion

Investment in RSA Forestry Industry 2016 Total Investment R42.9 billion

Investment in RSA Forestry Industry 2016 Total Investment R42.9 billion

Investment in Plantations – By Province 2016 Mpumalanga = highest investment (41.8% of total)

Investment in Mpumalanga Forestry 2016 Total Investment R17.9 billion

Investment in KZN Forestry 2016 Total Investment R15.4 billion

Investment in E. Cape Forestry 2016 Total Investment R5.7 billion

Investment in W. Cape Forestry 2016 Total Investment R1.9 billion

Investment in Limpopo Forestry 2016 Total Investment R2.0 billion

Investment in Forest Products Sector by Type of Processing Plant 2016 Total book value of investments R21.8 billion

Investment in Forest Products Sector by Investment Category 2016 Total book value of investments R21.8 billion

Section 6 CONTRIBUTION TO GDP

Composition of RSA GDP 2016 Total GDP – R3 813 billion (R3.8 trillion)

Contribution to GDP 1980 to 2016 Increase in Forestry to Ag GDP over period from 4.5% to 10.2% Decrease in For. Prod. to Mfg GDP over period from 6.3% to 5.1%

Forest Products vs. Other Manufacturing GGP per Region 2016

Gross Value of Output by Sector & Province 2016 Forestry: R9.0bn Forest Products: R25.5bn

Gross Value of Output by Sector & Province 2016

Forestry Industry Contribution to Agricultural GGP per Region - 2016

Forest Industry Contribution to Total GGP per Region - 2016

Forest Industry Contribution to Total GGP per Region - 2016 Importance of forestry and forest products sector has been declining in all provinces in which it operates over a number of years.

CONTRIBUTION TO FOREIGN TRADE Section 7 CONTRIBUTION TO FOREIGN TRADE

Exports of Forest Products 2015 vs. 2016 2015 – R25.8bn 2016 – R29.1bn Exports in 2016 R3.322 bn or 13% up on 2015

Imports of Forest Products 2015 vs. 2016 2015 - R18.5bn 2016 - R19.8bn Imports in 2016 R1.290bn or 7.0% up on 2015

Imports vs. Exports of Forest Products Trade Balance 2015 vs. 2016 Trade balance in 2016 R2.0bn or 28% more than in 2015.

Imports vs. Exports of Forest Products Trade Balance 2014, 2015 & 2016

Imports vs. Exports of Forest Products 2016 Exports R29.1bn Imports R19.8bn Positive trade balance in 2016 = R9 290 billion

Forest Product Exports by Product 2016 Total R29.1 billion

Forest Product Imports by Product 2016 Total R19.8 billion

Trade Balance in Forest Products 1992 to 2016 (nominal) Increase in imports - R18.4 billion (1 298%) Increase in exports - R26.7 billion (1 143%) Increase in trade balance - R8.4 billion (907%)

Trade Balance in Forest Products 1992 to 2016 (real) Increase in imports - R13.6 billion (217%) Increase in exports - R18.8 billion (182%) Increase in trade balance - R 5.2 billion (128%)

Export Comparisons 2006, 2011 & 2016

www.forestry.co.za | www.forestryexplained.co.za Image: Sappi Image: Sappi www.forestry.co.za | www.forestryexplained.co.za