1. The Impact of the 2007 Plantation Fires on the SA Forestry & Forest Products Industry Roger Godsmark Forestry South Africa, August 2007

2. Fire Damage in 2007 Introduction & History of Fire Damage Areas Affected Direct Current Cost of Fire Damage –Loss of Timber –Rehabilitation Costs Future Costs of Fire Damage –Foregone volume and income ex plantations –Foregone volume and income ex processors Other Impacts Summary

3. Section 1 Introduction & History of Fire Damage

4. Economic Impact of Forest Fires 1 Impact on Forestry Industry  Value of timber volume losses (present and future)  Cost of unplanned harvesting and transport  Cost of replanting  Disruption caused by unplanned age-class distribution changes Impact on Forest Products Industry  Lost intake  Value of lost production Fires that damage plantations have a serious economic, environmental and social impact 1. Economic Impacts

5. Economic Impact of Forest Fires 2 Atmospheric pollution Loss of biodiversity Damage to soil Unsightly landscape (reduced tourism) 2. Environmental Impacts 3. Social Impacts Loss of life Loss of jobs Loss of livelihoods (business owners)

6. Damage to Plantations by Fires 1980 to 2007 Total area damaged to 2006- 733,000 ha Total area damaged by fire to 2006- 387,000 ha (53%) Average fire damage 1980 to 2006- 14,300 ha p.a. As at August 14 th 2007 64 000 ha in RSA + 20 000 ha in Swaziland

7. Section 2 Areas Affected

8. Total Area Damaged by Fire by Genus & Province Total area damaged by fire in RSA = 63,964 ha Pine area39,257 ha Euc. area22,140 ha Wattle area 2,567 ha

9. Total Area Damaged by Fire by Province & Genus Total area damaged including Swaziland = 84,244 ha Swaziland: Pine19,000 ha Swaziland: Euc 1,240 ha Swaziland: Wattle 40 ha

10. Total Area Damaged by Fire by Product & Province Total area damaged by fire in RSA = 63,964 ha Sawlog area30,455 ha Pulpwood area28,760 ha Other area 4,749 ha

11. Total Area Damaged by Fire by Province & Product Total area damaged including Swaziland = 84,244 ha Swazi: Saw 15,000 ha Swazi: Pulp 5,280 ha

12. Areas Burnt as % of Total Area Planted by Province Forestry in Mpumalanga hit hardest

13. Areas Burnt as % of Total Area Planted by Genus Pine areas hit hardest

14. Areas Burnt as % of Total Area Planted by Product Sawlog areas hit hardest

15. Areas Damaged by Fire by Product and Severity of Damage Total area totally destroyed = 24,620 ha (38%) 34% 45% 34%

16. Areas Damaged by Fire by Product and Severity of Damage Total area totally destroyed = 24,620 ha (38%)

17. Section 3 Direct Current Cost of Fire Damage to Plantations

18. Cost of Fire Damage by Genus & Province Total cost of lost timber in RSA = R1.4 billion 76% of total loss in RSA

19. Total Cost of Fire Damage by Province & Genus Total cost of lost timber in RSA = R1.4 billion 66% of total loss in RSA

20. Total Cost of Fire Damage by Product & Province Total cost of lost timber in RSA = R1.4 billion 76% of total loss in RSA

21. Total Cost of Fire Damage by Province & Product Total cost of lost timber in RSA = R1.4 billion 54% of total loss in RSA

22. Cost of Damage as % of Annual Sales from Plantations (2006) Total sales in 2006 = R5.3 billion

23. Cost of Damage as % of Annual Sales from Plantations (2006) Total sales in 2006 = R5.3 billion

24. Harvesting & Re-establishment Costs Associated With Written-Off Areas Total additional costs = R248 million

25. Harvesting & Re-establishment Costs Associated With Written-Off Areas Total additional direct costs = R248 million R70 R115 R58 R7

26. Harvesting & Re-establishment Costs Associated With Written-Off Areas Mpumalanga’s costs greatest at 73% of total R181 R60 R8

27. Total Current Cost of Fire Damage by Product Total current fire damage costs – R1.6 billion 75% of total cost of damage

28. Section 4 Costs Associated with Future Volumes and Incomes Foregone ex Plantations ex Processing plants

29. Future Volume Affected by Fire by Product and Severity of Damage Future volume lost = 3.3 million tons Future volume lost comes ONLY from areas totally destroyed (i.e. written off)

30. Future Volume Affected by Fire by Product and Severity of Damage Future volume lost = 3.3 million tons Volume to be harvested from salvageable areas = 5.9 million tons

31. Future Value Foregone ex Plantations of Timber Volume Lost on Written-Off Areas Total future income foregone = R1.2 billion

32. Future Output Volume of Timber Products Foregone from Processing Plants Future output volume foregone ex processors =1.2m t

33. Future Output Value of Timber Products Foregone from Processing Plants Future income foregone ex processors = R3.7 billion

34. Future Volume Foregone as % of 2006 Sales Volume ex Plantations Future volume foregone ex forests = 3.3 million tons

35. Future Value Foregone as % of 2006 Sales Value ex Processors Future income foregone ex processors = R3.7 billion

36. Total Future Foregone Income Losses as a Result of Fire Damage Total future income foregone – R4.9 billion 72% of total

37. Section 5 Other Impacts On jobs On GGP On Investment

38. Potential Jobs at Risk from Fire Damaged Areas by Province Total jobs affected in RSA = 4,634 ha

39. Potential Livelihoods at Risk from Fire Damaged Areas by Province Total people that could be affected in RSA = 134,400

40. Impact of Fires on Forestry Contribution to Provincial GGP’s 48% drop 8% drop 12% drop Note: impact would be felt over a number of years so impact will not be so marked as indicated

41. Impact of Fires on Agricultural Contribution to Provincial GGP’s 25.8% drop 2.4% drop 1.7% drop Note: impact would be felt over a number of years so impact will not be so marked as indicated

42. Impact of Fires on Forest Products Contribution to Provincial GGP’s 91% drop 9% drop 14% drop Note: impact would be felt over a number of years so impact will not be so marked as indicated

43. Impact of Fires on Manufacturing Sector’s Contribution to Provincial GGP’s 13.6% drop 1.8% drop 0.2% drop Note: impact would be felt over a number of years so impact will not be so marked as indicated

44. Impact of Fires on Total Investment in Plantation Forests 2006 Note: impact felt immediately – total investment of R17.4bn reduced by R1.4bn or by 8.0% 14.5% drop 4.9% drop 1.5% drop

45. Impact of Fires on Investment in Industry’s Tree Resource 2006 Note: impact felt immediately – total investment of R9.6bn reduced by R1.4bn or by 14.4% 25.8% drop 9.5% drop 14.4% drop 2.4% drop

46. Section 6 Summary of 2007 Fire Related Costs and Losses

47. Summary of Fire Damage 2007 Areas Affected Province Areas Damaged (ha) Total SalvageableWrite-off Mpumalanga29,70818,05247,760 KZN8,1645,78413,948 E. & W. Cape 1,4727842,256 Total RSA 39,34424,62063,964 Swaziland12,2427,03820,280 Total All 52,58631,65884,244

48. Summary of Fire Damage 2007 Current Cost of Losses Province Losses (R million) Total Timber Add. Costs MpumalangaR1,047R181R1,228 KZNR285R60R345 E. & W. Cape R52R8R60 Total RSA R1,384R249R1,633

49. Summary of Fire Damage 2007 Future Potential Losses Province Future Losses (R million) Total ForestsProcessors MpumalangaR903R2,579R3,482 KZNR232R979R1,211 E. & W. Cape R49R117R166 Total RSA R1,184R3,675R4,859