eBusiness Weekly
To inject $30m in fresh capital
Rebuild 70pc of lost capacity
Golden Sibanda
Allied Timbers, a State- owned timber producer and processor, says there has been tremendous interest from prospective joint venture partners expected to invest up to $30 million into operations and restore capacity, which had plummeted over years.
The company had lost 70 percent of its processing capacity over a period of 15 years, during which the current executive management claims little was done to replace harvested plantations.
In fact, Allied Timbers actually now relies on third party contractors to harvest timber. It also had to pay for the service through set off with part of the harvested timber, as it could not pay cash.
Zimbabwe’s biggest manager of a bio-diversity asset has previously warned that the rate at which timber was being harvested, without replanting, could see Zimbabwe run out of timber in 9 years.
Chief executive Daniel Sithole told Business Weekly that the company needed a financially strong partner to inject fresh capital to revamp the company’s planting and processing capacity.
Capacity had declined below 50 percent of its level in 2 000, with current production reportedly now stable at 60 000 cubic meters a year. Two of Allied’s major processing saw mills, Chimanimani and Stapleford, were burnt down and currently inactive.
It is against this background that the company needs significant fresh dose of funding to rebuild capacity to replant timber estates and process produce from existing mature commercial forests.
About 500ha are being harvested annually at the moment, which is just about less than half what the company says is being planted.
Allied needs to plant 6 000ha a year for 15 years to close the gap created during a period when little was done to replace harvested areas. Ex-chief executive Joseph Kanyekanye was at the helm during that era, until he was forced to step down in 2014.
Dr Kanyekanye however said he had agreed on mutual separation, although he had first been suspended to facilitate investigations into his conduct, which allegedly bordered on corruption, failure to observe procedures and gross insubordination.
Dr Sithole would not give names of prospective JV partners, as the company moves to repair the damage, but said interest was strong from local and foreign firms and that Allied Timbers was not particular about who it preferred, as long as they had the money.
Currently, the company is working with small indigenous partners who are assisting with tools maintenance, fire fighting and timber processing, but needs a more financially sound partner.
“There are Zimbabweans with a lot of money, just look at the NRZ deal. There are Zimbabweans who are well linked out there, we however do not mind the colour of money,” Dr Sithole said.
“We are looking for someone with fresh capital. We need something (fresh capital) in the region of $30 million because we also need (to rebuild) capacity to process the existing timber.
“There has been tremendous interest. (Contrary to popular belief), its proof that money really does ‘grow on trees’,” Dr Sithole said. “You just need to look at the amount of activity in Harare, Mutare or even Bulawayo in terms of timber selling,” he said.
The company has a board mandate to plant 6 000 hectares a year, but is only currently able to plant 1 000ha per year due to limited financial resources, however double what is being harvested.
Dr Sithole said financial resources were needed to prepare land (clearing and pitting), make roads and plant seedlings on the land. A million dollars is required to plant just 3 000 ha of timber estate.
The increase in housing construction around the country has boosted Allied Timbers’ domestic sales while orders from regional markets, particularly Zambia and Botswana are growing.
