Allied Timbers US$12m sawmill ready for launch

23 May, 2022 - 00:05 0 Views
Allied Timbers US$12m sawmill ready for launch

The Herald

Business Reporter
ALLIED Timbers Zimbabwe (ATZ), Zimbabwe’s largest timber producer, is set to commission its US$12 million new sawmill at the Cashel Estate in the eastern highlands, as it seeks to ramp up milling capacity.

The investment will add to the US$7 million worth of equipment the company has acquired since 2020 under the vendor finance facility from Belarus and US$1 million invested from Allied Timbers Zimbabwe, chairman Mr Itai Ndudzo said.

“We brought in US$7,1 million worth of equipment from Belarus consisting mainly of fire tenders and fire fighting equipment because our biggest challenge is fire,” said Mr Ndudzo.

“We have also invested more than a million (US) dollars from our own generated resources towards recapitalization and now we are commissioning the US$12 sawmilling facility.”

The state-owned commercial enterprise has a 99-year lease agreement with the Forestry Commission, which owns 60 percent of commercial forest lands in Zimbabwe.

It was born out of the unbundling of the commission in 2003, which was meant to separate regulatory activities from commercial operations. The intention was to enable both institutions to effectively pursue their mandates, with funds from the commercial wing supposed to assist in funding the regulatory functions.

So the commercial wing gave rise to Forestry Company of Zimbabwe, which was later re-branded Allied Timbers while the regulatory activities were reconstituted into the Forestry Commission.

Mr Ndudzo said the year 2020 marked a very crucial period in which the company embarked on recapitalisation of operations, immediately achieving profitability while managing to declare a modest dividend.

“We are 90 percent ready (to commission the Cashel sawmill) and we are hopeful in the next 60 days, His Excellency, President Mnangagwa would be able to accommodate us in his diary with the official commissioning of the sawmill at the Cashel.

“The trajectory of the business is positive. There is a lot of construction that is ongoing in both domestic and industries and the demand for timber in the economy is huge.

“Timber has become a (US) dollar commodity and we also have good demand for our products in the region particularly in Zambia and Angola, Botswana and Mozambique, and the northern parts of South Africa as well as Namibia. What we have been working on since 2019 has been to do with our ability to satisfy demand.”

Mr Ndudzo said the new investment would help Allied Timbers to reduce its reliance on contract milling and boost revenue inflows. Currently, 70 percent of the company’s milling is done by contractors. As such, the company is looking to be “self-sufficient” in terms of planting, harvesting, sawmilling and value addition.

“We believe that with the retooling in place, we should be able to see a huge leap in terms of our profitability and our ability to supply. Last year, seventy percent of our timber was sawed by contractors but the ratios are so punitive because it has taken us 25 or so years to protect a tree (and) the contract saw miller comes and gets half of the value of the timber.

“The board took a deliberate move to build a new sawmill, to refurbish our sawmill at Gwendingwe Estate, and we have set in motion a process aimed at building another sawmill of a similar size at Nyanguwi,” said Mr Ndudzo.

 

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