Africa is a fascinating continent due to its diversity. Every country is uniquely different and must be considered accordingly. Contrary to the developed markets, such as North America, where we see separation of ownership of timberland and processing, our value creation strategy is to integrate the value chain to address inefficiencies and mitigate risks.
Although we are planting more than we harvest, our strategy is rather to buy existing assets and restructure these to create real value. Comparatively, from a risk return perspective, we believe this strategy represents a far better approach in the current market environment in Africa. We adhere to the highest ESG standards, social performance and environmental governance are literally “tickets to the game”. Focus however, is on long term sustainability, beneficiation and risk mitigation.
Strategically MTO has flipped the traditional operating model by focusing on markets first and we continue to invest in the global trading environment that we see as so critical to optimising value. We are able to unlock value through better management, increased productivity, economies of scale and improved logistics. We deliver on these objectives by ensuring a platform that addresses the traditional lack of capital, limited management know-how and capacity, and unreliable sources of information, all typical challenges in the African forestry sectors.
MTO Operations span the Western and Southern Cape and the Mpumalanga and Swaziland regions where we continue to acquire and accumulate assets, not only in plantations but also in processing and downstream value adding opportunities. We run a hybrid decentralised model with group centres of excellence, offering technical and marketing expertise to all of the operations.
Critical to a successful investment in Africa are strategic partners. MTO values partnerships that we carefully select for their strategic value and local savvy. We currently employ 4400 people, a large portion of which are contracting firms comprised mainly of previously disadvantaged community members or entrepreneurial employees.
An entrepreneurial culture, blended with experience and stability, is also key to unlocking opportunities and keeping current in a sometimes challenging environment, blended with experience and stability. We are fortunate to be well-diversified and accordingly have a well-established, broad and stable customer base. In every aspect of our business we value our partners, who are strategic in downstream markets and channels and strategic in our communities. We are aligned with prominent DFIs to mitigate political risk.
There is no compromise on sustainability and ESG. Not only do we subscribe to and comply with the likes of IFC and FCPA, we also invest liberally in social performance, social projects, enterprise development and transformation.
MTO is a well-established platform that we are able to leverage to create value through unlocking economies of scale, optimising assets through HBU (higher better use) and continuous improvement initiatives such as shorter rotations, capital projects, and biomass and energy projects.
Fundamental to a successful investment is to be selective and patient while accumulating high quality assets with a well-defined value creation plan. Understanding the risks and systematically mitigating these requires focus and is imperative. But none of the above can be achieved without capital and cash. This drives all of the returns, financial or not. It is an absolute prerequisite to ensure that the business has a healthy focus on financial sustainability, the ultimate enabler to achieve real value.
MTO’s commitment journey is aimed at reducing and ultimately reversing the longstanding destruction of Africa’s forest resources by:
Practising responsible forestry management
Assisting with growing demand for forestry products and bio-energy
Providing attractive risk adjusted return to investors
In order to do this, we subscribe to the standard of The Forestry Stewardship Council.
Differentiation and Value Creation:
What is FSC?
The FSC® Trademark indicates that wood comes from a forest, which is well-managed according to strict environmental, social and economic standards. The forest of origin has been independently inspected and evaluated according to the principles and criteria for forest management agreed and endorsed by FSC.
The adoption of the FSC certification process, its principles and criteria constitutes the best assurance to upholding the highest environmental standards. MTO Forestry (FSC-C014996) trading as Cape Pine, and formerly known as SAFCOL, obtained FSC certification for all its plantations in 1998.
Five-yearly main assessments and annual surveillance audits are conducted to ensure continued compliance. Plantations included in the Exit Lease Agreement which expires in 2020, although managed according to the same principles as the Sustainable Plantations, will be audited separately and placed on a “Qualifor Certificate” due to the non-sustainability of these Plantation Units.
A proceduralised Integrated Management System has been developed for the company and is used to guide and regulate all procedures which regulate adherence to standards on the plantation.
All activities that may have an impact on the environment are managed through formal procedures and internal monitoring systems. The management system provides a mechanism to ensure that the company maintains the performance levels required by FSC and achieves the goals set out in the company environmental policy. The Integrated Management System (IMS) also ensure that all activities take legal requirements and national forestry standards into account as a minimum requirement.
These procedures cover the following disciplines: Land Use, Diverse Forest Products, Eco-tourism, Forest
Engineering: Harvesting, Infrastructure, Conservation Management, Protection, Silviculture and Forest
Engineering: Roads. The Integrated Management System acts as a tool ensuring that environmental issues are integrated into all operations within the company. The management system is a living system that will continue to evolve as changes occur within the company, and all documents are regularly updated.
Research: Forestry for the future
MTO’s research facility is based at Karatara in the Eastern Cape. At this research facility, we focus on tree improvement and seed orchards for improved timber quality and growth. We supply the EasiGrow Nursery with improved seed from our seed orchards. We also perform controlled pollinations.
As a member of Camcor, a worldwide organisation, MTO Research has access to a wide range of ideas, IP, information and genetic material. We work closely with a number of other African timber companies realising that our mission statement of Reshaping the African Timber Landscape implies that we need to ensure that our research allows us to assist in addressing the Timber needs of Africa, both now and in the future.