The Sunday Mail
Timber-producing giant Allied Timbers Zimbabwe (ATZ) abandoned contract milling early this year and they say that the system had become unsustainable as contractors were indiscriminately felling trees thereby leaving the State-owned company without adequate timber to feed its own mills and factories.
In an interview last week, the new ATZ chief executive officer, Mr Daniel Sithole indicated that the system had to be dropped as it had become more of a problem to the embattled firm than a solution.
Under the contract milling model, ATZ had resorted to sharing with contract millers wet off-saw timber (WOS) on a 50-50 basis and paying for services and wages with wet off-saw timber.
The arrangement was meant to cover the company’s production shortfall but the new CEO who took over from the previous administration said the model left the timber market and business seriously distorted and unviable.
Under these conditions, Mr Sithole said, ATZ had to compete for the market with contractors as the millers would sell their timber at a very cheap price.
Mr Sithole said it had also become difficult to manage the 51 contractors that were using 70 mobile mills.
He said this is particularly damaging considering that no systematic re-planting of harvested compartments has been done in recent years.
“The first thing I did when I came on board was to stop cutting. In January there was a freeze, including at ATZ because we wanted to assess the situation on the ground,” said Mr Sithole.
“We didn’t know the basis upon which those contracts were awarded. We did not know the annual allowable cut, we needed facts. So after our assessment, we decided that we do not want contract saw millers at all, we will do our own milling.
“We were contracting so many millers and paying them with timber, the deal was that when they mill we get 50 percent of what they produce and they get 50 percent. That was a dumb contract. Where have you seen that? The resource is yours and you are giving someone 50 percent of it simply because they have equipment?”
The State-owned firm is virtually broke without machinery, modern technology to cut timber
Mr Sithole said contract milling was also bad for the environment as contractors were leaving behind a lot of litter and damage. “From an environmental point of view, that was a mess. The amount of litter that was left everywhere was just too much,” he said.
“Because millers were getting free timber, they were hand picking the logs that they wanted, they didn’t have the technology to process large logs so they left them to rot. They didn’t have the technology to process the smaller logs either so they also left them.
“From my assessment, they were utilising about 20 percent of the timber. There is empirical evidence of very low utilisation of the tree resource because contract millers had the luxury to cherry-pick felled logs and sawn timber sections, resulting in abandonment of large and small diameter logs in the field or roadside.
“There is strong evidence of very poor management of logging and sawmill waste, this poses serious environmental threats, including forest fires.”
Mr Sithole said most of the contractors agreed that the system had become unsustainable.
“The contractors themselves came to my office and they all agreed that it was not sustainable,” he said.
While suspending contract milling could be a good decision in the long run, well-placed sources within the company believe that the decision will cost the company a lot of revenue.
They say the little production that ATZ is doing on its own cannot sustain the company, adding that since the decision was made, workers have not been paid consistently.
“Nothing is happening, production has stopped and we are not being paid. We accept that contract milling was not sustainable but the disengagement could have been done gradually,” said one of the workers.
“It’s well known that our mills and factories are not functional so how can we be able to produce enough when we do not have the equipment?
“If we don’t produce there won’t be revenue, if there is no revenue the workers won’t be paid.”
Observers say the terms of the contracts can be revised so that the system continues until the company is fully mechanised.
Mr Sithole is, however, convinced that the situation will turn around.
He revealed that his company had acquired about $5 million for plant equipment and machinery recapitalisation; $2,5 million from Agribank and about $3 million from Infrastructure Development Bank of Zimbabwe (IDBZ).
Last year, contract milling contributed more than half of ATZ’s total timber production, an indication of how the timber concern may find the going tough when they have to produce more on their own.
ATZ is involved in the production of saligna and gum trees in the Eastern Highlands of Zimbabwe.
They are also involved in the processing, value adding the timber into furniture, its distribution, wholesale and retail of the products in Zimbabwe.
The company has outlets in one form or another in all major cities and towns in Zimbabwe. There are 12 outlets in Harare. Gweru, Bulawayo and Mutare have some of the larger outlets outside of the capital city.
In some cases, the company partnered organisations such as Halsteds and PG stock Allied Timbers for the purposes of sales and distribution.
However, due to the timber concern’s struggles, some of the partnerships and outlets are no longer functional.
