Investor Site Visit - 07/08 October 2008 Bob Hunt Forest Operations Manager

Transcription

1 Investor Site Visit - 07/08 October 2008 Bob Hunt Forest Operations Manager

2 PRESENTATION OVERVIEW Page 2 Plantations versus natural forests South African forest industry Mondi s South African Forest Operations KwaMbonambi Nursery21

3 PLANTATION VERSUS NATURAL FORESTS Page 3 Plantation ( fast wood forestry) Exotic plantations Intensive (capital and management) Short rotations, high yields Southern Sweden, 800,000 South Africa, 75,000 Natural ( old growth forestry) Indigenous forests Minimal (capital and management) Long rotations, low yields British Colum 1,600,000 Forest area (ha) required to sustainably supply 500,000 tpa pulp mill

4 FSC AND SUSTAINABLE FORESTRY Forests Stewardship Council (FSC) is the gold standard in sustainable forestry practices certification Based on the triple bottom line approach to sustainability Economic Social Environmental Mondi was the 13th company world wide to be certified and the 2nd in South Africa Mondi Rotatrim was the first office paper made in South Africa and sold globally to achieve FSC Chain of Custody Certification First certified in 1997 and recertified in 2007 Page 4

5 XAMPLE OF ENVIRONMENTAL NITIATIVE Page 5 Mondi Wetlands Programme Mondi, along with the Wildlife Environment Society of South Africa, WWF and Mazda Wildlife Fund support the Mondi Wetlands Programme Wetland rehabilitation Wise use and sustainable use of wetlands Siya Qhubeka delineation of eco-boundaries Promotes rural wetland conservation through Raising awareness Policy work and lobbying Catalysing partnerships Research based tools and resources Training and on the ground support Other Project sponsors

6 PRESENTATION OVERVIEW Page 6 Plantations versus natural forests South African forest industry Mondi s South African Forest Operations KwaMbonambi Nursery

7 FFORESTATION AREAS o 1.3 million ha o 1.1 % of area o 721,000 ha pine o 496,000 ha gum o 108,000 ha wattle Richards Bay. Durban ANNUAL HARVEST o 22 million m 3 o 19.5 million tonnes o 5.4 million m 3 sawlogs o 11.7 million t pulpwood o 650,000 t mining timber o 500,000 m 3 Page 7

8 FIRES 2007 was worst fire season in recorded history in South Africa but Mondi only lost 13,000 hectares Industry based approach to fire fighting in partnership with government (working on fire) State of the art centrally controlled digital camera fire detection systems developed in South Africa Control room linked to air and ground based resources Causes include lightning, honey collection, arson, controlled burns Mondi s YTD losses are 6,000 hectares (less than 2% of total) Net cost per hectare - ±R5,000 Page 8

9 PRESENTATION OVERVIEW Page 9 Plantations versus natural forests South African forest industry Mondi s South African Forest Operations KwaMbonambi Nursery

10 FORESTRY AREA AND OUTPUTS Page 10 Title Deed 000 (Ha) Plantable Area 000(Ha) Open Area 000(Ha) MSA SiyaQhubeka MSN Total Annual Harvested Tonnes: (millions) MSA Eucalyptus Pine Wattle Total Own (OLM) 2,48 0,42 0,24 3,14 Procured 0,95 0,20 0,01 1,16 Total 3,43 0,62 0,25 4,30 South Africa P&P production facilities fully self sufficient in timber

11 CONCEPTUAL MODEL C 10% B D 25% 30% 35% A Page 11

12 OST COMPETITIVENESS Average hardwood and soft wood costs ( /m3, Q2 2007) South Africa Brazil Russia Chile Australia Poland Portugal Sweden Finland France (1) Source: Pöyry Forest Industry Consulting. (2) Excluding Hungary Page 12

13 SA EUCALYPTUS DEMAND ND SUPPLY Page 13 OVER FELLING Tonnes (millions) WATER USE MORE LAND LAND CLAIMS PESTS & DISEASE MORE YIELD Pulp mills Chip mills Board mills Mining Timber

14 MORE YIELD AND LOWER COST Page 14 Volume yield * Pulp yield * wood density Time = Kg pulp.ha-1.yr-1 SILVI- -CULTURE TREES LAND VALUE Best Operating Procedures; More yield off the same land Tree Breeding & Genetics Land Management

15 HIGHER FIBRE PRODUCTION OFF A UNIT OF LAND Page 15 RAW MATERIAL COST 1,3 Volume yield 1 * Pulp yield 2 * Basic density 3 Time PULPING COST 2

16 OCUS AREAS Page 16 Tree Improvement Biotechnology Nurseries Silviculture Conservation Harvesting Transport Wood quality Planning Biometrics Technology Transfer Technology Transfer raining & Edu Feeding Scheme BCEA; Wages Health Care Living Standards

17 SAFETY LOST TIME INJURIES ( ) Page 17 Major Focus Area (YTD Aug) The target for 2009 is zero LTIs

18 PRESENTATION OVERVIEW Page 18 Plantations versus natural forests South African forest industry Mondi s South African Forest Operations KwaMbonambi Nursery

19 KWAMBONAMBI NURSERY KEY STATISTICS Latitude: Longitude: Altitude: 40 m above sea level Mean Annual Precipitation: 1200 mm Propagation method: Cuttings Production Type: Sub tropical clones Hybrids: E. grandis x E. urophylla E. grandis x E. camaldulensis Capacity: 10 million saleable plants per annum Nursery production Type: Containerized, individual cells, 64 cc volume Hedges or Mother Plants 65% Macro hedges, 35 % Hydroponics Cuttings: Macro cuttings and tip mini cuttings Media: Vermiculite, perlite and coir Production Length: days from cutting to dispatch Workforce: Outsourced, with Own Ops quality controllers Page 19

20 KWAMBONAMBI NURSERY PROCESS Parent material of a particular clone is established in hedges or clone banks These plants become the source of all cuttings Cuttings taken from the same clone have an identical genetic base and will exhibit the same traits of disease resistance, stem straightness and growth habit One individual hedge plant will produce approximately 84 cuttings per annum, resulting in 34 new plants per annum After harvesting the cuttings, they are taken to the production shed where they are Shaped into the required form Placed into individual cells with a particular media substrate Thereafter the trays are placed in a greenhouse where controlled environmental conditions encourage rooting to take place within a thirty day period Following the rooting period, the trays are moved into a grow-out section where they remain for a further 60 to 90 days Plants are fertigated to encourage rapid growth Page 20

21 Page 21 FORWARD - LOOKING STATEMENTS It should be noted that certain statements herein which are not historical facts, including, without limitation those regarding expectations of market growth and developments; expectations of growth and profitability; and statements preceded by believes, expects, anticipates, foresees, may or similar expressions, are forward-looking statements. Since these statements are based on current knowledge, plans, estimates and projections, they involve risks and uncertainties which may cause actual results to materially differ from those expressed in such forward-looking statements. Various factors could cause actual future results, performance or events to differ materially from those described in these statements. Such factors include in particular but without any limitation: (1) operating factors such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development plans and targets, changes in the degree of protection created by Group s patents and other intellectual property rights, the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for the Group s products and raw materials and the pricing pressures thereto, financial condition of the customers, suppliers and the competitors of the Group, potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in the Group s principal geographical markets or fluctuations of exchange rates and interest rates. Mondi does not a) assume any warranty or liability as to accuracy or completeness of the information provided herein b) undertake to review or confirm analysts expectations or estimates or to update any forward-looking statements to reflect events that occur or circumstances that arise after the date of making any forward-looking statements.

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