A Chinese passion: adding value to Mozambique's timber exports

Mozambique wants to encourage a timber industry that creates jobs and adds value: Duncan Macqueen visited one Chinese company keen to do just that and saw how an IIED-led project is providing support.

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Duncan Macqueen
Duncan Macqueen is principal researcher in IIED's Natural Resources research group
10 April 2017
Mr Yi, the manager of the processing facility, instructs some of the Mozambican workforce of Mr Forest Ltd (Photo: Duncan Macqueen/IIED)

Mr Yi, the manager of the processing facility, instructs some of the Mozambican workforce of Mr Forest Ltd (Photo: Duncan Macqueen/IIED)

Mr Zhou ordered a feast. Sizzling stone pot pork came first to the revolving table at the Bon Apetite restaurant. Beef noodles followed, then roasted duck and Chinese cabbage. Garlic shrimp and baked catfish completed the picture, washed down with a slightly smoky Chinese tea. Chinese cooks embody a national passion.

Mr Zhou has been in Mozambique for more than 10 years. He has a Mozambican wife and two kids in Pemba. He works for and supplies timber to Mr Forest Ltd, a Chinese forest company also in the northern province of Cabo Delgado. Mr Forest Ltd has just invested US$5 million in advanced timber processing. And just like their cooks, Chinese investors embody something of a national passion.

An unusual investor

To get a better picture, we headed four hours north of Pemba to Mocimboa da Praia – home to the distinctive triangular sails of the traditional Dhows off shore. Home to Mr Forest Ltd's sawmill onshore.

The company is somewhat unusual in Mozambique. It has invested in advanced value added processing, rather than simply ripping out logs or squared timber for export to China.

Such investments match what the Mozambican government wants: local value addition and employment; more efficient wood use; greater concern for long-term forest sustainability; all driven by inward investment.

Responsible Chinese forest investment is also a key concern for the IIED-led China-Africa Forest Governance Project (CAFGoP) which is what brought me to Mozambique. The project is conducting research, building capacity, and facilitating better impacts from the huge Africa-China timber trade.

Mozambique was Africa's largest timber exporter to China. Some 96 per cent of Mozambique's timber exports end up there. But early last year, the Mozambique Ministry of Land, Environment and Rural Development (MITADER) imposed a log export ban, driven by rampant illegality and huge revenue losses.

Just a few weeks ago, it launched 'Operation Tronco' (Portuguese language site) to clamp down on illegal timber, allegedly confiscating 150,000 cubic metres of wood of various species. Coupled with a sharp fall in Chinese demand, this has hit timber operators hard. But what of Mr Forest Ltd?

A professional operation

Mr Yi, the processing manager, met us at the gates of the slightly waterlogged sawmill site. The rains in Cabo Delgado come often and hard at this time of year. The air was a tense cumulonimbus of thunder. But despite the puddles, there was no doubting the professional nature of the operation. Smartly stacked planks are at the end of well-designed production lines.

Mr Yi had relocated from China with his wife and family three years ago. Once a lowly furniture maker in China, he had been promoted to a managing position within the firm. He was then enticed to Mozambique. His eyes glittered as he described ambitions for cost-efficient production lines, equal to anything in China or the USA.

Mr Forest Ltd's sawmill lay idle. While its timber had come with all legal documentation from its own concessions and that of another company in which it has shares, the clampdown had temporarily suspended its sawmilling operation.

But there were still planks of chestnut-umbila wood to be loaded into the sizeable (600 cubic metre capacity) drying facility. Some of the 100 strong Mozambican workforce were busy in their cobalt blue overalls.

Some of the 100 Mozambican workers employed by Mr Forest Ltd at the wood processing centre in Mocimboa-da-Praia (Photo: Duncan Macqueen/IIED)

Planks are cut to a range of diameters (currently 2-5cm), planed and then dried to 12 per cent humidity. The drier uses kilns fired by wood offcuts to improve energy efficiency. The smoke is water treated to meet USA environmental standards. Dried planks are stacked on pallets for export.

The new Mr Forest Ltd timber drying facility – part of a US$5 million Chinese investment in value added processing in Mozambique (Photo: Duncan Macqueen/IIED)

The quality control throughout means the Chinese customers can use the planks immediately for making furniture. This contrasts with most other imports from Mozambique which need to be dried and re-processed.

Ambitious expansion plans

Mr Zheng, the manager of Mr Forest Ltd, has ambitious plans for expansion. For example, he wants to add more advanced veneer slicing machines to cut to 0.6mm diameter. This processing centre will be open to partnership with other Mozambican and Chinese companies – forming a value-adding cluster.

As part of CAFGoP, Chinese technical experts provide advice, facilitated by WWF-China, including on the prospects for communities in concession areas to commercially produce non-timber forest products (NTFPs). Experts in medicinal plants, bamboo and local fruits were visiting the company's other site in Manica at that very moment.

Making use of the transport and market opportunities afforded by Chinese processing companies may contribute to broader economic growth and employment for Mozambican communities. It all sounds good.

Yet what was irking Mr Yi, and many of his Chinese compatriots, was the seemingly daily harassment by low-level highway police, forest department agents and customs officers. The government provides no legal or administrative advice, nor any incentives to support Mr Forest Ltd’s investments.

Mr Zheng, Yi and Zhou all have good Portuguese, unlike many others in the timber business. But in the eyes of local officials, there is nothing to distinguish such value-adding investors from the routine cut-and-run of Mozambican forestry. Instead, along with all other Chinese, they face a drip-drip of fines for minor legal infractions, real or imaginary.

Providing support

CAFGoP, in collaboration with the Chinese Academy of Forestry and the Mozambican NGO Terra Firma is tackling this. It has translated Mozambican forest, labour and investment laws into Chinese and Mr Yi gratefully took a copy, to arm himself against accusations of malpractice. He says he wants Mr Forest Ltd to abide by all the laws. The profitability of company investments depend on it.

Through CAFGoP, Mozambican officials will also visit China in an exchange visit hosted by the State Forest Authority (SFA) to see advanced processing centres there.

The project has also catalysed a memorandum of understanding between the two governments which will soon be signed. The idea is to share knowledge, technical capacity and efforts to combat illegality. Crucially, there is also an intention to explore investment in advanced processing facilities in Mozambique. In that sense, Mr Forest Ltd is ahead of the game.

Chinese and African decision-makers in Mozambique will have the opportunity to meet people like Mr Yi at a planned China Africa Platform event organised by CAFGoP. The aim is to better understand the challenges faced and aspirations held.

This may mean the passion of investors will at last be met with a more sympathetic hearing – for the good not only of companies, but also local people and Mozambique's forest. For their sake, I hope they also have a feast at the Bon Apetite to celebrate.

Duncan Macqueen ([email protected]) is principal researcher in IIED's Natural Resources research group.