Mondi’s management model for Kranskop land restitution project

February 28, 2009

With more than half of the national timber estate currently subject to land claims, it is in the interests of industry stakeholders to ensure that timberland transferred to claimant communities continues to be managed sustainably and productively.

Timber farms in Kranskop Kranskop team
The timber farms in the Kranskop area in KwaZulu-Natal being leased by Mondi from the amaBomvu and amaHlongwa community Trusts. The Mondi team: Maurice Makhathii, Thobi Hlongwane and Mike Shuttleworth.
Siyathuthuka Community Trust members Kranskop bakkie
Siyathuthuka Community Trust Chairperson Patrick Ntuli (left), Community Engagement Facilitator Xolani Qwabe and Silviculture Forester Nditsheni Matundu. Mondi paid for this truck used by the contactor to transport workers. Maurice Makhathini is in the foreground.

At the same time the post land settlement arrangements must fulfill the developmental objectives of the Forest Sector Charter by empowering community members through community upliftment, capacity building, the transfer of skills and the creation and realization of business opportunities.

The recent transfer of two farms comprising about 4000 ha of timber to communities in the Kranskop area of KwaZulu-Natal has given one of the big corporate companies, Mondi, an opportunity to test its land restitution settlement model. This is the first land restitution settlement agreement to be signed between a corporate grower and a community.

Mondi, which did not contest the Kranskop claims (and has not contested any land restitution claims to date), was introduced to the claimant communities through the Land Claims Commission in April 2007. Mondi's immediate objectives were to ascertain the communities' needs and expectations and to come up with a sustainable management model that met the needs of all the stakeholders. Two key imperatives were involved: to secure a sustainable fibre supply coupled with capacity building, skills transfer and income generation for the community. Both Mondi and the two communities were keen to prepare the groundwork prior to the settlement of the claim so they could hit the ground running as soon as the land transfer and lease agreements were signed.

Both claimant communities – the amaBomvu and amaHlongwa – had been assisted by the Land Claims Commission to set up Trusts, which serve as a legal entity for the purposes of owning land and co-ordinating development initiatives on behalf of the respective communities.

Mondi held needs analysis workshops with both communities. The amaBomvu workshop, facilitated by Lima, took place in July 2007. The community indicated they wanted to continue with forestry, and favoured a lease agreement with Mondi in terms of which Mondi would manage the forestry operations while providing business opportunities and other benefits to the community. They indicated their desire to become more involved in running the business in a joint venture with Mondi at the end of the lease period.

The needs analysis workshop with the amaHlongwa community was facilitated by Ambo Business Enterprise. The community also indicated a desire to continue with forestry through a lease agreement with Mondi. Other community needs that were highlighted include the installation of electricity, the provision of water for household and for agricultural purposes, as well as housing and sanitation.

Both community Trusts registered companies that serve as the vehicles for getting involved in commercial forestry operations.

Training of community trustees began as early as November 2007, covering issues such as the roles and responsibilities of trustees.

Mondi was able to mobilize their considerable resources to help prepare the way for these complex projects. Mondi's own Land Unit under Maurice Makhathini took care of the land sale to the government (for R20.5 million) and the signing of the lease agreement with the community trusts. Mondi's training team was able to secure R2 million funding from FIETA to provide the communities with capacity building, corporate governance and skills training to ensure that the community members acquire the skills and capacities necessary to make a success of the project.

MZ Technical Services, which is a part of Mondi Zimele (set up by Mondi to undertake enterprise development along their value chain), prepared business plans in conjunction with the community, and developed a phased approach to the community's involvement in the forestry operations. They also provide on-going mentoring services to the community's forestry operations teams in the field.

Mondi has recently established a new division, the Forestry Partnership Programme, headed up by Jim Matsho, that will provide the new community forestry businesses with guidance and support.

A project steering committee was set up comprising a representative of Mondi's land unit, HR department and a forester, a representative from the Land Claims Commission, plus two representatives from each community, to co-ordinate the projects.

The operational side of the two community plantations are managed by Mondi's Greytown Area Office assisted by Community Engagement Facilitator Xolani Qwabe and Silviculture Forester Nditsheni Matundu.

The Kranskop plantations comprise gum, wattle and pine of various ages. The pulp timber is sent to Mondi's Silvacel mill at Richards Bay, and the wattle bark to NTE's factory at Hermannsburg.

The forestry operations team deals with the community contractors on a purely business level, and manages the plantations as they would any other Mondi plantation.

A burning issue in many land restitution settlements – including the Kranskop claims – is the question of access to the funding that claimant community trusts need to maintain their assets and kickstart their businesses.

The Land Claims Commission will provide a discretionary grant of 25% of the value of the land, plus a grant per household, to the Kranskop community trusts, for this purpose.

Whilst the grants are being processed, Mondi has stepped into the breach by providing some R80 000 needed to prepare the business plans, register the business entities, and to purchase equipment for the contracting teams. In addition Mondi has purchased two bakkies with trailers at a cost of some R400 000, for transporting the contracting teams and their equipment to the field.

Maurice said that the Discretionary Grants have been used as security for the loans.

In addition Mondi has subsidized the rate paid to the community contracting teams by some R360 000 for the first year. (The rate paid to the contractors is higher than the standard forestry rate.) This was deemed necessary in order to ensure that contracts were viable in the initial stages. This money may not be recovered.

Financial contributions to date have come from Mondi and FIETA although the Commission is expected to approve grants of substantial amounts.

The community contracting teams started with alien weed clearing on unplanted land in 2008. Each team comprised of 12 people initially.

In December the contracts were expanded to include maintenance of all areas (weed control in open and forested areas). This required more training and more jobs, and there are currently 20 people employed in each team.

The contracts will continue to expand in a phased approach, thus allowing the contractors to gain experience and confidence as they go. Each new phase will also require additional manpower, training and equipment.

The next phase will kick in with silvic maintenance plus establishment (planting) in October 2009. This will require an additional 40 people per team.

Thereafter the phases are scheduled as follows:

  • January 2010 – fire protection (+ 10 people per team).
  • April 2010 – all silvic work plus harvesting (+ 30 people and three chainsaws per team).
  • The plan is that each team will harvest 1 000 ha each initially.July 2010 – shorthaul (+ a loader and tractor/trailer per team).

Both contracting teams have full term contracts plus in-field technical mentors, namely Johan Potgieter (MZTS) and Jabulani Shange (a former Mondi employee and contractor).

When SA Forestry magazine visited, one of the contract teams was receiving training in alien weed control, while the other team was doing silvic maintenance in a mature wattle compartment.

Maurice expressed his optimism about the projects, and believes that the education and training of community members is key to success. "It's the continuous education and training that will make it work," he said.

He also told us that they found fewer matriculants with maths and science from the two communities than they had expected. As maths and science is a requirement for a forestry degree, they are now turning their attention to the local schools.

"The local schools only offer maths on the lower level, and don't offer science at all," he said. "So our thinking is that we have to get involved in the local educational arrangements so that the schools can offer maths and science at higher grade, which is a pre-requisite for studying forestry."

Patrick Ntuli, chairperson of the Siyathuthuka Community Trust, told us that there are 11 trustees representing the amaHlongwa community.

"We are busy developing our business plan," he said. "We want to build offices and get involved in development. We are working in collaboration with local communities to create job opportunities, and to provide training – especially in forestry and agriculture.

"Our purpose is to develop the entire community in multi-sectoral ways. This is our land, our business. Then we get profit and we utilise it.

"We need to offer the young people skills in forestry and agriculture so they will be employed in our business."

He said that the Trust gives feedback to the traditional authorities in the traditional council. Nkosi Hlongwa is a founder member of the Trust.

First corporate forestry land deal signed
Mondi, the Regional Land Claims Commission (RLCC) and the Kranskop communities of amaHlongwa and amaBomvu signed the land restitution settlement agreement in October 2008. In terms of the settlement 4 000 hectares of forestry land was transferred to the two communities for R20,5 million.

The communities will get title to the land through the Siyathokoza and Eyethu Trusts.

The Lease Agreement between Mondi and the two communities, in terms of which the land will be leased back to Mondi for a period of 20 years, was signed at the same time as the land settlement agreement.

The lease agreement provides for community income from annual rental and a stumpage fee based on production output. The standard rental is 7% of value of planted land plus 2% of the value of unplanted land – all paid annually in advance.

In addition, stumpage at R10 per ton over the weighbridge is paid quarterly. It serves as an incentive to the community to promote productivity in the forest operations and prevent fires.

The agreement also ensures progressive involvement of communities in the forestry business over the 20-year period.
Key elements of the agreement include the following:

  • Mondi will provide annual bursary opportunities via its existing bursary scheme for two community members per claim to study forestry at tertiary institutions.
  • With Mondi's assistance, the Community Trusts have set up community owned businesses, currently engaged as contractors in the forestry operations.
  • Development, mentoring and coaching support is included for these businesses as part of the agreement.
  • Mondi has made an ongoing financial commitment to training, coaching, mentoring and start-up costs for the community companies, including vehicles and equipment.
  • FIETA (Forestry Industry Education and Training Authority) has also partly funded training of Trustees, company directors and employees.

Published in January/February 2009

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