NCT…from the General Manager

It’s hard to believe we are six months post fire in Richards Bay. I mean, six months is a long time, right? What has happened since then? What have we been able to achieve? When will we see chippers starting up? And trucks queuing again? What are our customers up to? I am sure these are the questions on everyone’s mind – members, employees, and general observers too. Let us first run through the activities related to the rebuild in Richards Bay, then we can talk about our customers and some brief insight into the market.

A project as big as the Richards Bay rebuild requires more capacity than what we possess in terms of technical staff, which iswhywe have called in Sivest, who are experts in Project Management and Engineering. With their assistance in putting together technical specifications, managing tenders, and then supervising project works we are starting to make progress on our rebuild. The past few months in Richards Bay have also been dominated by the loss assessors going through every nook and cranny, reviewing video footage and timelines as they work on their insurance reports along with Safire.

The rebuild is being carried out in a number of phases and, as you would expect, some of these phases will get higher levels of priority as we push towards getting chipping operations up and running:

• Mobile chipping of biomass for April and May vessels – we have brought in a mobile chipper to chip bio-quality gum for these two vessels for Japan that we did not push away. The chipping is right adjacent to the western stockpiles at Richards Bay Wood Chips (RBWC), and as I type this, we have already put close to 15 000 tonnes on the pile. This will continue until end May at least.
• BayFibre – the main damage at BayFibre is the electrical infrastructure and the screens and associated conveyors, right up to the main incline conveyor up to the stacker. We have gone out on tender for most of this work already and will appoint contractors soon. The work includes sandblasting and painting the structures, cladding the concrete columns, building a few new conveyors, and installing two new screens. Add to that all the electrics need to run that. We hope to be chipping by mid-August at BayFibre.
• RBWC – Western side (temp solution first). The main damage here includes the electrical infrastructure, the screening building, the reclaimers, the overhead conveyor gantries and the chip pile concrete floor and walls. We will concentrate on getting the chipper and screens up and running, and before we try reinstating the overhead conveyors, we will run a temporary chute to drop chips near there claimers. Much of this work has already had contractors appointed. We expect to have chips on the ground during August on this side too.
• RBWC – Eastern side. Once we have both chippers running, we will be able to focus on the eastern side and all the overhead gantries. These need to be sandblasted and painted and the inside conveyor infrastructure replaced.

Then we must put them back up and do civil repairs to the columns and stockpile floor. The timeline here is stretching out towards the end of 2024.

It’s an incredibly large and complex project, with the work even requiring Construction Work Permits to be able to proceed. Each time a tender award is granted, it also requires the loss assessors to review it and put their stamp on it too.

We will update you regularly in coming months, as we target specific milestones and share progress.

In the meantime, from a market perspective, Durban Wood Chips (DWC) continues to trade as normal, albeit with the added pressure of taking on extra vessels on behalf of Richards Bay. To date, they have managed two complete vessels for Nippon, our major Richards Bay Japanese customer, and expect to do at least another three before Richards Bay is chipping normally again. They have, unsurprisingly, reported a record year ending February 2024, having exported an amazing 642 000 tonnes.

In many ways 2024 would be a very interesting year – if you were simply an observer, that is.

We will need to contend with rising costs here in South Africa, from port costs to diesel, from wages to electricity and perhaps, don’t mention insurance costs. On top of that, an extremely unpredictable Rand, and the not insignificant matter of our national elections in May. Quite a tumultuous time to be restoring Richards Bay back to profitability. And in a year we mark our 75th anniversary of existence!

Regardless of our own challenges here in South Africa, the market in Japan and China remains in the doldrums and the pressure remains on pulp pricing as global economies continue in a sluggish growth pattern.

The pressure on pulp and paper always translates to wood chips too, and we are expecting tough trading conditions to remain in place even as we focus on getting our chipping plants running again. We will commence negotiations with Japan soon, and we will give you feedback as we engage directly with our customers; but our feeling is that we could be in a protracted negotiation cycle as both buyers and sellers alike face challenging market conditions.

Source: NCT Forest – April 2024 (Page 4–5)