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Operational successes despite difficulties
The harvest volume in 2021 was 233 700 m3, a decline of 6.6 % from the previous year (250 100 m3). The considerable inventory of logs permitted a reduction of the harvest volume. One of the three current harvest zones consist mainly of the hardwood azobé. We built a specialized sawmill for this wood species in 2020. The azobé site is difficult to access, and we were unable to harvest the entire volume in a timely manner. The sawmills in Bambidie processed 149 000 m3 of logs, an increase of 14.7 %. Sawn timber production amounted to 53 500 m3 (previous year: 44 600 m3). The new hardwood sawmill started two-shift operations only in February 2021, but was still able to achieve the expected productivity. Thanks to the higher yield compared to the other two sawmills, the production volume increased significantly.
Fortunately, we recorded only few outages due to the Covid pandemic. The safety measures implemented and the inspections carried out by public authorities helped to keep the impact on our operations low. As is the case practically every year, however, we did suffer from obstacles beyond our control. Road conditions sometimes prevented deliveries to the port, and we had to repair the road ourselves on behalf of the government. Rail capacity was also not expanded as promised, and the capacity of rail cars was insufficient at times, also because additional capacity was reserved for neighbouring mining companies. Fortunately, we were able to ensure the supply of logs to our veneer plant at all times. But lack of containers, strikes by the public authorities, and the low frequency of container ships with limited capacity for handling at the port had a very strong negative impact. This again led to an excessively high inventory of sawn timber at the end of the year. Travel restrictions and customs clearances impeded the planned support of the infrastructure, so that the overhaul of the sawmills as well as planned training courses were delayed enormously. This also resulted in increased standstills.
The inventory for the new forest management plan for the years 2025 – 2049 is currently being prepared by an external service company and should be ready by the end of 2023. This plan is a basis for obtaining the concession. The other requirements have already been met, and we are optimistic that we will be able to secure operations. Already in 2021, we began harvesting and processing additional tree species on an experimental basis. What we have been doing for a long time in Brazil will now also become the practice in Gabon. The market is ready for other wood species. This also provides better support for low-impact forestry, despite the increase in harvest volumes. The changed conditions for business in Gabon also call for accelerated investment in further processing of sawn timber. Export taxes were increased in 2021 from 1.5 % to 7.5 % for air-dried sawn timber and to 3.0 % for kiln-dried sawn timber. Local processing of sawn timber is therefore becoming more important strategically, also because this reduces the tax rates.
PW Gabon’s total investments in the amount of EUR 1.6 million were used for buildings (EUR 0.2 million), forestry machinery (EUR 0.6 million), homes for employees and their families in Bambidie (EUR 0.1 million), vehicles (EUR 0.3 million), and the sawmills (EUR 0.4 million).
At the beginning of 2021, we had to make some staffing changes in the management team in Bambidie. This led to several bottlenecks, but the existing management team handled the situation well. Starting in April 2021, the management team was complete again.
The VAT credit with the Gabonese government remained at the same high level of EUR 2.4 million and continues to tie up funds. The situation was aggravated by the increased inventory due to the shipping and handling problems mentioned above. Our net working capital is currently much too high, but we have been able to finance investments from cash flow or with bank loans from local institutions. Nevertheless, liquidity remained very tight due to sales delays, increased inventory levels, and increased costs from operating activities. We expect the situation to improve in 2022 and hope to be able to reduce the inventory level.