africa Agriculture Legislation logging Mozambique Natural Resources Wood

Obtala to review its operations in Mozambique due to new timber export rules

Obtala Limited (LON:OBT) has said it will fully review the potential financial implications of a ruling by the Ministry of Land, Environment and Rural Development (MITADER) in Mozambique on the exploitation and export of endangered species of timber.

The AIM-listed firm said under the ruling the exploitation and collection of timber of pterocarpus tinctorius, swartzia madagascariensis (ironwood), combretum imberbe (mondzo) is forbidden. The group pointed out that it has never owned licences to extract any of these species.

The African-focused agriculture and forestry company also said that the export of chanfuta, umbila and jambire will also not be allowed, with those three species being licensed only for logging in the domestic market.

Obtala said it has previously exported both chanfuta and umbila from Mozambique, but the export of both species made up less than 5% of total group sales in the first quarter of 2018.

According to the new rules, the export of native species of wood can only be carried out by operators certified by MITADER.

The company said: “We must now wait to see whether or not the government of Mozambique decides to uphold the MITADER ruling since the ruling is not automatically adopted into law.”

Paul Dolan, CEO of Obtala, commented: “We will fully review the potential financial implications of these measures to the group, but since Argento’s operations in Mozambique are certified by MITADER, if they are adopted into law they should, in the long term, benefit the group from both an operational and pricing perspective.”

He added: “In the short term however, until we have more clarity regarding the specific path that the government expects the timber industry to take, and any other measures that it may implement, it is clearly prudent for us to minimise risk by deploying financial resources towards expanding capacity at our production facilities in Gabon rather than Mozambique.”

Source: ProactiveInvestors

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