The Obtala Limited group is monitoring “with particular attention” the memorandum of understanding signed in June between the governments of China and Mozambique for the construction of a Industrial Processing Park for Timber in Mozambique, the group said in an update to a previous statement including its first half and second quarter results.
The statement added that in this regard, one of the main employees of the group’s subsidiary in Mozambique, Adriano Rafael, has been appointed to increase sales in the domestic market.
The memorandum of understanding signed between the two countries allows Mozambique to have reliable information on the amount of timber leaving the country headed for China and provides for the two countries to work together in the exploration, transport, sale and export of timber.
In Mozambique, the statement said, tree-felling licenses were issued later than expected on 12 June, 2018, and export licenses on 25 June, and Obtala subsidiary Argento Mozambique was one of 28 companies to be given an export license.
“The level of domestic processing that each species of wood must undergo in order to be exported has, however, yet to be announced,” the document said.
The group goes on to say that although improved processes were introduced at the Nampula sawmill, the uncertainty caused by the delay in issuing licenses obliged management to review the business model in detail, “which made it possible to conclude it was appropriate to introduce a cost reduction programme and a change of strategy.”
In the first half of the year, the group posted turnover of US$7.3 million and in the second quarter processed a record 3,800 cubic metres of timber, compared to 3,600 cubic metres in the first quarter.
The Obtala group, based in Guernsey, has 10 forestry concessions in Mozambique, namely in the province of Manica, which occupy an area of 120,000 hectares.