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Precious Woods owns forests in Brazil
and timber plantations in Costa Rica
and Nicaragua.
In 2005 the company decided to extend its business activities to
Africa
in order to expand its resource base and use its
experience and expertise to promote FSC certification in
the Congo Basin by achieving – if possible –
the step-by-step certification of more than 5 million hectares of
moist
tropical forest.
In May 2005, Precious Woods announced that it had signed a Memorandum
of
Understanding with Nordsüdtimber (NST), the largest forestry
conglomerate in
the Democratic Republic of Congo. It was originally planned to
acquire a
10%
stake, with the option of acquiring the majority interest within the
following
seven years.
In June 2006, however, Precious Woods announced that it would not be
signing
the contract with NST after all. The decision not to do so was due to
the
political situation in the DR Congo and the uncertainty regarding the
legitimacy of the exchange of concessions under the new forestry
legislation.
In March 2007, Precious Woods acquired a minority interest in NST.
The
amount
invested, however, was significantly
below the 10% stake envisaged originally. The option to substantially
increase
Precious Woods' participation at a later date remained unchanged. In
the
meantime, NST's subsidiaries have begun preparing their operations
for
certification according to the criteria of the FSC.
Shortly after acquiring its minority interest in NST, Precious Woods
became
aware of a Greenpeace report on logging in the DR Congo. This report,
which
contains several points of criticism, accuses a number of forestry
companies
operating in the DR Congo – including some of the companies that are
part of
the NST Group – of undermining the 2002 moratorium on the granting of
logging
concessions. The World Bank also comes under criticism in the report
for
failing to effectively enforce the moratorium that it had initiated.
Precious
Woods supports the ongoing review by
an inter-ministerial commission of the existing forestry concessions.
Precious Woods is in close contact with the management of the NST
companies and
is using its influence to ensure the rapid implementation of the
steps
that
need to be taken on the path towards FSC certification. Members of
Precious
Woods' senior management regularly meet with the management of
Sodefor
and
Soforma in order to raise and discuss all points that have a bearing
on
the
future development of these companies. The 5,000 or so employees of
Sodefor,
Soforma, CFT and Forabola on the one hand, and the forests of the
Congo
Basin
on the other, can only benefit from the steps being taken now with
the
aim of
achieving full FSC certification at a future date.
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| Q
& A
How large
is
Precious Woods' stake in NST
and what does its involvement consist of?
It is significantly below 10%. For this reason Precious Woods
currently
has
only limited influence over NST, let alone control of the Group.
However, it
may increase its participation over the coming years.
What has Precious
Woods done to
make
sure that it has not acquired an interest in a company involved in
illegal
logging?
An important point to consider is that in the DR Congo concessions
continued to
be re-allocated, and in some cases, exchanged in 2002 and 2003 with
the
full
approval and permission of the Ministry for Forests. In response to
pressure
from the World Bank, the moratorium was introduced in 2002 by
presidential
decree but was not published until 2004. The date on which it entered
into
force is therefore unclear. Forestry companies and even
representatives
of the
Ministry have declared that they had no knowledge of the decree until
it
was
made public in 2004. Among other things, concessions were exchanged
and
modified in 2002 and 2003 in reaction to the introduction of much
higher
concession fees which were even payable in respect of unforested
concession
areas.
Who is going to check that
NST holds
legitimate concessions and has paid the respective taxes and other
fees?
An official review of the forest concessions was decreed in 2005.
With
the
support of an independent international expert, an inter-ministerial
commission
is currently reviewing the legality of all156 existing concessions.
The
commission's report is expected to be completed at the end of
September
2008.
The various NST Group companies are sure that they have paid all
taxes
and fees
and have complied with the terms of the concessions.
What will Precious Woods do
if the
inter-ministerial commission finds evidence that NST holds its
current
concessions unlawfully and that the Group is operating illegally?
At present there is no indication that this is the case. The NST
Group
is
managed professionally and employs some 5,000 people. Should -
contrary
to
expectations – many of the existing concessions not be converted into
new ones,
Precious Woods would probably not increase its participation and
would
instead
decide to sell its stake in NST.
Does Precious Woods sell
timber from
NST
in Europe or plan to do so?
Precious Woods Europe does not sell any
timber from the DR Congo and does not intend to do so until the
concession
conversion process is completed at the end of 2008.
What guarantees will
Precious Woods
require before increasing its participation in the NST Group?
The decision to increase Precious Woods' participation will depend on
a
number
of factors: the existence of satisfactory answers to the questions
related to
the granting of concessions, the prospects for certification of the
forest
operations and the economic viability of the operations.
Is there any danger of
Precious Woods
losing its investment in the DR Congo? Could this affect the
company's
activities in Latin America?
Precious Woods – and its shareholders – are aware of the risks
inherent
in
investing in the DR Congo. Precious Woods decided to invest in the DR
Congo
because it is convinced that the sustainable management of tropical
forests in
the Congo Basin is not only possible but also of
utmost importance for the future of these forests. In the worst case
scenario,
Precious Woods would have to dispose of its stake in NST. However,
this
would
not endanger the company's operations in Latin America.
What would happen if
Precious Woods
were
to withdraw from the DR Congo or decide not to increase its
participation?
Given the growing demand for timber from East Asian countries,
companies
in the
DR Congo would have no difficulty in finding new buyers in Asia.
It is, however, highly unlikely that such new owners would embrace
their
social
and environmental responsibilities and seek to achieve FSC
certification.
Was Precious Woods' positive
assessment
of the proposed investment in the DR Congo unduly influenced by the
opportunities for financial gain mentioned in the company's
publications?
Absolutely not. Precious Woods has a proven track-record in the
sustainable
management of tropical forests. In contrast to other companies which
engage in
destructive logging practices or convert the forests to other uses,
to
obtain
pulp, soya or palm oil for example, Precious Woods' activities
contribute
towards the preservation of intact tropical forests. Moreover, the
company
firmly believes that its approach is not inconsistent with economic
viability.
Is Precious Woods in contact
with
Greenpeace?
There have not been any formal
talks between official delegations from Greenpeace und Precious
Woods.
On the
other hand, Precious Woods Brazil, for example, maintains close
contact
with Greenpeace
Brazil.
In Europe, numerous personal relationships
exist between individual Greenpeace officers and members of Precious
Woods'
management. Among other things these enable an ongoing dialogue about
the
principles and details of forestry activities in tropical forests.
What is Precious Woods'
opinion on the
Greenpeace report?
Precious Woods shares Greenpeace's concern for the tropical forest in
the DR
Congo and has an interest in working together with organisations
dedicated to
nature conservation - such as WWF and Greenpeace - in order to
improve
the
situation, as has been the case in Brazil. According to the
Greenpeace
report,
only the government is able to save
the tropical forests in the DR Congo. However, as there are
practically
no
forestry authorities with the ability to enforce forest laws and the
institutional framework in the DR Congo is generally weak, this
amounts
to an
illusion and serves to illustrate yet again the important role played
by
the
FSC's independent certification scheme in ensuring that forestry
companies meet
their corporate responsibility obligations.
Some of the allegations in the report, such as the accusation that
Sodefor
has failed to pay concession taxes and other fees, are, according to
Precious
Woods' information, completely unfounded.
To what extent does the
harvesting of
timber contribute towards deforestation?
In Africa, timber is extracted from tropical
moist forests on a highly selective basis. On average only one tree
per
hectare
is harvested and this in a felling cycle of 25 years. Such slight
disturbances
are not a problem for the forest. If the forest is opened up by
roads,
however,
deforestation can be accelerated by slash and burn clearance for
farming
purposes. In populated areas this has led to the destruction of large
areas of
forest. An important aspect of FSC certification therefore, is the
permanent
protection of concessions from illegal agriculture.
Why is deforestation a
problem in the
DR
Congo but not in Gabon?
In the DR Congo – particularly in the eastern provinces and as a
result
of the
displacement of people during the war - the population density is
much
higher
than in Gabon.
Spontaneous settlement has occurred in many forest areas, regardless
of
whether
forestry operations have been carried out there or not. Today,
carefully
administered and monitored logging concessions are able to provide
better
protection against illegal encroachment, particularly when these are
based upon
an independent certification process.
To what extent do forestry
operations
contribute to the destruction of the forest fauna?
In large forest areas with a low population density – for example in
many parts
of Gabon
– it is usually easy to find protein in the form of bush meat.
Indigenous
peoples such as the Pygmies living in Central African forests
completely
depend
on bush meat. As soon as the human population grows and the forest
becomes
fragmented, the number of animal and plant species found there
declines
drastically. Forestry companies which actively endorse the commercial
hunting
of bush meat by providing trucks and boats for transportation
purposes,
are
partly responsible for destroying animal life. As already mentioned,
nature
conservation is a precondition for certification according to the
criteria of the
FSC.
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