Monday, 18 February 2002
The High Court, Pretoria today began hearing a legal action brought by
forestry parastatal the South African Forestry Company Limited (Safcol),
against York Timbers Limited, the operating subsidiary of JSE-listed forest
products company Yorkcor. Safcol is seeking a declaratory order that it
validly terminated Yorkcor's long term sawlog contract in November 1998.
This litigation follows a series of court battles between Safcol and Yorkcor
since 1995, concerning log price increases and Yorkcor's refusal to
relinquish its rights in terms of two "evergreen" sawlog supply contracts
concluded in 1968 and 1970 with the Government. Yorkcor contends, inter
alia, that it is entitled to "fair and adequate" compensation terms of the
"evergreen" sawlog supply contracts, as well as in terms of the South
African Constitution. Two related hearings of the Competition Tribunal are
also pending.
A significant number of well established sawmillers have given up operating
since yielding to demands of higher sawlog prices and shorter terms of
tenure. The standard contract, which Yorkcor maintains is still enforceable,
expressly stipulates that the intention is to grant the sawmiller security
of tenure indefinitely. In 1998, the High Court confirmed a consent order to
the effect that, inter alia, Yorkcor is not obliged to renegotiate the
duration of its indefinite tenure.
The national forestry assets controlled by Safcol and the Department of
Water Affairs and Forestry are currently under the hammer in terms of a
privatisation process that could involve the award of tenure of up to 70
years for successful bidders, The state forests that have supplied Yorkcor
since the 1970s are included. The Minister of Water Affairs and Forestry
gave Yorkcor five years' notice of termination of a 1987 evergreen contract
over three forests in the Drakensberg escarpment in December 2001.
Environmental experts have been mandated by Yorkcor to show that the changed
land-use is unviable and without merits. If or when Yorkcor goes, its job-
providing industry near Bushbuckridge/Acornhoek and its social upliftment
programmes amongst the neighbouring communities will go with it.
It widely believed in the industry that the Department and Safcol need to
lift the constraints imposed by these 30-year-old "evergreen" contracts to
make way for a conservation area near the Kruger National Park and for
disposal in the privatisation process to preferred consortia. Yorkcor and
another sawmill in the Eastern Cape are resisting.
These Safcol v Yorkcor proceedings follow the application to the High Court
in Pretoria by Yorkcor for the committal for contempt of court of the
Minister of Water Affairs and Forestry and his Director-General. That
action, which was postponed, stems from the alleged failure to honour
several judgments of the High Court and the Supreme Court of Appeal.
Ends
ISSUED FOR :
Yorkcor Limited
CONTACT :
Solly Tucker (012) 804 9730/083 456 9900
FAX NO: :
(012) 804 8611
E-MAIL :
Sol@yorkkcor.co.za
ISSUED BY :
TISH STEWART PR ASSOCIATES
CONTACT :
Tish Stewart (011) 325 4195 Cell: 082 443 6399
FAX NO :
(011) 325-4199
E-MAIL :
Tish@tspr.co.za
DATE :
19 February, 2002
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