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Management Side
Technical Side
Mondi-First Corporate Forestry Land Deal Signed
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Johannesburg, South Africa, 16 October 2008 -- Mondi, the Regional Land Claims Commission (RLCC), and the Kranskop communities of AmaHlongwa and AmaBomvu have signed a land restitution settlement relating to Mondi forestry land.

The agreement provides for the transfer of more than 4000 hectares of Mondi land to the two communities. The communities will get title to the land, which will be leased back to Mondi. Mondi has entered into a 20 year lease agreement with the communities to enable the continued supply of timber to Mondi’s mills. This is South Africa’s first forestry related land restitution settlement agreement involving a corporate land owner.

This agreement sets an industry precedent by:
  • creating a sustainable working model of Community Trusts;
  • ensuring the communities receive an ongoing annual income;
  • introducing the communities into Mondi’s supply chain by transforming them into approved suppliers;
  • ensuring a transfer of skills and the increased involvement of community members in the forestry business.
     
The South African Government welcomes the settlement, which establishes an industry template that can be used by other companies as a framework for settling future forestry land claims.

“This is very good news for South Africa and for all parties involved in these settlements. Mondi is convinced that the land restitution process is necessary and we will continue to engage with government and communities to find sustainable solutions,” David Hathorn, Group CEO of Mondi.

“We are very pleased that a settlement has been reached with the community on terms which ensure real empowerment of new farmers and a continued fiber supply for our business,” said Viv McMenamin, Mondi South Africa’s Forestry and Transformation director. “This model and approach set the standard for equitable land restitution agreements that are commercially sustainable and beneficial for all parties.”

The key elements of the agreements signed today are:
  • A sale agreement stating that the land, and some immovable properties on it, will be bought from Mondi by the RLCC for the communities at a value of approximately ZAR 20.5 million.
  • Two similar lease agreements were signed between Mondi and the two Community Trusts.
  • A settlement agreement was signed by all three parties which spell out the terms and governance of the relationship.
  • The land will be owned by the two communities through the Siyathokoza and Eyethu Trusts.
  • The land will be leased back to Mondi and will continue to produce timber for use by Mondi’s mills.
  • The lease agreement, structured over a 20 year period, provides for community income from annual rental and a stumpage fee based on production output, whilst providing a continued timber supply for use in Mondi’s mills. The agreement will also ensure progressive involvement of communities in the forestry business over the same period.

Mondi will provide annual bursary opportunities via its existing bursary scheme for two community members per claim to study forestry at tertiary institutions. With Mondi’s assistance, the Community Trusts have set up community owned businesses, currently engaged as contractors in the forestry operations. Some 50 people are employed to develop opportunities in the forestry value chain. Development, mentoring and coaching support is included for these businesses as part of the agreement. In addition, Mondi has made an ongoing financial commitment to training, coaching, mentoring and start-up costs for the Community companies, including vehicles and equipment.

The Forestry Industry Education and Training Authority (FIETA) has also partly funded training of Trustees, company directors and employees.

Mondi is an international paper and packaging group and in 2007 had revenues of EUR 6.3 billion. Its key operations and interests are in Western Europe, emerging Europe, Russia, and South Africa. The Group is principally involved in the manufacture of packaging paper and converted packaging products, uncoated fine paper, and specifically products and processes, including coating, release liner and consumable flexibles.

Mondi is fully integrated across the paper and package process, from the growing of wood and manufacturer of pulp and paper (including recycled material) to the converting of packaging papers into corrugated packaging and industrial bags. Mondi has production operations across 35 countries and had an average of 35,000 employees in 2007.
 


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