Since 1998, Gabon has been at the forefront of global forest conservation efforts as it works to balance the priorities of ensuring the sustainability of its resource base and maximising the forestry sector’s economic contribution. One of the key pillars of the Industrial Gabon policy is to carry out more value-added processing at home – first-stage (felling and unrolling) and second-stage (re-sawing and plywood) processing, as well as third-stage manufacturing of finished goods.

LIFE AFTER THE BAN: Adapting to the ban on raw timber exports implemented since May 2010, Gabon’s forestry sector is undergoing significant restructuring – and, with low international prices, facing financial challenges. Whilst it accounts for only 4.5% of GDP in 2013, according to the African Development Bank (AfDB), it punches above its economic weight as the second-largest resource after hydrocarbons and the biggest private employer (with between 15,000 and 20,000 jobs according to France’s Mission Economique). Investing in downstream capacity is encouraging operators to become more formalised, but also to vertically integrate by holding their own logging concessions.

SUSTAINABILITY: With around 60 commercialised species such as okoumé, ozigo and other bois divers, Gabon holds significant potential and is home to some 350 other commercial tree species, according to the Ministry of Water and Forests. Okoumé, for example, is particularly sought-after, given its ease of unfurling, which yields higher-quality plywood.

Forests cover some 22m ha, or around 85%, of Gabon. The presidency, through the National Agency of National Parks (Agence Nationale des Parcs Nationaux, ANPN), is working on a unified national spatial map that will clear overlapping claims, expected to be ready in 2014.

“Establishing a central land use map for the whole of Gabon is sorely needed, as we see a number of uses such as mining, forestry and conservation claiming overlapping areas,” Christian Mbina, the technical director of the ANPN, told OBG. In support of this project, the French Development Agency (Agence Française de Développement, AFD) is managing a €9m plan, funded by Accord de Conversion de Dettes France-Gabon, for the construction of a satellite image receiver dish at the Nkok Special Economic Zone. Using data-feed from a Brazilian satellite, it will provide high-quality imaging for the Congo basin, allowing for more timely and accurate estimates of land use. At the same time, the EU is backing a project to establish supply-chain tracking for the central African timber trade (similar to diamonds and coltan), which is part of its Forest Law Enforcement, Governance and Trade process. The government is also taking steps in this area by encouraging certification from the US-based Forest Stewardship Council, a non-governmental organisation (NGO).

The ANPN, established in 2002, has seen its budget rise from CFA700m (€1.05m) in 2009 to CFA8bn (€12m) in 2013, with 400 staff and 120 park guards to monitor the 12% of the land that is protected. Meanwhile, discussions about possible applications for carbon offsetting through the UN’s Clean Development Mechanism are in the early stages, but Gabon’s government has shown a desire to implement enabling regulations to establish a carbon market. Indeed, a 2009 study by Britain’s Royal Society, based on research on Gabon’s forests, estimated tropical forest trees absorbed 18% emissions annually.

RESOURCES: The Investment and Export Promotion Agency (Agence de Promotion des Investissements et des Exportations, APIEX) estimates some 12.5m ha can be exploited in a sustainable manner. There are currently 10m ha of state land concessioned out in private permits. Some 4m ha of protected land and 8m ha of rural land, roughly 40% of the total, is reserved for the Gabonese – including community forests and hunting and fishing areas.

The most recent hard statistics date from 1995, when reserves of Okoumé were estimated at 130m cu metres, according to the EU, out of total exploitable timber reserves of 400m cu metres. More recently Olam, which claims it accounted for 45% of timber exports in 2012, estimated that Gabon holds a usable sustainable volume of 500m-600m cu metres of commercial species of mature age. Gabon is split into three commercial timber zones: coastal areas, reserved for Gabonese firms; the country’s north-east, mainly protected areas of the Minkébé reserve and the Batéké savannahs; and much of the remainder, particularly areas close to the TransGabon Railway (TGR), which hosts the main commercial developments – in Nyanga, the Ngounié basin, Moyen- and Haut-Ogooué, Ogooué-Lolo, and parts of Ogooué-Ivindo and Woleu-Ntem. The trade in unprocessed log exports has traditionally been cash-based, with few if any banks providing letters of credit and contracts often negotiated directly by agents.

While the TGR is used for a small share of timber produced, most is trucked over roads inoperable for three to six months of the year. Of the private permits, 52.9% are under sustainable management, 45.85% are transitioning to sustainable management, and 1.24% are not covered. Sustainable management permit areas range from 50,000 ha to 200,000 ha, while smaller, associated forest permits are less than 50,000 ha. The ministry can also award permits on a case-by-case basis to rural Gabonese for up to 50 trees.

LEGISLATING CHANGE: Government efforts to legislate change in the sector started in earnest in 2001, when the new Forest Code launched efforts to promote domestic downstream processing of logs, requiring between 25% and 35% local processing, aiming to raise forestry’s share of GDP to 10%.

Yet it surprised many operators in November 2009 when the government announced the total ban of unprocessed logs from May 2010, while exempting wood-processing machinery imports of all taxes. Although Cameroon reneged on similar efforts within six months, Gabon, which produced around 8% of global timber supply, held steady. National timber production fell from 3.95m cu metres in 2009 to 1.86m cu metres in 2010 and 1.59m cu metres in 2011, according to data from the Central African Forests Observatory (CAFO), an NGO, before stabilising around the 1.6m cu metres mark in 2012.

For 2012, APIEX estimates some 42% of wood went to Europe, followed by Asia (36%), and the rest of Africa and America (22%). While the number of registered sawmills grew significantly, the availability of unprocessed logs locally declined as small loggers were squeezed by constrained export demand.

CUSTOMS & COMPETITION: Some three-quarters of forestry companies are foreign owned, according to the AfDB. Of the 701 timber permits covering 11.33m ha in 2012, Chinese companies held 25.11% of the total area, or some 2.8m ha, according to the NGO International Union for Conservation of Nature (IUCN).

The largest Chinese firms are the state-owned COFCO group’s Sunly-Gabon, China International Forestry Group Corp’s Hua Jia, Transport Bois Négoce International and Honest Timber, which also acquired French firm Leroy Gabon in 2009. Since 2010, however, timber imports from Gabon declared at Chinese Customs have dropped off almost entirely, from a peak of over 100,000 cu metres a month in February 2010 to between 2000 and 8000 cu metres a month thereafter.

Meanwhile, Malaysia’s Rimbunan Hijau (RH) Group, a dominant player in Gabon with over 1.8m ha of forest concessions since it entered in the mid-1990s, has reportedly stopped trading completely since the ban. A number of European companies occupy major positions in Gabon’s timber trade, including Compagnie Equatoriale des Bois, acquired by Switzerland’s Precious Wood in 2007, and French companies including Rougier, Thanry, the Isoroy group (which sold Leroy in 2009 but still runs Plysorol) and Cora’Wood. A number of these, including Rougier and Precious Wood, have gained FSC certification since 2009.

But these same companies are also restructuring their Gabon operations, led by Rougier that announced in April 2013 its intention of selling off some assets there. Smaller firms also operate in this sector, often with Gabonese equity, but have increasingly been squeezed by the export ban and turned to contract saw-milling for larger trading firms, including Letuxfo, Société de la Haute Mondah and Société des Bois de Lastourville.

CONTRACTED PRODUCTION: As the opportunities for exporting unprocessed logs closed in 2010, small-scale Gabonese timber producers lost the export outlet provided by agents, particularly from China. The resulting drop in unprocessed logs put a strain on established sawmills, prompting operators with sufficient financial capacity to integrate vertically by acquiring their own forest concessions. Meanwhile, slower growth in China and India caused a significant drop in prices for all major woods. The immediate impact of the 2010 ban caused timber exports to fall by half to 828,000 cu metres, according to the International Tropical Timber Organisation (ITTO). Nonetheless, timber production rebounded to 1.6m cu metres in 2012, emphasising the sector’s relative robustness.

The clear government policy stated in Emerging Gabon and the current restructuring of the industry create clear opportunities for investment in timber. As Gabon competes against established third-stage manufacturers like Côte d’Ivoire, an enabling environment established by government will be key to growth.