NDF Zambezia Report 150206 Rev NO PIC1

Republic of Mozambique Ministry of Agriculture

National Directorate of Forestry and Wildlife

Forestry Entrepreneurship and Joint Forest Management Project

Projecto de Promoção de Negócios e Maneio Florestal

PRE-FEASIBILITY STUDY FOR

FOREST PLANTATIONS IN MOZAMBIQUE WITH FOCUS ON ZAMBEZIA

February 2006

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Report 6253-20

© SAVCOR INDUFOR: PRE-FEASIBILITY STUDY ON FOREST PLANTATIONS IN MOZAMBIQUE WITH FOCUS ON ZAMBEZIA, February 2006

Savcor Indufor, Rural Consult and WWF Mozambique carried out jointly the present study. The Nordic Development Fund and the Ministry of Agriculture of Mozambique financed the study and the latter provided also logistics support. The Embassy of Finland in Maputo assisted the National Directorate for Forestry and Wildlife in organizing a roundtable meeting in December 2005 where the study results were presented.

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TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMS iv

EXECUTIVE SUMMARY 1

1. INTRODUCTION 3 1.1 Objectives 3 1.2 Justification 3

2. INVESTMENT ENVIRONMENT 4

3. METHODOLOGY 5 3.1 Overview 5 3.2 GIS Screening 6 3.3 Field Survey 6 3.4 Environmental Criteria 7 3.5 Socio-economic Assessment 7

4. EUCALYPTUS WOOD TRADE IN A GLOBAL PERSPECTIVE 9 4.1 Pulpwood Trade Patterns in the International Markets 9 4.2 Early Players in Eucalyptus Solid Wood Products 10 4.3 New Global Business and Marketing Model 11

5. AREAS OF INTEREST FOR FOREST PLANTATIONS 12 5.1 Brief of the Country-wide Results 12 5.2 GIS Screening Results 12 5.3 Field Survey Results 15

5.3.1 Extent of Feasible Areas 15 5.3.2 Nature of Feasible Areas 16 5.3.3 Characterization of Surveyed Areas 17

5.4 Plantation Technology 17 5.4.1 Potential Species 17 5.4.2 Yield and Rotation 17

5.5 Financial Viability 18 5.6 Infrastructure and Its Future Development 20

5.6.1 Overview 20 5.6.2 Road Network in Zambezia 21 5.6.3 Railroads 21 5.6.4 Ports 21 5.6.5 Energy 22 5.6.6 Transport Alternatives and Average Distances 22 5.6.7 Concluding Remarks 23

6. ENVIRONMENTAL AND SOCIAL CONSIDERATIONS 24 6.1 Environmental Criteria 24

6.1.1 Overview 24 6.1.2 Hydrology 24 6.1.3 Soils 25 6.1.4 Conservation of Biodiversity 25 6.1.5 Conservation of Protected Areas 25

6.2 Socio-economic Considerations 26 6.2.1 Socio-economic Characteristics of Study Areas 26 6.2.2 Patterns of Local Settlements 26 6.2.3 Relation of Stakeholders with Native Forests 27 6.2.4 Local Experience in Tree Planting 27

6.3 Stakeholder Perception 27 6.4 Environmental Services: Carbon Sequestration 28

6.4.1 Overview 28 6.4.2 Identification of the Option 28

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6.4.3 Quantification of the Greenhouse Gas Emission Reduction Potential 29

6.4.4 Potential Market Value of the Certified Emission Reductions 30

7. RISKS AND THEIR MITIGATION 31

8. ROADMAP FOR PLANTATION INVESTMENTS 32 8.1 Roles of Investors, Communities, SMS Enterprises and the

Government 32 8.2 Technology, Management Skills and Human Resource

Development 32 9. CONCLUSIONS 34

9.1 Investment Environment 34 9.2 Forest Products and Markets 34 9.3 Extent and Nature of Potential Areas 35 9.4 Yield Potential 35 9.5 Financial Feasibility 35 9.6 Infrastructure 35 9.7 Environmental Considerations 36 9.8 Socio-economic Considerations 36 9.9 Risks and Their Mitigation 36 9.10 Roles of Different Parties, Financial Options 36 9.11 Methodological Improvements 37

LIST OF ANNEXES

Annex 1 GIS –Screening Methodology Annex 2 Field Survey Results Annex 3 Study Area Descriptions Annex 4 Overview on Plantation Technology Annex 5 Infrastructure Annex 6 Environmental Criteria for Pre-feasibility Screening Annex 7 Operational-level Environmental Criteria and Definitions Annex 8 Socio-economic Survey in Potential Plantation Areas Annex 9 Additional Market Information LIST OF FIGURES

Figure 3.1 General Study Concept 5 Figure 4.1 World’s Eucalyptus Saw-wood Production (2002) 10 Figure 5.1 Screened Areas and Economic Restriction Values 14 Figure 5.2 Example of One of the Screened and Mapped Areas 14 Figure 5.3 Sampling Route and Identified Feasible Areas in Gurue 16 Figure 5.4 Estimated Direct Mill-gate Cost for a Pulpwood Operation in

Zambezia 19 Figure 6.1 Direct Employment Opportunities Created by a Large scale

Plantation Project in Two Different Yield Scenarios that Produce the Wood Required by a Pulp Mill 26

Figure 6.2 Overview of the Production Chain 28 Figure 6.3 Carbon Stock Accumulation in Different Scenarios 30 LIST OF TABLES

Table 3.1 Feasibility Value - Calculation Example 7 Table 5.1 Potential Areas and Their Extent 13

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Table 5.2 Identified Potential for Large-scale Plantations in Zambezia 15 Table 5.3 Identified Potential for Small-scale Plantations in Zambezia 16 Table 5.4 Numeric Information on Surveyed Plantation Areas Zambezia 17 Table 5.5 Yield Potential and Rotation in Typical Zambezian Plantation

Sites (Total MAI) 18 Table 5.6 Summary of Direct Plantation Establishment and Maintenance

Costs for 8-year-Rotation Pulpwood Plantation in Zambezia 18 Table 5.7 Summary of Estimated Harvesting and Transport Costs for

Pulpwood in Zambezia 19 Table 5.8 Existing Road Network in Zambezia 21 Table 5.9 Suitable Ports to Export Plantation Wood from Zambezia 22 Table 6.1 Supposed Planting Program 28 Table 6.2 Plantation Productivity in Different Scenarios 29 Table 6.3 Carbon Sequestration Potential in Different Scenarios 30 Table 7.1 Risk Analysis 31

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ABBREVIATIONS AND ACRONYMS % percent a per year ANE Administração Nacional de Estradas - National roads Administration Agency BDMT bone-dry metric tons CDM Clean Development Mechanism CER Certified Emission Reduction CFM Caminhos de Ferro de Moçambique - Mozambique Ports and Railroads CIF Cost, insurance and freight cm centimeter CO2 carbon dioxide DIY do-it-yourself DNFFB National Directorate for Forestry and Wildlife ENCE Empresa Nacional de Celulares, S. A. F Feasibility value FAO Food and Agriculture Organizaton of the United Nations FGHY fast-growth, high-yield FOB free on board FSC Forest Stewardship Certification GIS Geographic Information System ha hectare IRR internal rate of return km kilometer km2 square kilometer m meter m2 square meter m3 cubic meter MAI mean annual increment MDF Medium Density Fibreboard mm millimeter NGO non-governmental organization t ton US United States USA United States of America USD United States Dollar W Used weight w/o without

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EXECUTIVE SUMMARY

Areas of interest for plantation establishment In Zambezia there are 0.7 million hectares of potential areas for plantation establishment, equivalent to 7% of the total land area. The potential for small-scale (1-20 ha) plantations is 589 000 ha while identified potential for large-scale plantations is 124 000 ha. Field surveys revealed two main constraints for large-scale plantation development: (i) land-use intensity due to high population density, and (ii) relatively high and dense existing vegetation. Socio-economic feasibility The establishment of forest plantations in Zambezia will contribute for poverty reduction and improved livelihood on a local and regional level. Establishment of large-scale forest plantations will create work opportunities in remote rural areas which otherwise have few other development opportunities. Rural communities’ main interest in plantations lies in opportunity to create jobs and employment opportunities. Environmental feasibility The developed screening methodology eliminates the major sensitive environmental features that are easily identifiable on the maps, e.g. catchments, wetlands, rivers, slope, formally protected areas, concessions and areas of extensive natural forests. The environmental conditions in the study areas in Zambezia allow sustainable plantation establishment, considering the best environmental practises and compliance with the set criteria. Decisions for conversion of current land use e.g. agricultural and heavily utilized natural forest areas needs to be assessed in a balanced manner considering, in addition to environmental factors, also socio-economic aspects in the specific locality. The objective must be long-term sustainable land use maintaining the biodiversity and production capacity of the sites. Financial feasibility Wood production cost per se in Zambezia is internationally competitive due to low plantation establishment and maintenance costs. Transport costs remain relatively high due to weak infrastructure, which is, however, improving. The estimated wood cost at mill gate or port is USD 33/m3 if the transport distance is 300 km. The internal rate of return for a 20 m3/ha/a yielding plantation is in the range of 14.4% to 20.5% when the current FOB export prices for eucalyptus chips are applied (USD 47 to 53/m3). The trade of carbon emission reductions offers an additional opportunity to improve the financial attractiveness of plantation investments in Mozambique. It is estimated that the market value of certified emission reductions generated by the forest plantations in the survey area could be from USD 340 to 670/ha depending on plantation productivity. Species and yield potential The preliminary species recommendation includes selected eucalyptus species (total MAI 18-25 m3/ha/a on typical sites), selected pine species (11-15 m3/ha/a), Gmelina arborea (18-22 m3/ha/a) and Tectona grandis (9-11 m3/ha/a). Potential yield with advanced tree improvement and deployment of superior clone material is at least 40% higher.

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Investment environment The Mozambican Government has clearly expressed a strong interest to facilitate foreign companies to invest in forest plantations. The Ministry of Agriculture has recently elaborated a national strategy for afforestation emphasising commercial forest plantations. Different stakeholders must have clearly defined and commonly understood and accepted strategic roles in plantation development. The role of investors is to bring in business management and project planning skills, technology, and especially knowledge forest products and access to markets. The role of communities is to guarantee a stable and safe operating environment for the proposed project. In addition to above mentioned risk management, other roles of the Government are to create attractive and non-bureaucratic business environment, including incentives, legislation and public administration in general. The Government will act as a communication channel between the investors and the communities, if necessary. Forest products and markets The world demand for wood raw material is expected to grow firmly along with the population, incomes and consumption patterns. Major increase is expected to take place in Asia, mainly in China. Japan will remain the major importer of wood chips in the future, and China may emerge as a new market. The future growth in global demand for industrial round wood will be to a large extent satisfied from plantations. Due to high transportation costs, the most likely mills to purchase eucalyptus are located close to ports that are capable of handling large vessels carrying wood chips. Prospects for eucalyptus sawn wood expansion have been noted around the world. A large number of industrial eucalyptus growers develop saw log growing regimes, or mixed regimes for both logs and pulpwood from a single site. Infrastructure In general the current infrastructure is sufficient for commercial scale plantation establishment. Once operations are commenced in a given area, locally it may be necessary to realize minor infrastructure improvements. Most of the smaller roads used for wood transport will require improvements once harvesting operations commence, or at least constant maintenance to support the increased transport volume. Risk analysis In Zambezia the identified risks are related to availability of suitable land, plantation yield and social issues. Their probability and severity, if not solved, is low to moderate. The Government of Mozambique plays an important role in mitigation of land availability and social issues -related risks, e.g. local stakeholder consideration, continuity of land tenure and consistency of agreements.

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1. INTRODUCTION

1.1 Objectives

The main purpose of the pre-feasibility study is to provide a tested study concept to potential investors as well as the Mozambican stakeholders with reliable physical, social, economic and environmental information of the most viable areas for plantation forestry; i.e. the areas where plantation forestry is technically feasible and can give adequate returns to the investors and benefits for local communities and other stakeholders in environmentally sustainable manner. The study aims at giving practical orientation with field surveys on:

• locating and quantifying potential areas for plantation development, with main emphasis on commercial large scale plantations.

• technical viability considering tree growth and operating conditions, plantation technology, potential tree species and their yield potential;

• infrastructure assessment and its future development with focus on transport infrastructure and costs.

• financial viability considering direct planting costs and investment needs, and markets in short, medium and long term, and possible additional income from carbon sinks;

• environmental and conservation aspects considering identification and protection of environmentally sensitive areas in vicinity of or within forest plantations;

• social viability considering the stakeholder perception on different modalities of forest plantations and general socio-economic conditions in the study areas.

1.2 Justification

During the last decade overall investments in the Mozambican forest sector have been marginal and forest industries have remained underdeveloped. Savcor Indufor believes that Mozambican forest sector offers significant potential for wealth creation. Plantation forests and plantation based forest industries, both pulpwood and saw-timber, are considered as the major opportunity. Plantation development requires sufficient scale, long-term vision, serious commitment, and experienced forest investors as partners who provide capital, management skills, technology and access to international markets. Savcor Indufor Oy and Rural Consult Lda carried out a preliminary study on plantation investment prospects in Mozambique in March-April 2005. The Finnish Government financed the study. The results indicate that there are almost 7 million hectares of theoretically suitable land for forest plantations in the country. The Mozambican Government has expressed a strong interest to support foreign companies to invest in forest plantations and form partnerships with local enterprises and communities. There is also a growing interest among foreign investors to enter Mozambique, however, the risks are still perceived rather high. More detailed information is needed in order to:

• Locate the most promising plantation areas and quantify their spatial extension; • Assess competing land-use forms and availability of land; • Characterize tree growth and operating environment and appropriate plantation

technology; • Estimate the financial feasibility of plantation establishment, considering the

growth potential with suitable species and value chain costs; • Analyse relevant environmental aspects and establish environmental criteria for

plantation establishment; • Survey stakeholder perception on large-scale plantation operations and other

relevant socio-economic aspects.

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2. INVESTMENT ENVIRONMENT

Mozambique is considered as one of the most promising countries in the Sub-Saharan Africa with steady economic growth and increasing political stability. The country has taken serious steps towards balanced development over the last decade after a long period of internal crisis. Since the end of 1980s Mozambique has implemented a national structural adjustment program, which has emphasized orientation towards efficient market economy. One part of the adjustment process is privatisation of productive assets. Apparent development opportunities in Mozambique have attracted increasing flows of foreign investments. The net inflows of direct foreign investments have increased almost ten times since 1995. In African context the growth of the investment level has been significant. The Ministry of Agriculture and Rural Development in Mozambique – also in charge of forest administration – has put remarkable efforts in elaborating effective forest policy already since the beginning of 1990s. In Mozambique forestry is recognized as a sector, which can promote rural development, stimulate local and regional economies and thus reduce poverty. Until present the government has put emphasis mainly on promotion of sustainable management and utilization of natural forests as forest plantation development. Also the forest industry has, until present, concentrated in harvesting operations of the country’s natural forests. One strategic objective of the Mozambican forest policy is to promote private sector involvement in forest management in order to increase forest sector’s contribution in national economy. Promotion of industrial plantation development forms one key strategy in achieving the overall objective. Modern forest industry prefers uniform raw material that can be procured from fast growing plantations. Major potential to develop the forestry and forest industry sector in Mozambique lies in forest plantations. The new government of Mozambique (and in particular the Ministry of the Agriculture) has seen necessary to improve business environment in general and widen the base of the development of the rural areas. In the new development special attention will be given to establishment of forest plantations of (i) fast growing tree species suitable for pulpwood, and (ii) trees suitable for timber production. Recently the Ministry elaborated a national afforestation strategy with support from the Food and Agriculture Organization of the United Nations (FAO). The strategy determines the roles of the National Directorate for Forestry and Wildlife (DNFFB) and key stakeholders in plantation development. It is considered important that the government of Mozambique takes a leading role in plantation development and ensures its sustainable political support and commitment for the implementation of this strategy. The Mozambican Government has clearly expressed a strong interest to facilitate foreign companies to invest in forest plantations and form partnerships with local enterprises and communities. There is also a growing interest among foreign investors to enter Mozambique.

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3. METHODOLOGY

3.1 Overview

The methodology used in the study allowed the screening and assessment of large areas as well as simultaneous consideration of technical, economical, environmental and social aspects (Figure 3.1). Assessment of environmental and socio-economic aspects formed a fundamental part of the study building foundation for the sustainability of future plantation development in Zambezia. The first phase in the methodology is based on GIS and remote sensing eliminating areas not feasible for plantation development under applied criteria. The screened areas that were filtered out with the criteria formed the starting point for the technical, environmental and social field surveys. The GIS-screening applied quantitative methodology while the methodology used in field surveys, was qualitative and descriptive. Figure 3.1 General Study Concept

COMPONENTS OUTPUTS

GIS -BASED SCREENING OF

POTENTIAL AREAS

Identify areas with no preliminary restrictions.

FIELD SURVEY AND TECHNOLOGY

Technical description of screened ares, aplicable plantation technology, species

selection, yield prediction, and value chain costs.

ENVIRONMENTAL ASSESSMENT

Conservation criteria in plantation establishment.

SOCIO-ECONOMIC SURVEY

Description of socio-economic conditions and stakeholder perception on forests and

plantations.

PROVINCE LEVEL INFRASTRUCTURE

ANALYSIS

Description of current infrastructure and it´s future development

INTERNATIONAL MARKET ANALYSIS

Description of market situation and future tendencies for selected markets and forest

products

Feasibility Study on Most

Promising Areas

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3.2 GIS Screening

The initial selection of potential areas for fast-growing plantations was assessed using GIS and Remote Sensing. In the first phase the criteria were defined for excluding the areas not viable for plantations. The following criteria were applied in Zambezia: • Rainfall over 1 000 mm/year • No native forests or forest concessions • No permanent agriculture • No areas with high conservation value (mangrove) • No areas with existing reservation (protected areas, game reserves, forest

concessions etc.) • No wetlands or hazard for flooding • No water catchments • No water polygons (lakes) • No steep slopes or mountain areas • No areas with high population density • Minimum uniform area 5 000 ha The corresponding information layers in the scale of 1:250 000 (in digital format) were collected from different sources in Mozambique and combined. In the second phase the remaining areas were economically ranked based on population density and existing transport infrastructure. Population density and different infrastructure layers (distance to ports, distance to major roads, etc.) were given calculation weights according to their importance to the economic feasibility in plantation establishment. Using the weights, restriction values were assigned to the study area (from 1 to 6 -very light to very heavy restrictions). Finally the screened areas in the first phase were overlaid with the optimization surface and the areas of interest were selected and mapped in detail. The GIS –is screening methodology is described in detail in Annex 1.

3.3 Field Survey

With help of the information and maps produced in the GIS –screening, a rather extensive field survey was conducted in each of the six areas of interest. All accessible roads in the screened areas were considered as sampling routes, and every 5 km a assessment plot was laid. The visible area was considered to represent the plot area, typically meaning an area of 5-10 hectares. Information registered in each plot consisted of the following: • Presence of human settlements • Land availability • Existing vegetation and current land-use • Topography • Soil physical characteristics • Feasibility for large scale and small scale plantations • Main restricting factor for plantation establishment The variables and used classification system varies between the surveyed areas, because the survey methodology was under development and some minor details were changed during the fieldwork. The variables and classification systems used in each of the surveyed areas are in presented in detail in Annex 2. The simple data analysis of qualitative variables consisted of capture of the field information on spreadsheets and calculation of percent proportions for each class and by registered variable. For measured quantitative variables mean values were

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calculated for each surveyed area, based on individual plot data. All data processing was done individually for each of the six areas of interest. In last surveyed area (Milange) a numeric Feasibility Sum method was tested as follows: • An individual feasibility value (0 to 5) was given to each of the characteristics

assessed. • By weighting these individual values from 0 to 1, a plot Feasibility Value was

calculated as a weighted sum of individual variable values. • The final feasibility value for a given area is then calculated as a mean of the

individual plot values. Feasibility values >4.0 are considered as “good potential”, and 3.0-4.0 as “regular potential”.

An example is shown in Table 3.1. Table 3.1 Feasibility Value - Calculation Example

Characteristic Description example Feasibility value (F)

Used weight (W)

F x W

Land availability “Land available with some restrictions”

3 40% 1.20

Vegetation “High bush 3-7 m” 3 20% 0.60 Topography “Flat or nearly flat” 5 20% 1.00 Soil characteristics

“Sandy loam, some compacted, no gravel”

4 20% 0.80

Feasibility sum of the plot 3.60 Estimates on spatial extent of feasible areas (hectares) are based on field survey and were calculated as proportions form rather extensive assessment plot data and then extrapolated to correspond the respective study area. Therefore all field survey-based hectare estimates must be considered as indicative figures only.

3.4 Environmental Criteria

The screening methodology eliminates the major sensitive environmental features that are easily identifiable on the maps, e.g. catchments, wetlands, rivers, slope, formally protected areas, concessions and areas of extensive natural forests (Annex 6.) The main objective of the environmental verification process was to identify and assess on ground level environmental factors that have not been eliminated or identified in the GIS -screening mask due to issue of scale and map accuracy. Qualitative and descriptive environmental verification process was carried out in the field throughout the study areas by using a-priori-information from GIS –screening process and technical field surveys. Special attention was given to vegetation type and composition in order to identify features and support mechanisms such as Hydromorphic soils, High Conservation Value Forests, natural undisturbed Grasslands, sensitive water catchments, etc.

3.5 Socio-economic Assessment

Field interviews and data collection was carried out to characterize relevant socio-economic aspects and stakeholder perception in the areas screened areas. Field assessment was integrated in field surveys of the forestry team and it focused on households and members of communities living along the main roads.

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A total of 33 non-structured group interviews were conducted with encountered families and people concentrated in local commercial establishments. In addition, some schoolteachers were interviewed. Following a general guiding checklist for the main issues (Annex 8), interviews were made as informal conversation with no structured format or forms to fill. The relevant information obtained from the interviews was recorded afterwards.

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4. EUCALYPTUS WOOD TRADE IN A GLOBAL PERSPECTIVE

4.1 Pulpwood Trade Patterns in the International Markets

Demand and Supply The world demand for wood raw material is expected to grow firmly along with the population, incomes and consumption patterns. Major increase is expected to take place in Asia, mainly in China. Japan will remain the major importer of wood chips in the future, and China may emerge as a new market. China has announced several large-scale pulp and paper projects, but availability of fibre remains a constraint. China’s massive 13 million ha planting program of fast-growth, high-yield (FGHY) plantations is lagging far behind its schedule. Japan is moving away from native species chip imports into plantation wood chips (25/75 ratio in 2005). In terms of market size, Japan was the biggest market with 11 million bone-dry metric tons (BDMT) of hardwood chips (eucalyptus) and 2.7 mill. BDMT softwood chips (pine) imports in 2003. Hardwood is gaining ground over softwood in Japan’s imports. Australia is the main source, but South Africa increased its shipments to Japan fast after 2001. Hardwood chip supplies from the USA have collapsed after 2000, and the country was expected to turn into a net importer in 2004. Brazil and Vietnam are the latest suppliers to Japan. Chile has totally replaced its Nothofagus spp. and pine exports with eucalyptus chips. Chile may continue to increase exports. The needs for imported high-quality fibre in Europe are also growing. Some of the wood deficits in Asia and Europe will be met by imports of pulp and paper but the imports of chips will remain quite significant. A novel feature to Europe is the emergence of chip imports for bio energy, which has already happened e.g. between Sweden and Brazil. In the USA, International Paper has imported eucalyptus chips from Brazil. The most potential future suppliers to Asia include at least Russia, Australia, New Zealand and Chile. In the United States, pulpwood and wood pulp imports are projected to increase, but imports will remain small relative to domestic supply. Japan is gradually getting more hardwood chips from foreign plantations owned by Japanese companies. Prices Price variation between shipments and contracts varies a great deal depending on several issues such as the size, longevity and frequency of the contracts. Long-term contracts on regular shipments have more stable prices than spot shipments to supply sudden needs. The average prices in different countries, however, are quite similar. For hardwood chips, based on long-term development average prices were on the level of USD 45-55 per m3 (FOB, in 2000). Average import prices (CIF), on the other hand, have more variation and are markedly higher than export prices due to shipping charges, which may be very different depending on transportation distances, for example. In Europe and Japan, chip imports fetched USD 75-85 per m3 on average (2000). In 2003, the Japanese market price was USD 126/BDMT. The trend has been declining since 1995. But Australian chips have become more expensive in 2003.

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Trade Arrangements Wood chip trade is typically arranged through international trading houses, which arrange shipping and forwarding. Many forest industry companies have expressed interest to buy pulpwood and chips directly from overseas suppliers without intermediaries to control costs. Due to high transportation costs, the most likely mills to purchase eucalyptus are located close to ports that are capable of handling large vessels carrying wood chips. Normally chip vessels unload their cargo to two or three mills, and they are first routed to the deepest port.

4.2 Early Players in Eucalyptus Solid Wood Products

There is a widespread belief that plantation-grown eucalyptus will play a more significant role in the international solid wood product industry and trade. The future growth in global demand for industrial round wood will be to a large extent satisfied from plantations, while supplies from natural tropical forests will decline due to constraints on access and sustainability. In the early-1990s, some of the world’s leading forest industry corporations started to investigate markets and establish pilot plants. The pioneers included e.g. Aracruz Celulose, Weyerhaeuser, Mondi, Boise Cascade, Fletcher Challenge and ENCE. Latin America has been the main “laboratory” for most of these players. The largest part of the world’s eucalyptus saw-wood continues to be produced by Australia with its extensive natural eucalyptus forests. But even there, the focus is moving to plantation-based production. Yet, one must remember that eucalyptus saw-wood, for instance, is just below 2% of the global output of sawn hardwood, or approximately 0.5-1.0 million cubic metres. Prospects for expansion have, however, been noted around the world. A large number of industrial eucalyptus growers are now developing with saw-log growing regimes, or mixed regimes for both logs and pulpwood from a single site. Figure 4.1 World’s Eucalyptus Saw-wood Production (2002)

Australia 53%

Argentina 7%

S. Africa 5%

Other 13%

Brazil 19%

Uruguay 3%

The following characterization can be given on progress with eucalyptus by key countries: Saw-wood: • Brazil by far the leader in lumber, flooring, veneer. • By 2008-10, Uruguay will be the leader in clear wood supply. • Chile species mix is aimed mainly at pulp.

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• South Africa was the early leader but has not maintained focus. • Australia – still mainly old growth and “re-growth”, plantation supply aimed at pulp,

sawlogs are coming in the near future. Trade names like Victorian ash, Tasmanian oak, EcoAsh, etc. are used on eucalyptus wood.

• Argentina – long history of sawing and peeling, but limited supply of sawlogs. Plywood and panels: • Industrial scale production in e.g. China, both mixed species (combi) and pure

eucalyptus plywood: not the preferred species though. • Long-time use for hardboard and particleboard production in Brazil

(Eucatex/Duratex). • Usage for MDF relatively new, but popular in Thailand, also Masisa making high-

density Eucalyptus MDF for laminated flooring. For MDF, eucalyptus is mainly used in applications with overlay.

4.3 New Global Business and Marketing Model

One reason why the international trade looks upon eucalyptus with growing interest is the need to prove the legal and sustainable origin of wood in any product form. Today certified wood products are clearly on display in the leading European and US DIY (do-it-yourself) outlets and builders’ stores: They showcase e.g. certified eucalyptus shelving, edge-glued boards, garden furniture, decking, flooring and similar products. The most innovative companies operate globally to take the best value out of eucalyptus e.g. in the following way (case Scancom company): • E. grandis is grown with a prolonged 12-16 yrs. rotation and processed in a basic

sawmill in Brazil. Drying capacity has been added recently. Basic product placing is the following:

- Low-grade boards are manufactured into garden decking tiles, then marketed to Europe, where this product has a growing market.

- Best grades are shipped to Scancom’s factories in Vietnam, and processed into garden furniture components. Then they are exported to Denmark, the Netherlands, and other to European countries.

• This concept optimizes low-cost FSC-certified raw material from Brazil, affordable container freights to Asia, Vietnam’s affordable and skilled labour, and finally European market demand for non-tropical wood in outdoor furniture. Final product is sold with FSC label.

For more forest products and markets -related information, see Annex 9.

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5. AREAS OF INTEREST FOR FOREST PLANTATIONS

5.1 Brief of the Country-wide Results

In early 2005 Savcor Indufor, together with Rural Consult, financed by the Ministry of Foreign Affairs of Finland, carried out a desk study and GIS –screening of plantation potential of five provinces in Mozambique (Sofala, Manica, Zambezia, Nampula and Niassa). A total of almost 7 million theoretically potential hectares were identified, most of that in Zambezia, Nampula and Niassa (2.1 million ha, 1.5 ha million ha and 2.4 million ha, respectively). Based on annual precipitation data, the most suitable locations for commercial forest plantations were considered to be the central and northern parts of Mozambique, while southern part appears to be too dry for commercial plantation forestry. Based mainly on rainfalls and yield of eucalyptus plantations in Swaziland, an initial productivity of 20 m3/ha/a with 10-year-rotation was estimated for eucalyptus, with potential to increase the yield at least some 35% during next ten years. Direct first year’s planting cost was estimated as USD 531/ha and stumpage cost of the eucalyptus wood was estimated as USD 8.30/m3, while road-side price was calculated as USD 14.90/m3. Mill-gate cost with 130 km transport distance was estimated as USD 20.50/m3. Regarding the existing infrastructure in Mozambique, the study concluded that the main paved road network in the provinces is reasonable. Gravel and dirt roads are generally in rather bad condition. In total there are over 3 000 km of railroads in Mozambique. The rail network is currently under improvement, and it is managed by CFM (Mozambique Ports and Railroads). The ports that would best serve the future forest plantations are Beira, Nacala, Quelimane and Pemba. The desk study identified wood chip exportation to Japan (and other countries) as a feasible business opportunity. According to the study, the increasing demand for high quality printing and office grades will increase the demand for high quality pulpwood, i.e., wood coming from the plantations. In this context the establishment of fast growing, industrial forest plantations were seen as an attractive investment within the next 10-40 years. Main strengths identified in Mozambique include the availability of local labour at relatively low cost and that local people and their representatives have a positive attitude towards forest plantations. As a weakness the lack of large-scale, successful fast-growing plantations was mentioned. Also it was outlined that local people do not have experience in plantation fieldwork – a large training program will be needed before the start-up of the operational phase of any new plantation development project. The importance of community involvement in plantation development, including tree farming and small-scale plantation enterprises, were analysed and widely recognized.

5.2 GIS Screening Results

By using GIS data in the preliminary phase, the areas of interest for plantation establishment can be selected with relative ease. The accuracy of final result though depends on the quality of the data used. The screening was conducted using information from different sources, which were further processed and integrated into one database. The screening was then carried out using different GIS analysis methods. The areas of interest were identified and mapped in detail, after which the fieldwork was conducted in the selected areas.

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According to the screening, the province of Zambezia has plenty of theoretical potential for establishing plantations in terms of the area available. Major limitation throughout the province though, is the population density. The forested areas are sparsely populated, but the open or semi-open areas are usually occupied at least to some extent. Most of the communities are relying on shifting cultivation and therefore the population is also moving a lot. Population density is therefore difficult to ascertain without intensive fieldwork or very detailed, up-to-date land use classification. The total area of Zambezia province is approximately 10.3 million hectares. Based on the GIS screening, 1.2 million hectares were identified as theoretically potential areas for plantations (Table 5.1, Figure 5.1). These areas located mostly in the northern parts of the province, in the districts of Gilé, Ilé, Alto Molócue, Milange, Gurúe and Namarroi. Another large potential area existed in the district of Morrumbala in the Southeastern part of Zambezia. Table 5.1 Potential Areas and Their Extent

Area Districts Screened area of interest1 (ha)

1 Gurúe, Milange, Namarroi 345 000 2 Alto Molocue 152 000 3 Gilé 295 000 4 Ile 230 000 5 Morrumbala 92 000 6 Milange 105 000

Total 1 219 000 Note: (area no. refers to Figure 5.1). Based on the transportation distance and the population density, the most optimal areas existed in the districts of Gilé and Alto Molócue. This is due to the closeness of the Nacala port, Cuamba-Nacala railroad and the highway N1. Also especially the northern parts of Gilé are relatively sparsely populated. To assist the field study, the six areas of interest (Figure 5.1) were mapped in detail (1:250 000), considering the land use, infrastructure, population and topography (Figure 5.2). Maps were used to focus the fieldwork in screened land areas and thus facilitate the next phase of the study.

1 Excludes <5 000 ha polygons.

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Figure 5.1 Screened Areas and Economic Restriction Values

Figure 5.2 Example of One of the Screened and Mapped Areas

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5.3 Field Survey Results

5.3.1 Extent of Feasible Areas

The used methodology did not allow accurate area calculations of identified feasible and non-feasible sites. An indicative estimate of feasible areas was derived from the proportion of feasible observation plots in a given study area, and then extrapolated over total area of interest, as explained in chapter “3.3. Field Survey”. In case of identified more uniform areas in Gurúe, the extent of areas was confirmed by rough visual Landsat -satellite image interpretation. Over all six surveyed regions there are two main limitations for large-scale plantation establishment: (i) rural population density, and (ii) existing vegetation. Areas with low population density and high land availability the vegetation tends to be too high to be cleared for plantation establishment (classified commonly as “low forests” or “degraded low forests” 8-15 m tall). Vice versa areas with low existing vegetation (“Low bush <3 m“ or “High bush 3-7 m”) usually present high population density and intensive land-use, resulting low land availability. Due to this it was found difficult to identify, with the used methodology, large areas (>10 000 ha) with high proportion of available land and low existing vegetation. The estimated planting potential both for large scale and small-scale plantations is presented in Table 5.2 and Table 5.3. Main factor identified as restriction for large scale plantations is land availability due to dense population density and subsequent intensive current land-use. The other limiting feature is relatively high exiting vegetation (>8 meters high more). Approximately 124 000 ha of large uniform areas were identified in Gurúe –area (Figure 5.3). On the other hand the potential for small-scale plantation establishment and tree farming is practically un-limited. Even so, the presented figures are indicative only, fact that must be considered when establishing planting objectives by the Government or other stakeholders. Table 5.2 Identified Potential for Large-scale Plantations in Zambezia

Area, ha Gurue Alto Molocue Gile Ile Morrum-

Bala Milange Total Share,%

Area not feasible 151 000 50 000 115 000 94 000 41 000 105 000 556 000 46Feasible w/restrictions 65 000 72 000 130 000 123 000 41 000 0 431 000 35

Scattered areas w/o restrictions 5 000 30 000 50 000 13 000 10 000 0 108 000 9

Identified large uniform areas 124 0002 0 0 0 0 0 124 000 10

Total screened area 345 000 152 000 295 000 230 000 92 000 105 000 1 219

000 100

2 26% of the area was classified as feasible without restrictions, and remaining 74% potential with light restrictions by existing vegetation and land-use.

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Figure 5.3 Sampling Route and Identified Feasible Areas in Gurue

Table 5.3 Identified Potential for Small-scale Plantations in Zambezia

Area, ha Gurue Alto Molocue Gile Ile Morrum-

Bala Milange Total Share,%

Area not feasible 162 000 33 000 198 000 115 000 27 000 95 000 630 000 52

Feasible w/o restrictions 183 000 119 000 97 000 115 000 65 000 10 000 589 000 48

Total screened area 345 000 152 000 295 000 230 000 92 000 105 000 1 219 000 100

5.3.2 Nature of Feasible Areas

Surveyed areas considered as feasible for plantation establishment clearly have below-average population density; consequently they are areas with low-intensity land-use and availability of land for plantations is adequate. Typically these are abandoned agriculture areas with no actual productive use. Existing vegetation is commonly re-grown secondary vegetation of <3 meters or 3-7 meters high and has no important environmental or biodiversity values. Dominating topography is almost without exception flat or nearly flat, or gently undulating – i.e. feasible for mechanization of site clearing, soil preparation and harvesting operation if desired. Soils in sites considered as feasible are of medium texture (clay loam, loam, sandy loam) with sufficient drainage capacity. Compacted soil layers are usually found in 20 to 40 cm.

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5.3.3 Characterization of Surveyed Areas

The surveyed areas in Zambezia can be characterized as follows: • Population density. In general the average population density in surveyed areas

vary from 14 persons/km2 to 40 persons/km2. Morrumbala and Gilé are the less populated areas.

• Land-use and vegetation. Typical productive land-use forms are agriculture (shifting agriculture) and scattered fruit trees. The rest of the areas are commonly without any productive land-use and carry woody vegetation of variable height and density.

• Topography. Topography in Zambezia is commonly gently ondulating, flat or nearly flat. Nearly all areas allow mechanization of forest operations, such as site clearing, soil preparation and harvesting.

• Soils. Most of the soils are medium textured loams, sandy loams or clay loams with acceptable internal drainage. Most soils present compacted structures in less than 40 cm. Also some heavy textures soils and light sandy soils are found but in less extent. Most common soil colours are brown and reddish.

Some relevant numeric information by area is given in Table 5.4. More detailed description by area is given in Annex 3. Table 5.4 Numeric Information on Surveyed Plantation Areas Zambezia

Character Gurue Alto Molocue Gile Ile Morrum-

Bala Milange

Rainfall (mm) 900-1 500 1 100-1 700 1 100-1 300 1 100-1 600 850-1 100 1 000-1 700Dry months (<50 mm / month) 5 6 6 5 6 3

Mean annual temperature (C) 21.5-23.0 22.0-23.5 23.5-25.0 23.5-25.0 23.5-25.0 23.0-25.0

Elevation (m) 650-850 450-750 200-450 200-450 150-450 150-500

Distance to port 530 km (Nacala)

420 km (Nacala)

330 km (Nacala)

440 km (Nacala)

280 km (Beira)

480 km (Nacala)

5.4 Plantation Technology

5.4.1 Potential Species

Based on prevailing climatic and soil conditions in Zambezia, the following preliminary species recommendations are given: • Eucalyptus (pure species): Eucalyptus urophylla, E. camaldulensis • Eucalyptus hybrids: E. grandis X E. urophylla, E. grandis X E. camaldulensis • Pines: Pinus caribea var. hondurensis, P. mercusii (continental provenances) • Other species: Gmelina arborea (melina), Tectona grandis (teak) Final species selection in any plantation effort must be based on species trials. For species recommendations by area, see Annex 3. 5.4.2 Yield and Rotation

Yield potential and rotation varies according to species, objective of the plantation (pulp / saw-logs) and site quality (rainfall and soil). General yield prediction for typical Zambezian sites is given in Table 5.5. Given initial mean annual increment (MAI) figures assume adequate site selection, use of reasonably well-adapted genetic material (seed), intensive silviculture and good operational quality. The potential MAI figures refer to a expected productivity with advanced tree improvement, including

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deployment of superior genetic material through vegetative propagation (clones). Growth rates can also be lower in exceptionally low quality sites, or higher in exceptionally good sites. For more detailed information by surveyed areas, see Annex 3. Overview on plantation establishment techniques in given in Annex 4. Table 5.5 Yield Potential and Rotation in Typical Zambezian Plantation

Sites (Total MAI)

Species Initial MAI (m3/ha/a)

Potential MAI (m3/ha/a)

Rotation for pulp

Rotation for saw-logs

Eucalyptus ssp. 18-25 25-32 8 years 12-15 years Pinus ssp. 11-15 15-20 10-12 years 20 years G. arborea 18-22 28-32 8 years 12 years T. grandis 9-11 12-14 N/A 25-30 years

5.5 Financial Viability

The calculated direct planting cost for a 8-year-rotation pulp wood plantation can be considered internationally competitive, being low cost labour and low cost access to land the main advantages. Plantation cost depends on type of existing vegetation to be cleared, and is estimated to vary from USD 663 to USD 837 per ha. Table 5.6 summarizes the planting costs and Table 5.7 harvesting and transport costs. The cost of wood production through the whole value chain, from plantation establishment to harvesting and transport, is presented in Figure 5.4 as a function of plantation productivity (mean annual increment, MAI) and transport distance. Table 5.6 Summary of Direct Plantation Establishment and Maintenance

Costs for 8-year-Rotation Pulpwood Plantation in Zambezia

Concept Direct cost (USD/ha in 8 years)

Concession fee (+35% over net area) <1 Mechanical site clearing: a) “Low bush < 3 m” 125 b) “High bush 3-7 m” 299 Mechanical soil preparation 100 Access roads 12 Pre-planting weed control (optional) 39 Seedlings 60 Seedling transport 3 Planting (1300/ha + blanking) 6 Fertilization (2x) 125 Weed control (manual, 2 years) 130 Forest guards 29 Phytosanitary control 25 Fire break maintenance 8 Total for “Low bush <3 m” –type vegetation USD 663/ha Total for “High bush 3-7 m” –type vegetation USD 837/ha

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Table 5.7 Summary of Estimated Harvesting and Transport Costs for Pulpwood in Zambezia

Concept Direct cost USD / m3

Chainsaw harvesting 1.39 Manual debarking 0.45 Off-road transport (750 m) 2.06 Sub-total harvesting 3.91 Loading 0.38 Road transport (300 km x USD 0.08) 24.00 Sub-total transport 21.65 Road maintenance 0.50 Total harvesting and transport USD 28.79 Figure 5.4 Estimated Direct Mill-gate Cost for a Pulpwood Operation in

Zambezia3

0,00

5,00

10,00

15,00

20,00

25,00

30,00

35,00

40,00

45,00

50,00

55,00

8 10 12 14 16 18 20 22 24 26 28 30 32

MAI (m3/ha/a)

MIL

L G

ATE

CO

ST (U

S$/m

3)

STUMPAGE

ROAD-SIDE

100 KM

300 KM

500 KM INITIAL YIELD 2nd ROTATION

Wood production cost per se in Zambezia is internationally very competitive due to low plantation establishment and management costs (stumpage cost USD 5.00 per m3 or less). Stumpage cost correlates directly only with plantation productivity, and improved yield will decrease the wood production cost proportionally. On high yielding plantations (>25 m3/ha/a) stumpage cost is as low as USD 3.00/m3.

3 Does not include administration costs.

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The financial viability and competitiveness of a plantation based wood production is generally determined by calculating and bench-marking FOB mill-gate or port-gate cost of the wood. In case of Zambezia, and like on most plantations worldwide, mill-gate cost of the wood is strongly influenced by transport distance. With the operative costs identified in Zambezia, pulp-wood plantations should be established within 300 km radius form the planned mill or exporting port; this guarantees a mill-gate cost of USD 33.00/m3 or less. Thinking of exporting eucalyptus chips to e.g. Japan, the port-price at the moment in Durban, South-Africa, is around USD 50/m3 (solid wood base), leaving though reasonable profit margin for eucalyptus chip export. In case of more valuable tree species and/or value added products, such as teak or sawn wood, better sales price allow longer transport distances, but at cost of investor’s profit margin; transport distance must always be minimized and taken into consideration in project planning. The estimated internal rate of return (IRR) for pulpwood plantations range from 9.7% to 24.5% as a function of plantation productivity and wood price (calculated for 300 km transport distance):

Wood Price FOB (USD/m3) MAI (m3/ha/a)

47 50 53 15 9.7% 12.8% 15.5% 20 14.4% 17.7% 20.5% 25 18.3% 21.6% 24.5%

5.6 Infrastructure and Its Future Development

5.6.1 Overview

Since the end of the civil war in 1992 and along with the sustainable economic growth of the country, the Mozambican government have been undertaking considerable steps toward the rehabilitation of the country’s infrastructure, with particular emphasis going to road and bridges rehabilitation, energy supply improvement and port rehabilitation and their management outsourcing. In general the current infrastructure is considered sufficient for commercial scale plantation establishment; once a plantation concession area has been identified, it is possible to carry out a more detailed infrastructure analysis. Locally it may be necessary to realize minor infrastructure improvements, especially for road network and bridges. Certainly concession areas will require construction of internal access roads in plantation areas as a standard plantation establishment activity. Before plantation harvesting operations start, the whole logistic chain from plantation to markets must be studied and optimised. Most of the smaller roads used for wood transport will then require improvements, or at least constant maintenance to support the increased transport volume. An important constraint in Zambezian infrastructure is lack of railroads. The six study areas are located approximately 280-530 km of road-distance from nearest international port. Wood transport costs thus will play a major role in financial feasibility of any plantation development, especially in case of low value-added products.

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5.6.2 Road Network in Zambezia

In Mozambique about the half of the national road network (more than 26 000 km) are feeder roads, i.e. unpaved roads with seasonal circulation. The main roads accounts for about 20% of the network, while the remaining 30% are considered secondary roads. The feeder roads, in general, connect the districts and the primary and secondary roads to the provinces. Due to the efforts undertaken by the government, road rehabilitation and maintenance have been increasing, with the number of roads in good or fair conditions, rising from 57 percent in 2000 to 70 percent in 2003. The existing road network in the Zambezia province consists of about 5 240 km. The classification of the roads and their current condition is presented in Table 5.8. Table 5.8 Existing Road Network in Zambezia

Road condition (km) Road classification

Extension (km)

Share,% Good Reasonable Poor Bad Very

bad Primary 767 14.6 235 449 19 64 0Secondary 1 351 25.8 440 597 111 0 203Tertiary 2 490 47.5 436 777 400 437 440Non classified 633 12.1 0 83 90 349 111Total 5 241 100.0 1 111 1 906 620 850 754 In line with the national road sector reforms, there is a twofold roads and bridges rehabilitation program in Zambezia, the first one implemented by the provinces and the second one under direct implementation of ANE – Administração Nacional de Estradas (National roads Administration Agency). By 2009 the Zambezia province will have considerably improved road network and in condition to serve the needs of the agro industry, including the studied potential plantation areas (Annex 5). 5.6.3 Railroads

The railway infrastructure in Mozambique (over 3 000 km) was conceived to connect the Mozambican ports with the land-locked countries, the so-called “Hinterland”. The rail network is currently under improvement. The public company CFM (Caminhos de Ferro de Moçambique - Mozambique Ports and Railroads) is the owner of the network. The CFM is undergoing a profound reform program, consisting of labour retrenchment and above all of the outsourcing of the network management. In Zambezia the Quelimane-Mocuba line is the only existing railroad in the Zambezia province. This line is not working and out of order since the eighties. Owned by CFM, the line is considered not viable for the near future and therefore shall not be taken in consideration for plantation developments. 5.6.4 Ports

In Mozambique there are three categories of ports: primary, secondary and feeder. The primary ports are Maputo, Beira and Nacala. The ports of Quelimane, Inhambane and Pemba are secondary ports. The feeder ones are the remaining ports, which often lack any operational infrastructure. The primary ports offer better services and possess greater capacity for the reception of vessels, while the secondary ports present several operational difficulties both to receive vessels and to operate machinery to handle the cargo. The feeder ports are practically all out of order.

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The port of Quelimane is the main port in Zambezia. The port is undergoing a deep rehabilitation program (about USD 12 millions investment), ending by 2007, aiming to increasing it’s capacity, namely: • Duplicate it’s handling capacity to about 650 000 t/year; • Offer a 24 hours a day services; • Handle two vessels simultaneously, reducing the demurrage costs; and • Register improved handling conditions for the load and offload of different cargos,

including container cargo. The port of Quelimane (Capital of the Zambezia province) is under private management for at least 15 years. After the rehabilitation, the port of Quelimane will offer better services and possess greater capacity for the reception of vessels. Possible international ports for forest products export operations are Nacala and Beira. The characterization of the ports is presented in Table 5.9. Table 5.9 Suitable Ports to Export Plantation Wood from Zambezia

Port and cargo type Capacity (ton) Depth (m) Beira (primary port) - General cargo - Containers

1 700 000 950 000

9 12

Nacala (primary port) - General cargo - Containers

1 000 000 600 000

10 14

Quelimane (secondary port) - General cargo - Containers

650 000

-

8.5 -

5.6.5 Energy

By 2014 all the district capitals in Zambezia province will be connected to the national power network, thus improving significantly the local power supply; EDM is willing to go into specific agreement to install a specific power line for the project, subject to discussion, according to the needs and the end location of the project. Annex 5 presents some information on current energy sector infrastructure and it’s future development. 5.6.6 Transport Alternatives and Average Distances

The following transport alternatives can be considered for transport of plantation wood in Zambezia: • Plantation road side Road transportation Quelimane Harbor • Plantation road side Road transportation Railroad (Nacala corridor line)

(OPTIONAL) Nacala harbor • Plantation road side Road transportation Railroad (Beira corridor line)

(OPTIONAL) Beira harbor Average road distances form evaluated areas to ports is 280 to 530 km, as presented in chapter 5.3. The following unit costs are considered for large scale and constant wood transport: • Road transport: USD 0.06-0.10/ton/km (current price on international routes) • Railroad: USD 0.03-0.04/ton/km (current price on Beira and Nacala corridors)

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5.6.7 Concluding Remarks

By 2009 the infrastructure in the Zambezia province will be improved significantly, offering suited conditions for forest project implementation. By then all the district capitals in Zambezia province will be connected to the national power network, thus improving significantly the local power supply. EDM is willing to go into specific agreement to install a specific power line for a industrial project, subject to discussion, according to the needs and the end location of the project. With the conclusion of the rehabilitation program the road network in Zambezia province will be improved and in condition to serve the needs of the agro industry, particularly forestry. With the conclusion of the rehabilitation program, the port of Quelimane will offer better services and possess greater capacity for the reception of vessels.

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6. ENVIRONMENTAL AND SOCIAL CONSIDERATIONS

6.1 Environmental Criteria

6.1.1 Overview

The objective of Environmental criteria is to ensure a sustainable forest plantation industry, which minimizes impacts and enhances biodiversity and other environmental values in plantations and adjacent areas. The most important values associated with Sustainable Forest Management are: • Water: quality, quantity and wetland habitat; • Soil: quality, quantity and nutrient status; • Species biodiversity: ecosystem function and important species; • Forest health: against pests, diseases and fire; • Economic services: optimal yield and value of both timber and non-timber

products and services; • Human resource development: training, occupational health and safety, access to

resources; • Heritage: aesthetic, cultural and spiritual values; • Research and development: improved productivity and environmental

management; • Compliance to Legislation. Thus it can be seen that there are many diverse aspects that need to be considered during environmental planning. The environment is a highly integrated function and is recognized to consist of three major components: (i) the physical environment, (ii) the social environment, and (iii) the financial environment. These components are inter-dependant and cannot be separated. Thus, when considering and environmental factor, it is critical to consider the influence that other components will have. The ‘big picture’ is always important as it will help to allocate the importance to issues and decisions. Furthermore, due to possible irreversible impacts of the plantation development, the principle of adopting a “precautionary approach” is always recommended, particularly where an element of doubt exists. In broad sense, prevailing environmental conditions in the study areas in Zambezia allow sustainable and environmentally sound plantation establishment, considering the environmental criteria is adequately applied. Decisions for conversion of current land use e.g. agricultural and heavily utilized natural forest areas needs to be assessed in a balanced manner considering all the other factors in the specific locality. The objective must be certainty of a more productive and sustainable land use. See Annex 7 for operational level environmental criteria. 6.1.2 Hydrology

All major water catchments must be avoided. On slopes of lesser catchment significance, care must be taken with the selection of appropriate soil types to ensure that erosion and sedimentation of the water systems do not occur. Areas where significant wetlands and flood risk occurs, must be avoided. The preservation of riparian and supportive vegetation is essential not only to ensure function but also for biodiversity.

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6.1.3 Soils

Soil types are not only important for sustainable site productivity, but from a stability aspect to avoid erosion and deep rutting. Soils play anther important role in plantation forestry in that they determine the type of natural vegetation that will be supported adjacent to commercial stands. 6.1.4 Conservation of Biodiversity

Plantation developments must conserve natural areas for the maintenance of biodiversity. Historically a good balance between commercial and conservation areas has been determined in Southern Africa (South Africa, Swaziland and Zimbabwe) by the application of accepted international environmental guidelines. In terms of area, an average of 30-35% of the area should be conserved. This ratio still allows for a financially viable area to be managed. Conservation areas in excess of 40% of total plantation area create an abnormally high indirect cost and reduce net returns. Conservation areas less than 30% usually indicate inadequate delineation of conservation areas. Adherence to this ratio will satisfy requirements in a balanced manner, from both a conservation and commercial plantation viewpoint. Within this conservation area, a sound judgment must be made, by considering all natural features and their ecological function, on which will be conserved and protected. This protection should represent all types of vegetation and features occurring naturally in that area. Any small areas of open forest of dense woodland should as far as possible be conserved within these conservation zones. There may still be a loss of some these forested areas, but adequate areas will have been further protected on a landscape scale through exclusion of larger intact areas in the screening process. The conversion of smaller fragments of natural woodland and forest into plantations must be seen in the above recommendation. If the objective of a more productive and sustainable land use can be achieved with certainty, the conversion is justified. The conservation and protection of unique landscapes must be identified prior to large-scale plantation establishment. This aspect has significant impacts on cultural heritage, aesthetics, and the potential for eco-tourism. Poor location of plantations and even individual stands can result in the loss of these values. 6.1.5 Conservation of Protected Areas

These areas will be eliminated in the screening process. However, it is of importance to consider impacts that plantations may have on such areas. Most important is the impact on hydrology; so there needs to be careful assessment of the proposed location of the plantation relative to the hydrological movement that the protected area depends upon. Secondary considerations are aspects such as ensuring corridors for the movement of species to and from these areas, and the potential for species to move between the protected area and plantation’s own protected areas. Further secondary impacts are the disruption of aesthetics due to the proximity of plantations, and the spread of weed species to protected areas.

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6.2 Socio-economic Considerations

6.2.1 Socio-economic Characteristics of Study Areas

In general the study areas can be characterized as marginal, with under-developed infrastructure and service sector, little economic activity, extensive land-use tradition, low technology based subsistence agriculture (e.g. corn, cassava, beans) and very little production of cash-crops (cotton, pineapple and tobacco). Additional income sources result mainly from occasional work that few people manage to get in road construction companies, mining companies and local SMS enterprises (markets, grain mills and oil processing facilities). Two major problems identified throughout the study areas are unemployment and availability of drinking water. The income does not suffice to supply people’s basic needs and they have difficulties in repairing the boreholes for drinking water, educating their children, and acquisition of seed and tools for agriculture, etc. The establishment of forest plantations in Zambezia will contribute for poverty reduction and improved livelihood on a local and regional level. Establishment of large-scale forest plantations will create work opportunities in remote rural areas with few other development opportunities (Figure 6.1). In case of family/community level tree farming, plantations will offer opportunities for additional income of local families, thus diversifying their income structure. Figure 6.1 Direct Employment Opportunities Created by a Large scale

Plantation Project in Two Different Yield Scenarios that Produce the Wood Required by a Pulp Mill

EMPLOYMENT OPPORTUNITIESfor 4 million m3/a

1,500 2,000

1,900

1,900

250 250

- 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

22 m3/ha/a 30 m3/ha/a

Man

-yea

rs (=

perm

anen

t job

s)

Off-road transportChainsaw harvestingPlantation

6.2.2 Patterns of Local Settlements

The overall housing tendency is the construction of permanent houses occupying a narrow strip along the main roads, usually leaving behind in the inland patches of abandoned agriculture land. Even so most families maintain some scattered shifting cultivation areas in the inland. Two main forms of settlements were observed: one where houses are located in somewhat concentrated, village or community forming pattern, and other where

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houses are located randomly over the given area, forming a scattered mix of households and shifting agriculture areas between native vegetation. The concentrated settlement pattern is more desirable from the viewpoint of plantation development and land-use planning. The scattered settlement pattern means lower land-use intensity, and occupies large areas, without leaving much space for plantation development. 6.2.3 Relation of Stakeholders with Native Forests

People collect from forests products such as poles for building, firewood, and occasionally native fruits and some medicinal plants. In general forests are considered as areas for future agriculture expansion. Shifting cultivation expansion is the main reason for clearing the natural vegetation, independently of the type, state and quality of the current forest cover. Most of the members of local communities are not aware of the potential value of the native forest. Only practitioners of traditional medicine have knowledge of medicinal plants and they consider forests an important resource. Local people are not concerned clearing native low vegetation for plantation establishment, especially if it results in any benefit for them. In line with this, people are not interested in protecting native forests. 6.2.4 Local Experience in Tree Planting

Eucalyptus trees (mainly E. camaldulensis, some E. grandis and E. urophylla) are well known in rural environment in general. Since about ten years ago some NGO’s (e.g. ALISEI and World Vision) are promoting tree planting and donating seedlings, but apparently are not offering technical assistance for appropriate plantation establishment. Planted trees are usually very few, established in lines or as individual shade trees close the household area. At the moment, rural people have no interest in expanding reforestation areas, due to lack of knowledge and uncertainties regarding the type of the end-product and lack of markets.

6.3 Stakeholder Perception

Overall the receptivity for the establishment of fast growing tree plantation is positive though in some zones people prefer wait for the decision and acceptance from government or local/traditional leaders. In order to secure periodic fixed salary, most people prefer to be employed by an enterprise for tree planting activities to establishing plantations by themselves. This also reflects lack of confidence on plantation grown wood markets and a business itself. Once there is an example on how to successfully establish plantations and a client who is buying the wood, the community/family level tree farming scheme will be more interesting among rural people. It is perceived important that trees should produce income monthly or at least annually rather than only at the end of the rotation period in tree farming scheme. The land-use planning of a large-scale plantation project must consider some 2-3 ha for agriculture areas per family. Traditional shifting agriculture can be developed towards more permanent and more productive agriculture by provision of technical assistance, improved seed material and fertilizers and tools by the forest plantation developer.

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Main expectative regarding the establishment of large-scale plantations is the creation of employment opportunities, either through direct employment as labour in forest companies, or indirectly through self-employment initiatives. The presence of planting companies is expected to accelerate the local infrastructure development.

6.4 Environmental Services: Carbon Sequestration

6.4.1 Overview

The emission reduction calculations of the proposed CDM afforestation/reforestation project are based on the assumption that the “system boundary” of the project will be limited to such activities on which the project has adequate decision-making power itself. The projects CDM system boundary is depicted in Figure 6.2. For the proposed project the following issues are described: • Identification of the option • Quantification of the greenhouse gas emission reduction potential • Assessment of the potential market value of the Certified Emission Reductions Figure 6.2 Overview of the Production Chain

Afforestation/ reforestation

CO2

Harvesting

CO2

Clearing of vegetation

CO2

6.4.2 Identification of the Option

The CDM eligibility of plantations (afforestation/reforestation), which are specifically targeted to produce raw material for a pulp mill for which investment decision has been already taken before CO2 consideration can be challenged. Such plantations may not fulfil the additionality -criteria. However, in the calculations for the potential carbon sequestration, and respective CER potential are presented (Table 6.1). The baseline (the most likely scenario without the project intervention) land use alternative for these 40 000 ha of lands to be afforested/reforested is shrub land with “low bush” (<3 m high) and “high bush” (3-7 m high). There is no valid estimation about the biomass content of the shrub lands and therefore the baseline carbon sequestration/emission reduction is set to be zero. Table 6.1 Supposed Planting Program

Year 2006 2007 2008 2009 2010 2011 2012 2013 Total Planting area (ha)

5 000 5 000 5 000 5 000 5 000 5 000 5 000 5 000 40 000

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6.4.3 Quantification of the Greenhouse Gas Emission Reduction Potential

In the calculations four different wood growth scenarios has been used. The scenarios and their productivity figures are given in Table 6.2. The mean annual increment (MAI) of 18 m3/ha is used to describe the "regular" initial productivity for seed based plantations. The MAI of 25 m3/ha is the initial yield for better sites. With research and development activities and deployment of superior clones these MAIs can be raised to 25 m3 ha 35 m3/ha for the second rotation. Table 6.2 Plantation Productivity in Different Scenarios

Mean annual increment (MAI) (m3/ha/a) Scenarios 1st rotation Following rotations

1 Regular site, seed based plantation

18 m3 /ha/a 18 m3 /ha/a

2 Regular site, 2nd rotation with clones

18 m3 /ha/a 25 m3 /ha/a

3 Good site, seed based plantation 25 m3 /ha/a 25 m3 /ha/a 4 Good site, 2nd rotation with clones 25 m3 /ha/a 35 m3 /ha/a The conversion factor for estimating whole tree above-ground volume is 1 1744. The conversion factor for estimating dry biomass weight from the whole tree volume is 0.55. The conversion factor for estimating carbon content of dry biomass is 0.486. One ton of carbon is equivalent to 3.67 tons of CO2. The baseline carbon sequestration/ emission reduction is zero (see above). The rotation is eight years, including the planting year. The first harvesting will take place in the end of the year eight when the whole plantation area planted during the first year will be cut. Reforestation will take place through replanting in the beginning of the year nine (i.e. first year of the next rotation). All the harvested areas will be replanted (i.e. the forest cover will be maintained). Only the above-ground biomass is included in the present calculations. The omission of the below-ground biomass accumulation can be also considered as an allowance for estimation errors and for carbon release in site clearing (risk avoidance). If and when more information is available, and the risk allocation can be reduced, the total biomass growth can be included in the calculations presented. Due to the even planting and harvesting schedule of the plantations, the carbon stock will stabilize at the end of the first rotation in scenarios 1 and 3 (year 8), or at the end of the second rotation in scenarios 2 and 4 (year 16).

4 Widely used conversion factor. 5 Widely used conversion factor. 6 Widely used conversion factor.

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Table 6.3 Carbon Sequestration Potential in Different Scenarios

Scenarios Max growing stock

(million m3)

Max CO2 accumulation

(1 000 t)

Max value of CERs

(USD million)

Max value of CERs

(USD/ha) 1 Regular site, seed-based

plantation 3.0 3 050 13.7 340

2 Regular site, 2nd rotation with clones

4.1 4 250 19.1 478

3 Good site, seed based plantation

4.1 4 250 19.1 478

4 Good site, 2nd rotation with clones

5.8 5 950 26.8 670

Figure 6.3 Carbon Stock Accumulation in Different Scenarios

0

1 000

2 000

3 000

4 000

5 000

6 000

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

1234

Scenario

1 000 tCO2

6.4.4 Potential Market Value of the Certified Emission Reductions

The potential market value of the carbon sequestration and respective Certified Emission Reductions (CER) will depend on the development of the global markets for CERs. Presently the price spread of CERs is USD 3-6 per tCO2. The estimated potential market value of CERs from afforestation/ reforestation/ plantation operations over the years 2006-2028 using average CER price of USD 4.5 per tCO2 in different scenarios varies between USD 13.7 – 26.8 million (USD 340 to 670/ha).

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7. RISKS AND THEIR MITIGATION

Risk analysis is a fundamental part of any investment analysis. Assessment of potential risks and their sources forms a basis for risk management and mitigation. The principle in all businesses is that we will not take additional risk unless we expect to be compensated with additional return. The risk/return trade-off means that investors require higher returns for investing on more risky projects. The overall country risk in Mozambique is still considered high, however, it has decreased over last years due to the stable political environment and increasing flow of foreign investments. In the past the agreements with government agencies and foreign investors were not always consistent, i.e. a past agreement or commitment could be turned down by a new decision-maker, which increased the uncertainties. Also high transaction costs and “red tape” are still causing significant additional costs. In forestry long gestation period, insecure land tenure and lack of market information are sources of general business risks in Mozambique. In addition, availability of suitable land, plantation yield, forest fires and potential conflicts with local rural populations are sources of significant uncertainties. There are also other risks related to environmental impacts and forest products markets, which are common to all plantation projects throughout the world. The high risks are reflected in high cost of capital and high-expected rate of returns that are driving the local investors to maximize short-term returns. This kind of behaviour is naturally harmful for development of sustainable forestry business. The identified risks, their probability, severity and mitigation measures are listed in Table 7.1. The Government of Mozambique plays an important role in mitigation of land availability and social issues -related risks, e.g. local stakeholder consideration, continuity of land tenure and consistency of agreements. Table 7.1 Risk Analysis

Risk Probability Severity if not solved

Mitigation Measures

Plantation -related risks Land availability problems

++ +++ Assure land availability in quantity and quality in feasibility studies prior to final investment decision.

Low yield ++ ++ Adequate site selection, matching species to site, modern plantation technology.

Forest fires ++ ++ Active fire prevention, monitor and fire fighting program.

Environment -related risks

Negative environmental impacts

+ ++ Implement plantation program according to common international environmental criteria.

Social issues -related risks

++ ++ Transparent and realistic proposal to the stakeholders, project development in line with the proposal, active contact and communication with the stakeholders.

Market -related risks + ++ Definition of forest products and target markets at feasibility study phase.

Low (+), Moderate (++), High (+++)

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8. ROADMAP FOR PLANTATION INVESTMENTS

8.1 Roles of Investors, Communities, SMS Enterprises and the Government

In Mozambique, like in all other plantation country as well, different stakeholders must have clearly defined and commonly understood and accepted strategic roles in plantation development. The role of investors is to bring in business management and project planning skills, technology, and especially knowledge forest products and markets. Ideally investor is already running a similar business elsewhere and is able to guarantee markets for the produced wood in the future. The role of communities is, after accepting the project proposal under commonly agreed terms, to guarantee a stable and safe operating environment for the proposed project. In addition to having numerous working opportunities in the project, they are expected to un-officially support the investors and project management by acting as forest guards in their area of influence. Also communities and individual people may have opportunity to establish plantations by themselves, under guidance of the plantation project staff. In this “tree farming” -scheme the conditions and terms vary between projects. Commonly plantation project provides technical assistance and perhaps seedlings, and tree farmers establish the plantations on their own land by themselves. Produced wood will be sold to the company at commonly agreed price. The role of small and medium sized enterprises in plantation development can be diverse. They can establish small and medium sized plantation under similar terms and conditions than individual tree farmers. Also SMS enterprises usually play an important role as contractors in plantation establishment, maintenance, harvesting and transport operations. The role of the Government is vital in plantation development. First of all forest plantations must be seen as a relevant opportunity to develop forestry sector and the rural environment in general. Secondly it is Governments role to create attractive and non-burocratic business environment. This includes at least legislation, tax system and incentive system for forest plantations. Land acquisition or access to land, necessary permits and authorization of management plans must be facilitated at all levels of the Government. In case of Mozambique, the Government will act as a first contact between the investors and the communities - also it is expected that the Government will actively participate in solving the problems between the investor and the community, if necessary.

8.2 Technology, Management Skills and Human Resource Development

Being Mozambique an incipient plantation country, adequate technology, management skills and experienced human resources are not locally available. At first hand nursery technology and machinery required for site clearing and soil preparation must be imported – in this sense the vicinity of South Africa offers an opportunity to choose and import the correct technical solutions and equipment. Use of foreign contractors for site clearing and soil preparation is a feasible option in the short term, while local capacity is being developed in medium and long term. Harvesting is less of a problem, thanks to experience from harvesting operations of native forests. Anyway harvesting equipment need to be modernized. Any large-scale plantation project needs a comprehensive in-house training program at all levels of the organization. Meanwhile more general training programs can be organized as short courses and should include the following:

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Topics Target groups Management skills and project planning with focus on plantations

Project managers, government officials, post-graduate university students

Nursery design and construction, seedling production

Nursery managers and supervisors, government officials, post-graduate university students

Land-use planning, plantation technology

Plantation managers and supervisors, government officials, post-graduate university students

Silviculture development, tree improvement

Project managers, R&D managers, government officials, post-graduate university students

Plantation harvesting and wood transport

Project managers, harvesting and transport managers and supervisors, government officials, post-graduate university students

In terms of local technology development, the establishment of field trials for species and seed source selection is one of the most urgent tasks at country and provincial level. It is recommended that the Government takes initiative and promotes the establishment of well-designed field trials as soon as possible. This will accelerate the development of future plantation investments by saving time and making potential yield prediction more accurate.

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9. CONCLUSIONS

9.1 Investment Environment

Investment environment and opportunities are better in forest plantations than in native forest management. Mozambique is taking its first steps in plantation development. Currently forest plantations have a clearly defined strategic role in country’s development plans and the investment environment is positive - recently prepared national afforestation strategy is a sign of this. The Mozambican Government has clearly expressed a strong interest to facilitate foreign companies to invest in forest plantations. There is also a growing interest among foreign investors to enter new African countries, including Mozambique. Lack of detailed information on plantation establishment opportunities in Mozambique is making the progress rather slow.

9.2 Forest Products and Markets

The world demand for wood raw material is expected to grow firmly along with the population, incomes and consumption patterns. Major increase is expected to take place in Asia, mainly in China. Japan will remain the major importer of wood chips in the future, and China may emerge as a new market. The needs for imported high-quality fibre in Europe are also growing. The most potential future suppliers to Asia include at least Russia, Australia, New Zealand and Chile. Price variation between shipments and contracts varies a great deal depending on several issues such as the size, longevity and frequency of the contracts. For hardwood chips, based on long-term development average prices were on the level of USD 45-55 per m3 (FOB, in 2000).

The future growth in global demand for industrial round wood will be to a large extent satisfied from plantations. Due to high transportation costs, the most likely mills to purchase eucalyptus are located close to ports that are capable of handling large vessels carrying wood chips. In the early-1990s, some of the world’s leading forest industry corporations started to investigate markets and establish pilot plants for sawn eucalyptus timber, mainly in Latin America. The largest part of the world’s eucalyptus sawnwood continues to be produced by Australia with its extensive natural eucalyptus forests. But even there, the focus is moving to plantation-based production. Prospects for eucalyptus sawn wood expansion have been noted around the world. A large number of industrial eucalyptus growers are now developing with sawlog growing regimes, or mixed regimes for both logs and pulpwood from a single site. The main competitive edge of eucalyptus products solid wood products is undoubtedly based on fast growth and high yield on monoculture plantations with relatively compact location and easy harvesting. On the other hand, lower yield per round wood unit in comparison to natural timber call for immediate improvements in wood drying, jointing and edge-gluing technologies, and wood preservation and finishing of products. Processing technology development look promising for eucalyptus in the future.

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9.3 Extent and Nature of Potential Areas

From the total area of Zambezia (10.3 million ha) 1.2 million hectares were identified as theoretically potential. According to conducted field surveys, the potential for small-scale (1-20 ha) plantation establishment is very large, estimated as 589 000 ha (48% of the studied areas). In Gurue (Gurue-Lioma-Molumbo -areas) four areas with a total of 124 000 ha were identified as potential ones for large-scale plantation development. These areas have below –average population density and low vegetation cover. The availability of land for plantation development must be confirmed. Field surveys revealed two main constraints for large-scale plantation development: i) land-use intensity due to high population density, and ii) relatively high and dense existing vegetation. These two factors correlate inversely: where population density and land-use intensity is low (i.e. where there are land available for plantations), amount of existing vegetation biomass is a constraint for plantation establishment and requires intensive clearing operations. In most cases this is not environmentally nor economically feasible.

9.4 Yield Potential

Growth conditions in the study area in terms of rainfall and soil characteristics are variable and certainly they are influencing on plantation yield potential, being areas with higher rainfall and soils with deeper free rooting depth the best ones. The preliminary species recommendation includes selected eucalyptus (MAI 18-25 m3/ha/a on typical sites), selected pines (11-15 m3/ha/a), Gmelina arborea (18-22 m3/ha/a) and Tectona grandis (9-11 m3/ha/a). Potential yield with advanced tree improvement and deployment of superior clonal material is at least 40% higher. Expected rotation for pulpwood is eight years for eucalyptus and 10-12 years for pines. Under saw log regime optimal rotation is 12-15 years for eucalyptus and 20 years for pine.

9.5 Financial Feasibility

Wood production cost per se in Zambezia is internationally very competitive due to low plantation establishment and maintenance costs. An important constraint is lack of railroads. The six study areas are located approximately 280-530 km of road-distance from nearest international port. Wood transport costs thus will play a major role in financial feasibility of any plantation development, especially in case of low value-added products. With the operative costs identified in Zambezia, pulpwood plantations should be established within 300 km radius form the planned mill or exporting port. In case of more valuable tree species and/or value added products, better sales price will allow longer transport distances.

9.6 Infrastructure

In general the current infrastructure is sufficient for commercial scale plantation establishment. Once operations are commenced in a given area, locally it may be necessary to realize minor infrastructure improvements, especially for road network and bridges. Certainly concession areas will require construction of internal access roads in plantation areas as a standard plantation establishment activity. Most of the smaller roads used for wood transport will require improvements once harvesting operations commence, or at least constant maintenance to support the increased transport volume.

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9.7 Environmental Considerations

The developed screening methodology eliminates the major sensitive environmental features that are easily identifiable on the maps, e.g. catchments, wetlands, rivers, slope, formally protected areas, concessions and areas of extensive natural forests. If data is available, screening should be carried out in 1:50 000 scale. Field verification process is required to identify and assess the environmental factors that have not been eliminated or identified in the GIS-screening mask due to issue of scale and map accuracy. The environmental conditions in the study areas in Zambezia allow sustainable and environmentally sound plantation establishment, considering the environmental criteria is adequately applied. Decisions for conversion of current land use, e.g. agricultural and heavily utilized natural forest areas, needs to be assessed in a balanced manner considering all the other factors in the specific locality. The objective must be certainty of a more productive and sustainable land use.

9.8 Socio-economic Considerations

All the study areas can be characterized as marginal, with under-developed infrastructure and service sector, little economic activity, extensive land-use tradition, low technology based subsistence agriculture and very little production of cash-crops. Two major problems identified throughout the study areas are unemployment and availability of drinking water. The average income does not suffice to supply people’s basic needs. The establishment of forest plantations in Zambezia will contribute for poverty reduction and improved livelihood on a local and regional level. Establishment of large-scale forest plantations will create work opportunities in remote rural areas with few other development opportunities. In case of family/community level tree farming, plantations will offer opportunities for additional income of local families, thus diversifying their income structure. Rural communities’ main interest in plantations lies in opportunity to create jobs and employment opportunities. Local people need an enterprise to employ them. Their preference is for the establishment of plantations through entrepreneurs, so they will secure a monthly salary. When selecting the plantation areas, reserving 2-3 ha for each local family for subsistence agriculture should be considered.

9.9 Risks and Their Mitigation

In Zambezia the identified risks are related to availability of suitable land, plantation yield and social issues. Their probability and severity, if not solved, is low to moderate. The Government of Mozambique plays an important role in mitigation of land availability and social issues -related risks, e.g. local stakeholder consideration, continuity of land tenure and consistency of agreements.

9.10 Roles of Different Parties, Financial Options

Different stakeholders must have clearly defined and commonly understood and accepted strategic roles in plantation development. The role of investors is to bring in business management and project planning skills, technology, and especially knowledge forest products and markets. The role of communities is to guarantee a stable and safe operating environment for the proposed project. Also communities and individual people may have opportunity to

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establish plantations by themselves. The role of small and medium sized enterprises in plantation development can be a contractor and/or planter. The most important role of the Government is to create attractive and non-burocratic business environment, including incentives, legislation and public administration in general. The Government will act as a communication channel between the investors and the communities, if necessary.

9.11 Methodological Improvements

As the methodology used in present study does no give reliable estimates on spatial extension of feasible/non-feasible areas, it is recommended to acquire and carry out visual interpretation of high resolution (min. 5 meters) Spot 5 –satellite images. This can be done instead of economical ranking of the areas, being this later of little usefulness at pre-feasibility study phase. The visual satellite interpretation must be carried out only in areas determined as theoretically potential in GIS/Remote Sensing screening -phase. The main objective and output of the visual satellite interpretation phase is to create a land-use classification and vegetation cover classification layers over study areas. With help of this, all fieldwork will be focused on feasible areas only (low population density and low vegetation cover) and fairly accurate estimates on spatial extension of feasible areas are obtained. Visual satellite interpretation -phase will decrease the amount of fieldwork, but slightly increases the costs of the study because of the acquisition of satellite images must be acquired. As a trade-off, the study will provide much more accurate and useful information for all stakeholders interested in plantation establishment in Mozambique.

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NDF Zambezia Report 150206 Rev NO PIC1

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Transcript of NDF Zambezia Report 150206 Rev NO PIC1