Could you give us a brief overview of your professional career?
I have been in Africa since 1977; I started out in Sierra Leone in commodity trading and came to Liberia in 1980. Before 1977, I spent several years in the Middle East, the Far East and the United States in the same food commodity market. When I came to Liberia in 1980, I was able to negotiate a concession agreement with the Government for Hotel Africa, which was built for the OAU conference in 1979. After we took over, we added a lot of attractions to the existing hotel especially in the entertainment field. Within a few years the operation of the hotel became very successful, I then started the B W distributorship under the name Gibacol Motors, a small aircraft charter company "Gibacol Airlines", and participated in several other ventures with the Timber Investment Company (Timco) and I have been in this field now for over 14 years. Of course, the civil crises that took place in 1990 put us back a lot and we had to leave the country for a while. I returned to Liberia in January 1991 and I have been here since then. I was able to keep the hotel going and had to make several renovations during the years. The Timber operations stopped for a while, but I was able to restart our activities in 1994. In view of the situation of that time we were unable to operate on the same level as before 1990. In 1997, a new government was elected and we were now ready to reactivate our operations to a normal level. I formed a new corporation, Royal Timber Company (RTC), which was a combination of several concession areas covering several different companies that I already owned. At that time it was still very difficult to obtain a substantial loan to purchase the required equipment and vehicles for a successful operation. I therefore contacted my various contacts in the industry to enter into a joint venture and eventually I was able to convince some of my friends in the Far East and we created the Oriental Timber Company (OTC).
Could you give us some details about OTC?
OTC presently has a concession agreement with the Government of Liberia covering about 3 million acres of forest. During the first phase of the investment, we brought in some 120 yellow machines and 100 trucks to start up operations. It was very difficult to find the required operators for these modern machines and trucks and we had to bring in about 600 expatriate workers to be able to get started and to train the local employees in various fields. You must understand that, during th last 8-9 years, there has not been any serious operation in the timber industry and many of the qualified operators have left the country or are unable to work at this time. We needed to find new people who have to be trained and prepared for the present equipment and trucks. Presently, after one year of operations the expatriates have been reduced by 50% and we have now some 1500 Liberian employees. We are building a new plywood mill in Buchanan where a six-line plant will be set up, and this plant is expected to be ready for operations in April or May 2001. The factory will provide jobs for an additional 2000 people. Of course, a lot of training is needed and we will have to bring quite a few technicians for a while to train our people on the job.
What was the amount of the initial investment?
The total investment in the first phase of the program was between 50 and 60 million USD. Since we started, an additional 20 million USD has been injected, and the plywood mill will require a further 60 million USD.
What benefits has the country had from the OTC activities?
Besides the creation of jobs in the operational areas, we have built a network of very expansive and accessible roads, the first one covering a distance of about 120km. It starts form Buchanan and connects the Cestos river bridge to Buchanan, the distance has been shortened and the travel time has been cut by more than 60%. In addition, we have built at least a further 200km in various roads. Greenville is now very easy to reach and we are currently building various roads that will connect Grand Gedeh to Bassa and other areas. We have also set up an agricultural project, which includes seed multiplication, provided for the training of local farmers for high yield rice production and where we will produce our own rice requirements. Of course, the business community in Bassa has had a significant increase in their trade volumes as people are spending more money than before, As an exercise of social responsibility, we have made available 500,000USD for the renovation of the Fendell Campus of the University of Liberia and we have currently imported generators to provide electricity for the city of Buchanan. OTC has opened a modern hospital in Buchanan, which is now used by the companies' employees and other residents of Buchanan. It goes without saying that we make substantial contribution to National Revenue.
Do you account for 1.1 million cubic meters?
No, certainly not, this was the total production of Liberia before 1990. Last year, our export production accounted for some 350,000cbm, we expect that this year we might be able to produce between 6-700,000cbm of which the largest portion will be in the plywood mill presently under construction. I should explain that people who have no knowledge of our industry create a very wrong impression about our operations. The area that is presently assigned to OTC is equal to the areas that were occupied by several different companies before the war, two of these companies were owned by me. These companies, operating in the same area, produced more than OTC present volume. It seems that we are doing a high volume only because the production is coming from one company.
Is the entire production exported?
For now, yes. But this will change as soon as the plywood mill is operational. We will then use all our peeler species for the factory and we shall transform at least 50% of our production to finished products.
What will be the production capacity?
Each of the 6 production lines is able to produce some 5,000cbm of finished product, which will require an input of about 10,000cbm. Therefore, the input capacity will be between 50-60,000cbm per month, but it also depends on the efficiency of the operation, the market requirements, as well as the availability of the raw materials in the areas where we are operating. | You are working with two main species, is that correct?
We work with two different types of wood, not species. There are species for the plywood mill, which we call peeler species, and species that are to be used for the sawmill industry, which we call hardwoods. We have a large quantity of Ekkie in our forest, which is being used in Europe for port construction and bridges. It is very hard, difficult to saw, but will endure in water for many years. We are now introducing our various species to the Far East where the market demand is much higher than in Europe.
Your plywood mill has a higher operational cost?
The plywood mill has a higher operational cost than other industrial timber processing operations. However, we expect to be very competitive in the African and European markets. 2cbm of raw material produce 1cbm of finished plywood. If you send your round logs form the production area, you are transporting 50% of waste and paying freight for something you are not going to use. We should have a better return on the investment as we are saving on freight. Presently, most of the plywood in Africa and Europe is coming from the Far East or South America, and we should be able to compete even if our operational costs here are higher.
What are your competitive advantages with some neighboring countries?
There are not many plywood mills in the neighboring countries, and certainly none of our capacity. We will be, by far, 5the largest plywood mill in West Africa, or maybe even in Africa.
In Gabon maybe?
In Gabon, most of the timber processing industries are in the sawmill area. A few plywood mills existed in Nigeria, but most of them have closed. Today, the plywood market is very competitive, and you have to be very efficient to be able to exist.
The plywood mill project will be operational in April. Is it the major investment planned for the coming year?
Certainly, the plywood mill is the major investment in the processing part of our operations, and it will become more important than our round log export department. However, until the factory is ready, the export department is keeping the company alive, though we are looking forward to a higher profit margin from the timber-processing department.
What percentage of your activity would it represent?
I think that the plywood mill will probably represent 60% of our income. It all depends on the world market, if the market is good ten we can use the full capacity and the income will represent a higher percentage of the total income.
How profitable do you expect to be?
Given the investment that has been made we do not expect to make profit in the immediate future. We have to look at the operation as a long-term project since the investment has to be set off over a reasonable number of years. We are also aware that some of the species we produce are not yet known in th market and we have to introduce them at competitive prices.
What is your opinion on the reforestation program?
The reforestation program is one of the most important facets of the continuing existence of our operations. First of all, we have to act in keeping with the International Ecological requirements. Many countries are requesting certificates indicating that the timber is produced in keeping with International standards. Secondly, it is very important to prepare sufficient timber reserves for the future of our operations. To achieve this, we are planting in our nursery newly introduced fast growing species as well as existing indigenous species at the same time. We are planting this year some 400,000 trees of which 50% are existing indigenous species, which are to be planted in the forest. The remaining ones are fast growing species, which are to be planted in plantations and can reach a diameter of 60cm in the next 7 years. If we plant 200,000 trees of this fast growing peeler species per year then we will have a new timber every year. At that time we are going to see a good return on our investment, as it will be easy to harvest these species since they are growing in plantations. We are also looking into the paper industry and we might have to plant special species for this type of industry.
You seem to have two loves; the Hotel and OTC. Which one do you love most?
These two industries are completely different "animals". The hotel operation is much more enjoyable if the market is booming as it used to be and you see many satisfied people in a luxurious setting, while the logging industry demands a very hard life in remote areas, very high investments and a continuous supply of spare parts and lots of technical problems.
What has been your most challenging and rewarding experience?
Both the Hotel Africa and the OTC operations have been very challenging but, at this stage, the OTC operations are functioning well and everybody is working, and we can see where we are going. The Hotel operation is presently not at the level that it used to be before the civil crisis, but I am sure that while the economy is being rebuilt the operational results are once again going to be very satisfactory.
What would be your message to our readers who are interested in the country?
Liberia has a lot of opportunities in many different fields. The land is very fertile and excellent for many different agricultural projects, rubber industry, palm oil industry and many others. There are other resources for various type of mining industries while our waters are very rich with fish. A prospective investor should come and visit Liberia to get a first hand impression of the country. The Government is investor friendly and we as OTC have had all the cooperation of the Government and the various agencies of Government and we are certainly planning further investments in the country. |
ORIENTAL TIMBER CORPORATION (OTC)