Govt considering modern sawmill proposal

http://www.stabroeknews.com/index.pl/article?id=56524317

Govt considering modern sawmill proposal
By Johann Earle
Stabroek News
Wednesday, July 11th 2007

A cabinet sub-committee is currently reviewing the proposal of a US
company seeking approval to begin value adding in the wood sector and
which says that there is too much wastage in the sawmilling process in
Guyana.

Simon and Shock International Inc (SSI) is promising a modern sawmill
operation unlike anything seen in any of the tropical forests in the
world. The company said that it would have a recovery rate of close to
70 per cent and over and the little waste it produces will be used to
power its kiln-drying plant. This means that logs will be 100 per cent
utilised.

SSI expects total employment to exceed 112 with at least 85 per cent
hired locally. Employment opportunities for local staff will range from
senior management through to starting positions. The company plans to
invest over US$26M in three years.

Minister of Agriculture Robert Persaud, under whose purview forestry
falls, has sent the company's proposals to a Cabinet sub-committee for
final review before being sent to Cabinet for approval.

If success comes its way, the American company started by Kelly Simon
and Mike Shock will be set up in Linden in what is billed as a move
that would revitalise Guyana's lumber industry.

Questioned as to when approval should come the company's way, Minister
Persaud said that there is a process and it might seem to the company
that this is taking too long. He is supposed to meet with the company
shortly and will explain the situation to them.

According to the company, Persaud when meeting SSI before was enthused
with the operation that the company proposed.

The company is worried that because of the long wait for approval by
the Guyana Government its financial backers may want to pull the plug
on Guyana for other countries like Brazil.

The company, which is primarily a lumber company, wants to buy timber
from other concession holders with a view to establishing long term
supply contracts which they could use to gain financing from foreign
banks to purchase equipment.

Simon said that the company will be buying about half of its logs from
other concessions and that it was mandatory for the company to have its
own concession.

He said that SSI has spent the last three years formulating and
implementing a new and practical approach to sawmilling in Guyana. He
said that the company has proposed to Government the most advanced
hardwood sawmill ever constructed in the tropics. He said that today
there are five other such mills: four in the US and one in Europe.

"We propose to build the sixth, and most advanced in Guyana.

This mill will be able to service both the foreign and domestic markets
with tens of millions of board feet of both green and kiln-dried lumber
manufactured to the highest specifications in the world, at prices that
would be more than competitive," Simon said.

He said that the computer controlled, laser driven mill will achieve
recovery rates that regularly exceed 65 per cent and at times will
exceed 70 per cent, leaving enough waste to heat the kilns necessary to
capture the vast market for kiln-dried lumber in both Guyana and the
overseas market.

SSI began the process in late 2004 when it approached Prime Minister
Sam Hinds to find a site for the operations.

He said that an attractive site was located after four months of
working with the Prime Minister, the Lands and Surveys, Linmine and
many others.

The CEO said that in early 2005, SSI engaged Go Invest to work out the
details of a Memorandum of Understanding (MOU) that would be acceptable
to both Government and SSI.

This, he said, took a few additional months and resulted in a draft MOU
that is ready for completion should the rest of the company's
objectives be achieved.

He said that the company was in constant contact with the Guyana
Forestry Commission and in November 2005, the GFC and the Ministry of
Agriculture arranged an open meeting of all the relevant stakeholders
in forestry that would be affected by the new technology.

According to the CEO, the company went through a 14-month due diligence
process with the GFC and he said that "no quarter" was given since it
was during a very difficult time in which to apply for a new
concession.

As a direct result of the talks with the Government, the company
offered three written guarantees. Firstly that SSI will not export logs
from Guyana, since it is a lumber company and not a logging company;
that SSI will build an advanced milling complex in Linden before any
logging activity can take place; and, that if SSI does not build the
advanced mill in Linden in a specific time period, all logging
concessions granted to SSI by the Government will be returned uncut.

SSI has been working in the hardwood sector in Guyana for about ten
years and the company's primary business has been in the export of sawn
hardwood lumber manufactured by local producers, into the US and
international markets.

The company said that for a host of reasons, it decided that the only
way to fully satisfy its current and future customer base was to
construct its own manufacturing facility in Guyana.

Some years ago the company began an extensive review of the Hardwood
Saw Milling industry in Guyana and other tropical hardwood producing
countries.

The company also researched the move toward sustainable forestry and
its impact on the markets for tropical hardwood lumber.

The results of these initiatives drew the company to a very concise
conclusion regarding the type of mill needed to satisfy the global
marketplace, along with the implementation of management techniques to
complement such a mill.