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Safcol Meets Yorkcor In The High Court

Release Date: 19/02/2002 14:02
Code(s): YRK
Wrap Text
Monday, 18 February 2002

The High Court, Pretoria today began hearing a legal action brought by forestry parastatal the South African Forestry Company Limited (Safcol), against York Timbers Limited, the operating subsidiary of JSE-listed forest products company Yorkcor. Safcol is seeking a declaratory order that it validly terminated Yorkcor's long term sawlog contract in November 1998. This litigation follows a series of court battles between Safcol and Yorkcor since 1995, concerning log price increases and Yorkcor's refusal to
relinquish its rights in terms of two "evergreen" sawlog supply contracts concluded in 1968 and 1970 with the Government. Yorkcor contends, inter alia, that it is entitled to "fair and adequate" compensation terms of the "evergreen" sawlog supply contracts, as well as in terms of the South African Constitution. Two related hearings of the Competition Tribunal are also pending.
A significant number of well established sawmillers have given up operating since yielding to demands of higher sawlog prices and shorter terms of tenure. The standard contract, which Yorkcor maintains is still enforceable, expressly stipulates that the intention is to grant the sawmiller security of tenure indefinitely. In 1998, the High Court confirmed a consent order to the effect that, inter alia, Yorkcor is not obliged to renegotiate the duration of its indefinite tenure.
The national forestry assets controlled by Safcol and the Department of Water Affairs and Forestry are currently under the hammer in terms of a privatisation process that could involve the award of tenure of up to 70 years for successful bidders, The state forests that have supplied Yorkcor since the 1970s are included. The Minister of Water Affairs and Forestry gave Yorkcor five years' notice of termination of a 1987 evergreen contract over three forests in the Drakensberg escarpment in December 2001.
Environmental experts have been mandated by Yorkcor to show that the changed land-use is unviable and without merits. If or when Yorkcor goes, its job- providing industry near Bushbuckridge/Acornhoek and its social upliftment programmes amongst the neighbouring communities will go with it.
It widely believed in the industry that the Department and Safcol need to lift the constraints imposed by these 30-year-old "evergreen" contracts to make way for a conservation area near the Kruger National Park and for disposal in the privatisation process to preferred consortia. Yorkcor and another sawmill in the Eastern Cape are resisting.
These Safcol v Yorkcor proceedings follow the application to the High Court in Pretoria by Yorkcor for the committal for contempt of court of the Minister of Water Affairs and Forestry and his Director-General. That action, which was postponed, stems from the alleged failure to honour several judgments of the High Court and the Supreme Court of Appeal. Ends ISSUED FOR : Yorkcor Limited CONTACT : Solly Tucker (012) 804 9730/083 456 9900 FAX NO: : (012) 804 8611 E-MAIL : Sol@yorkkcor.co.za ISSUED BY : TISH STEWART PR ASSOCIATES CONTACT : Tish Stewart (011) 325 4195 Cell: 082 443 6399 FAX NO : (011) 325-4199 E-MAIL : Tish@tspr.co.za DATE : 19 February, 2002

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