Scotland’s BSW Timber’s €41m Investment in Gomilsko on Schedule (Interview)

By , 25 Sep 2018, 11:50 AM Business
Scotland’s BSW Timber’s €41m Investment in Gomilsko on Schedule (Interview) bsw.co.uk

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STA, 24 September 2018 - Scottish sawmiller BSW Timber expects to have all permits for the construction of a EUR 41m facility in Gomilsko near Celje in the coming months and launch production in 2020 as scheduled. The company's commercial director Alex Brownlie told the STA the chance of administrative delays had been factored into the original timeline. 

Brownlie stressed that the postponement of construction, planned for September, had not been caused by BSW but was a result of administrative procedures, which were however running their normal course.

"Within the set timetable we always allow a certain degree of flexibility of individual processes," he explained.

A public examination of the municipal spatial plan is under way and when it is completed "we will need a detailed spatial plan and a building permit, and we need to know what will be in the facilities so that we can properly design them," he said.

BSW, which is using the extra time to work on the detailed technical design of the equipment, still has "May 2020 as the target for the first log to be cut" in Gomilsko.

A planned pellet facility in Šoštanj is scheduled to follow a month later with a chance to speed it up, which will however depends on equipment suppliers in a currently very busy industry.

BSW is to secure the EUR 41m via an equity mixture that includes the company's own funds, an already approved loan by the Royal Bank of Scotland and loans from Slovenia.

Touching on the criticism BSW and the government have faced from existing small sawmills in Slovenia, Brownlie said that the company was very sensitive to concerns within Slovenia, since it intends "to be an active participant in the economy of Slovenia".

Echoing the points made by Economy Minister Zdravko Počivalšek, he said each industry needed small, medium-sized and large companies to be successful.

He said processes would be put in place that will allow BSW to buy raw products from existing Slovenian sawmills to add value to them and then send them to the international market, where BSW has a strong presence. "What we can do is provide economies of scale."

Brownlie also pointed to Slovenia's wood processing industry strategy from 2012, which envisaged three large and modern sawmills. "Our investment and business plans really fit hand in glove with that strategy and 2012 is quite a long time ago now."

He said that BSW was already engaged with sawmills around the county and noted that "while we recognise their concerns, there is also still a large amount of value being left in Slovenian forests".

"An appropriately scaled industry that can flex" can "keep the value here in Slovenia", he said, highlighting as an example the inability of the current industry to react to the December 2017 windthrow.

As to why BSW, which is processing in Great Britain and Latvia, picked Slovenia, Brownlie highlighted the country's geostrategic position, strong in-country logistics, a long history of sustainable forest management, and its eurozone membership.

Asked about the new ruling coalition's plans to increase capital gains taxation, he said that BSW was following the developments but that "something of that nature is for the country to decide...its sovereign decision and it is what it is".

"What we're encouraged by is that the overall business climate in Slovenia is very positive to business and commerce. Taxes will evolve over time as they do in all countries. We're relaxed about that, we've been at this for long time, have seen lots of different tax regimes."

Reiterating that BSW is in Slovenia for the long-term, Brownlie stressed that it is also interested in working with other Slovenian businesses, "particularly around the construction sector".

Existing companies in the country involved in wood products "need security of supply, which gives them confidence to invest in developing their products, expanding their product range", he said, adding talks were already under way with some of them.

Commenting on BSW's business results, Brownlie said "the picture has improved" after three difficult years, with the sector, cyclical in nature, having gone "through some tough times globally".

The industry is resurging as the economies around the world are picking up and while Brexit is creating some uncertainty in the UK, "overall the economy in the UK is strong and has a good degree of resilience".

Brownlie also feels that the general outlook for the wood processing industry is very good, timber being a sustainable material with excellent properties.

He noted that Slovenia has a strong hand to play due to its large quantities of quality timber and knowledge of how to manage it sustainably.

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