Burkina Faso's gold industry is set to decline, says the CEO of West African Resources. Boukary Diallo has attributed the downfall to militant ... attacks that have intensified this year as well as Russia's Nordgold shutting the Taparko mine in April.
The announcement comes at the same time as AFIP’s first acquisition of East African company Green Resources, the region’s largest forest development and wood processing company.
New Forests aims to develop Green Resources’ forestry plantation and wood processing business as well as use the company as an entry point to expand into the wider region, explains CEO David Brand.
Green Resources is an established sustainable forestry company, managing around 38,000 hectares of plantation forests in Mozambique, Tanzania, and Uganda.
“We made the specific decision to invest in Green Resources because it is a mature company, allowing us to consolidate the business while engaging with the local community,” says Brand.
“Consolidation will allow us to create an economy of scale and build efficiency for a sustainable commercial operation,” he says.
New Forests is the second largest forest management company, with AUD8.7m ($5.5 million) assets under management. The company manages a portfolio of sustainable timber plantations, conservation areas, carbon and conservation finance projects, agriculture, timber processing and infrastructure across Asia-Pacific, the US, Southeast Asia and Africa.
Development Finance Institutions, British International Investment (BII), Norfund and Finnfund also participated in the deal.
Consolidation will allow us to create an economy of scale and build efficiency for a sustainable commercial operation.”
“From start to finish, the deal took around 18 months to complete,” explains Lasse David Nergaard, director at Norfund. “It was a complex structure that took time to develop, but we are happy with the collaborative way in which the platform was developed.”
New Forests aims to raise a total of $500 million over the next two to three years from a much more diverse capital base, says Brand.
“Around 97% of the equity raised by New Forests across our platforms comes from institutional investors, pension funds, sovereign wealth funds and insurance companies and as we build a track record in the region and sector, we hope that private institutional investors will become much more involved in the platform,” he says.
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Moreover, working through an open-ended permanent capital vehicle such as the AFIP will allow New Forests to collaborate with a variety of investors and operate for decades into the future. “This will be essential to develop sustainable forestries,” says Brand.
Race to net zero
According to research by the World Economic Forum, biodiversity loss and ecosystem collapse are ranked among the top five threats to humanity in the next 10 years. Moreover, approximately half of the world’s global GDP – around $44 trillion – is at risk as a result of the dependence of business on nature and its services.
Meanwhile, emissions from agriculture and land use account for nearly a quarter of all human-caused emissions but remove around one-third of fossil fuel emissions emitted each year.
As such, reimagining how we use land and forests can both reduce carbon emissions and pull carbon out of the atmosphere.
This will be essential to develop sustainable forestries.”
As such, channelling investment towards deforestation and a focus on land restoration should be top of the agenda in the run-up to COP27, says Brand.
“This is one of the greatest urbanisation challenges in the world. We need to contribute sustainable building materials, categorise forest conservation as a climate solution and look at forestry as a means to create jobs and economic diversification,” he says.
“For us to do this and for us to achieve net zero, 25% of climate change funds must be channelled to changing the way we use the land but at the moment, it only accounts for 3%. So something needs to change,” says Brand.
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