SA Forestry Feature – July 2020

A long and winding road

A brief history of NTE from the pioneering days to the present …

NTE Company (Pty) Ltd is celebrating its centenary this year, a remarkable milestone for any business to achieve anywhere in the world. It’s been a long and winding journey, from the early, pioneering days of wattle planting and establishing a new business in the southern tip of Africa, riding out the impacts of two world wars, economic recessions, tree disease outbreaks and corporate takeovers along the way.

Tracing its origins all the way back to the Natal Tanning Extract Company Limited established in 1920, NTE has been at the centre of the development of the wattle bark extract industry in South Africa, and is today one of the world’s biggest producers of leather tanning agents. Fast-growing ‘wattle’ trees were first brought to South Africa from Australia around 1880 and were planted out by farmers in the Natal area for livestock shelter and firewood. When researchers discovered that the bark of the black wattle contained high concentrations of polyphenolic chemicals, commonly known as tannins, which can be used to soften animal skins for making leather goods, local farmers and manufacturers were quick to start exploiting these ‘champion’ trees.
Lyles Tannery in Pietermaritzburg was already extracting tannin from the bark of locally grown black wattle, and using it successfully in their tannery. Meanwhile wattle pioneer Sir George Sutton, along with farmers from the Noodsberg area, started exporting wattle bark to England and Europe where demand for tannin was high.
A number of wattle bark processing factories were established over the next few years, with new processes being developed to refine the product.
In 1915 the Natal Tanning Extract Company was established as a partnership in Pietermaritzburg by an engineer, Owen Walters, and local solicitors Thackery James Allison and Arthur Horace Himes. In February the following year they exported their first shipment of 439 tons of mimosa extract produced in their Pietermaritzburg factory.
Five years later, in 1920, NTE joined forces with the South African Tanning Extract Company, owned by London based Forestal Land, Timber and Railway Company, to establish the Natal Tanning Extract Company Limited for a purchase price of £553 332.
However poor silviculture practices combined with the effects of the great depression in the aftermath of the 1st World War, put the industry in South Africa under severe pressure. Forestal sent the enterprising Charles William Biggs, whose career began as a messenger boy with the Santa Fé Land Company in Argentina, later appointed secretary of the Development Company of Santa Fé. Mr Biggs was sent to Natal to take over the management of NTE from TJ Allison.
Biggs’ energy and enthusiasm galvanised the business which, by 1925 owned 15 500ha of good wattle land in the Midlands, Zululand (Melmoth area) and around Iswepe.
Manufacturing of bark extract during this period took place at factories in Pietermaritzburg, Inanda and Rooispruit, with another factory in Paddock under construction. Manufacturing was later consolidated to the plants in Pietermaritzburg and Melmoth.
By 1928 the Iswepe Factory was established, operating initially as a dry bark mill where bark was chopped, hydraulically pressed into bales and exported. In 1934 the Melmoth factory installed autoclaves for leaching bark under pressure, and in 1944 the Iswepe factory was converted into an extraction mill processing 850 tons of bark per week.
In 1945 Sidney Clegg, who had been a manager of NTE since 1934, was made General Manager after Biggs resigned due to ill health. By then the company had consolidated, going on to develop a number of leading brands including ‘Elephant Brand’ Solid Mimosa Extract.
Demand for wattle extract products surged during and immediately after the second World War and wattle plantings in South Africa increased significantly. In 1958 the world demand for tanning materials dropped due to over-supply. Quotas were introduced in South Africa as government involvement in the industry increased.
The establishment of the South African Wattle Growers Union (SAWGU) in 1938 and an increasing need for wattle research led to the establishment 10 years later of the Wattle Research Institute, the precursor to the ICFR which is still conducting commercial forestry research today.
The research benefitted the industry greatly through the introduction of tree breeding programmes and helped manage the outbreak of tree diseases such as ‘gummosis’ which were damaging wattle plantings. In the meantime NTE was at the forefront of improving wattle bark extract technology and processes at its bark factories at Hermannsburg and Iswepe.
Research also unearthed the potential to develop a variety of new products from wattle bark such as dispersants, depressants, flocculants, binders, adhesives and even mud thinners used in oil well drilling. The adhesives could be used in the manufacture of durable plywood, composite panels and boards and were marketed under the Bondtite brand. The Bondtite Adhesive Company was established in July 1971 and grew to service local and international markets.
In 1969, the South African branch of the UK-based Slater Walker Group purchased the Natal Tanning Extract Company from Forestal which resulted in the doubling of NTE’s value, and profits rose from R767 000 in 1968 to R1.44 million in 1969. But four years later, in the midst of a recession in the UK, the Slater Walker Group collapsed and sold off the company’s South African assets to the Anglo-American Corporation. Thus NTE, along with the two bark factories and the wattle plantations, were transferred and became a subsidiary of Mondi Forests.

Wattle farmers buy bark factories

When Mondi put the Iswepe and Hermannsburg bark factories up for sale in 1997 as they were deemed not to be aligned with Mondi’s core business, an opportunity presented itself for private wattle growers supplying bark to acquire a stake in the processing and marketing of bark extracts. Negotiations were headed up by Bailey Bekker and Dave Dobson, who clinched a favourable deal to purchase the factories for R45 million. The entire NTE management and staff of 520 people, led by John Wray, transferred across to the new Co-operative, Wattle Extract Manufacturing Co-operative Ltd (WEMCO), which subsequently changed its name to NTE Co-operative Limited.
With the purchase of the factories and the establishment of WEMCO, the wattle growers who had supplied the factories were for the first time provided with an opportunity to share in manufacturing profits and to serve on the Board of the new co-operative. When the South African Co-Operative Act was changed in 2006 the NTE Board converted the co-op to NTE Company Limited, a private company.
Shareholders were required to dig into their pockets to ‘bail out’ the company at the height of the 2009 recession which resulted in a contraction of business to the extent that the Hermannsburg factory was on the brink of closure.
Yet another change in the industry occurred when UCL, another pioneering South African wattle company, decided to withdraw from the Mimosa Extract Company (Pty) Ltd, which handled the research, sales and shipping functions for the wattle bark extract industry. Thereafter MEC continued to operate exclusively for NTE and was eventually incorporated into NTE along with the other marketing subsidiary, Bondtite.
In 2014 NTE’s name was changed yet again to NTE Company (Pty) Ltd, and in 2017 MEC, Bondtite and NTE staff were brought together under one roof for the first time at the new NTE HQ at Redlands Estate in Pietermaritzburg.
A positive spin-off of the unification process has been that NTE has now become a totally independent, unified and streamlined operation focused on the manufacturing and marketing of a variety of wattle extract products on behalf of its shareholders.

NTE today … surviving and thriving in a complex world

The humble wattle tree has been much maligned over the years as an ‘alien invader’ that threatens biodiversity and crowds out local flora and fauna. But in the right hands it can become a ‘champion’ tree. This has been the case in South Africa where NTE Company (Pty) Ltd has, over the past century, not only built a business from the bark of this tree, but also played a pivotal role in the development of an entire industry.

All of this has been possible thanks to the properties contained in the bark of the black wattle, Acacia mearnsii, which, when processed, produces a range of useful, natural products in great demand around the world.
The clincher, and the thing that makes black wattle a ‘champion’ tree, is that it also happens to produce good quality timber that is highly suitable for building, fencing, charcoal manufacturing and pulping, for which application it fetches premium prices.

Way back in the early 1900s in the British colony of Natal, where NTE has its origins, black wattle was grown primarily for its bark, and the timber was often just burnt as waste. Today, the wattle growers who supply bark to NTE for processing receive a double payday at harvest time as they can sell the timber to the pulp market after stripping off the valuable bark.
This bark is bundled and delivered by NTE suppliers to one of the company’s bark factories where it is processed and turned into premium tanning products used in the leather industry, as well as adhesives used in the manufacture of laminated wood, boards and corrugated cardboard.

NTE owns no plantations of its own, it relies on wattle growers around KwaZulu-Natal, Mpumalanga and Swaziland to supply all of its raw material requirements. Most of these suppliers, who include hundreds of small and medium-scale wattle farmers as well as corporates like Sappi, NCT and TWK, have been NTE shareholders since the bark factories were bought from Mondi Forests in October 1997. Today, NTE is one of the world’s biggest producers of wattle extract products, and has – through its shareholders – access to a large wattle growing resource. It still operates along co-operative lines, and is effectively owned by its suppliers.
NTE has access to and has benefited from world class research that has resulted in significant improvements in the quality and productivity of wattle bark. It also employs chemists and engineers who have optimised and refined manufacturing processes over the years.
NTE is currently processing around 85 000 tons of wattle bark per year in the two factories, producing around 28 500 tons of finished product. This is marketed under Mimosa and Bondtite brands and is sold in 45 countries around the world.

The bark ‘season’ runs from September through to June to coincide with the wet season, when the bark is easier to strip off the trees. It is delivered to the factories as soon after harvesting as possible, as fresh ‘same-day’ bark produces the highest quality product.

Potential new markets for wattle bark extract include dust suppressants for the mining industry, water purification applications and the utilisation of spent bark as bioenergy. Thus even though it is a 100 year old business, there are still plenty of new opportunities on the horizon, thanks to the amazing properties of wattle bark.
Transformation plays an important role in securing the long term supply of wattle bark. To this end, the NTE team has played a pivotal role in supporting a neighbouring community in Hermannsburg to acquire and operate a 365ha timber farm, thus contributing to the building of a local, rural economy. NTE’s extension forester Eza Mapipa works closely with the Emvelo CPA, which is an NTE shareholder and supplier of wattle bark to the Hermannsburg factory. NTE has not been spared the operational and marketing disruptions that occurred in the wake of the Coronavirus pandemic which has affected the entire world. NTE shut down its operations for the first three weeks of lockdown in South Africa in late March and April this year in support of government’s efforts to slow the spread of the virus.

However it has subsequently resumed operations with all Covid-19 regulation protocols in place to ensure the health and safety of staff.
With little room for growth in the leather industry and facing stiff competition from oil-based products in the adhesives market, the NTE team is busy developing new products and new markets. This includes potential new products for the mining industry. Another avenue with potential is using spent bark as biomass to produce energy. Spent bark is already used as fuel in the boilers at the Hermannsburg and Iswepe factories.
“Our shareholders are our customers, and we need to do our utmost to maximise bark value for their benefit,” concluded NTE Managing
Director Harald Niebuhr, a third generation wattle grower.