Markus Pfannkuch, co-CEO of the wellknown producer Precious Woods, which operates mills in Gabon and Brazil, says the tropical market is under significant pressure. But the company is focusing on productivity and planning to drive competitiveness and for the longer term is looking to value addition. Precious Woods is based in Switzerland. Its key markets are the US, Europe and Asia but it trades globally.
It was a pioneer in achieving third party certification in tropical forestry and in driving sales of a wider range of species as part of further efforts to underpin sustainability.
Its Brazilian business, Precious Woods Amazon – MIL Madeiras Preciosas manages 575000ha of forest around Itacoatiara. The MIL sawmill has annual throughput of 100,400m3 and processes over 20 species in a mix of air-dried and kiln-dried sawn lumber and planed and profiled products.
MIL was the first forest management company in Brazil to achieve FSC certification and was certified under the PEFC-endorsed Cerflor scheme in 2017. It also has FSC Ecosystem Services Certification for carbon sequestration and storage and watershed services.
Precious Woods has also had a majority shareholding in Gabonese producer Compagnie Equatoriale des Bois (CEB) since 2007. It was the first Central African timber operation to develop a comprehensive forest management plan and in 2008 became the first in Gabon to achieve FSC certification. It is also PEFC certified. It has 596,800ha of forest under management, harvests 200,000m3 of timber a year and operates three sawmills.
Precious Woods additionally holds a 49% stake in veneer producer Compagnie des Placages de la Lowé (CPL) in Gabon.
CEB’s main timbers are azobé and okoumé, but it also processes padouk, okan and various other species.
In 2020 a new 17,000m3-a-year capacity production line was installed at CEB’s Bambidie mill site to handle the high level of azobé available from its latest cutting areas. Since then, it has also added planing capacity to produce S4S padouk and a new peeling line has come on stream at CPL. In 2025, a new planing plant was installed and put into operation at the Bambidie site to increase the variety and capacity of further processing.
Mr Pfannkuch described the current climate in the tropical sector as “tense” and that’s a view, he said, that’s shared by other timber businesses in the Congo Basin and Brazil.
“In Gabon, several plants have been idle, and the Nkok Special Economic Zone, [where multiple timber businesses are based] is operating at a low level,” he said. “We have seen such ups and downs in the past but not at that level. Moreover, recently, the first long-established sawmill announced that it would definitely close its doors, which is a worrying sign. I personally feel that we have entered a critical phase in the industry, with others possibly following. In addition, while companies are experiencing slow markets, governments plan to impose new taxes, and the railway company in Gabon intends to increase prices by a double-digit percentage.”
Additionally in Gabon, Precious Woods often faces difficulties accessing spare parts for machinery.
“One of the main issues is the decreased performance of the train service in Gabon, on which we also rely for timber transportation, as well as the availability and price of sea freight,” said Mr Pfannkuch.
Meanwhile in Brazil, he added, the new US tariff regime is impacting the timber sector, even if currently most timber products are still exempt.
“US customers are ordering reduced volumes,” said Mr Pfannkuch. “That’s mainly because they fear that the tariffs might be extended to timber when it is still in a vessel and under transhipment, which would then mean taxes would apply.”
Overall, Precious Woods has seen the international market slow further over the last 12 months.
“Some say we have reached the bottom of the downturn, while others are more pessimistic,” said Mr Pfannkuch. “From our side, we see a certain stabilisation at a low level, but pressure on prices remains high.”
The main reason for slow demand, he added, is ongoing underperformance in the construction sectors of key economic areas.
“We’re seeing this in Asia, the Americas, and Europe,” he said. “The causes are multifaceted.”
Among Precious Woods’ African species, azobe and padouk performed well. “However, padouk imports into the EU from Gabon were blocked for more than 10 months in 2024 and 2025 due to missing import permits,” said Mr Pfannkuch. “This was down to EU-specific CITES regulations and unfortunately it has offset the positive effect of sales levels.”
Regulatory challenges generally, both in the countries Precious Woods operates and in the EU, have adversely impacted its operations, but it reports that, while not related directly to the timber market, reforestation services offered to third party operators in both Gabon and Brazil have performed well.
Precious Woods’ latest half-year report also highlights improvements in productivity the company has made in this challenging environment, and more are planned.
“We aim to further improve our production and planning processes,” said Mr Pfannkuch.
“With markets being slow, our focus on planning, plus co-ordination and key products is proving to be of enormous importance.
While not directly linked to productivity, an important factor in our performance is that our new management team in Brazil is also constantly optimising our cost-saving programme there.”
While remaining committed to offering a broad spread of timber varieties, Precious Woods reports that, due the currently slow market, demand for lesser-known timber species (LKTS) is currently very low and they are proving a complex sale.
“However, we still have customers who intend to run tests with some LKTS”, said Mr Pfannkuch.
Meanwhile, the new planing line at CEB and new peeling line at CPL are now operating successfully. The company has a rolling programme of technology renewal and MIL’s wood residue-fuelled power plant, MIL Energia Renovavel, is set to be connected to Brazil’s national power grid. Further investment projects across the business are “in the budgeting process” for 2026.
Precious Woods said earlier it was confident about meeting the requirements of the EU Deforestation Regulation [EUDR].
That includes its demand that all timber and the other forest and ecosystem risk commodities placed on the EU market should be accompanied with documentation giving geoco-ordinates for their point of origin.
The EUDR has been back in the headlines in recent weeks with the EC initially proposing to delay introduction a further year, after having already deferred it 12 months from December 2024. It has now put forward an alternative, with the regulation to be introduced for most businesses on schedule at the end of December 2025, but with a range of simplifications, plus a six-month grace period for companies to comply. It won’t now come into force for small and micro businesses until December 2026. Precious Woods, in line with the recent statement from the International Tropical Timber Technical Association, to which it belongs, felt the EUDR shouldn’t be delayed further and feels its stance vindicated by the EC’s latest proposal.
Looking forward, Precious Woods acknowledges that the tropical sector will remain challenging.
“In the Congo Basin, even seasoned CEOs with long experience have stated to me that it has never been more complicated than today,” said Mr Pfankuch.
At the same time, while markets remain slow and Precious Woods does not foresee major market upturns in coming months, nor does it predict further downturns. While caution remains the order of the day, it also sees more promising signs ahead and it plans to continue to evolve in line with the market.
“As a company, we remain optimistic that tropical timber will continue to be a successful niche product,” said Mr Pfannkuch.
“We will continue to optimise our processes, and we will also continue on our path to create more added-value products.”
