Steinhoff Africa is to close two factories in Durban but is considering building a R1bn chipboard plant in the Eastern Cape which could generate 3,000 jobs.

The company, South Africa’s largest furniture maker, is closing the Moxwood door plant and Steincraft, which produces hardwood furniture for the US and UK markets. Door production will be doubled at another Durban factory to compensate for the loss of Moxwood.

Steinhoff said high domestic timber prices and an oversupply of wood in competitor countries had made its products uncompetitive on the export market.

It cited recent forest fires in the Western Cape and Mpumalanga, which damaged 35,000ha of plantations, and rising demand for structural wood products as reasons for high timber prices.

Steinhoff said the lumber price index has increased 33% since January last year, with higher grade timber leaping 47%. Timber suppliers have also warned of further rises of 15-20%.

The company will build the R1bn chipboard plant if it receives competition commission approval for its purchase of a 33,000ha plantation in the Eastern Cape. The development is in line with Steinhoff’s strategy to establish clusters of plantations, sawmills and timber manufacturing facilities.