PG Bison, a subsidiary of the country's biggest furniture manufacturer, Steinhoff, is planning to establish the biggest timber cluster in the history of the province, Business Report learnt yesterday.

PG Bison will use timber from the forests in Ugie and Maclear to produce chipboard in a plant that will be located between the two towns. Chipboard is used to make furniture, and is also used by the construction industry.

Steinhoff's investment comes at a time when the Coega and the East London industrial development zones (IDZs), both of which are in Eastern Cape, are beginning to attract investment - a prospect that will reduce unemployment in the poverty striken province.

Last week, the East London IDZ unveiled three investors that will plough R188 million into the region and create nearly 400 jobs.

And almost two months ago, the Coega IDZ said it had secured a Belgian textile maker, Sander International, as its first tenant since its establishment in 1996. The investment will create more than 500 jobs.

Chris van Niekerk, the chief executive of Steinhoff's timber industries, flew to East London yesterday to discuss the project with Nosimo Balindlela, the Eastern Cape premier, and Kevin Wakeford, the chief executive of the Eastern Cape Development Corporation (ECDC). But Van Niekerk said the competition authorities had to clear the investment.

Steinhoff is listed on the JSE Securities Exchange, where the value of its shares is R16.5 billion.

"The documents will be submitted to the competition authorities within the next two weeks," said Van Niekerk.

"We want the chipboard plant to be the anchor for the project, and we are looking at supplying the building and furniture industries."

He said the plant would supply the domestic and export markets, focusing on Africa, Europe and the US.

As part of its plans to stimulate economic activity in the Ugie Maclear area, the Eastern Cape government is close to completing the construction of a road that will facilitate transportation of timber between the forest plantations of Ugie, Maclear and Elangeni.

The towns are situated in the northeastern region of the Eastern Cape, about 100km from Mthatha in the former homeland of Transkei.

The new road infrastructure will be linked to the Kei-Rail Corridor, which will enable the shipping of bulk timber from the region to the East London harbour for export. The provincial government is spending about R40 million on the upgrade.

Wakeford said the ECDC "will mobilise all our resources to ensure that Steinhoff's infrastructure needs are met. "As part of our role in this venture, we will also assist with black economic empowerment, and ensure that there is a supply chain in place in order to facilitate small and medium-sized enterprise development."

Steinhoff's share price rose 1.95 percent to R14.65 yesterday. The household goods and textiles sector rose 0.27 percent.