Pulp and paper firm Sappi has announced new investments in SA worth R7.7bn. The investments include a R2.7bn capacity expansion project and a planned R5bn over five years in various continuous improvement initiatives and upgrade projects.
“Sappi has seen significant benefits in serving its global customers from its South African operations,” said CEO Steve Binnie.
“Sappi had invested some R4.3bn from 2012 to 2018 to increase its dissolving pulp capacity in South Africa. This global market has shown such strong growth that Sappi will again increase capacity in South Africa by investing R2.7bn at Saiccor during 2018 and 2019.
“Sappi, which contributes 1% of South Africa’s total foreign revenue from its South African operations and supplies the fruit export industry with most of their packaging requirements which contributes around 4% to the country’s foreign revenue, is pleased to be able to support President Ramaphosa’s call for significant investment into the South African economy.”
The President has put together a team to raise new investment of $100bn in South Africa, and the Sappi commitment follows announcements from Mercedes, from China, Saudi Arabia and the UAE.
“In addition to expanding capacity, Sappi is planning to invest R5 billion over the next five years through maintenance and upgrade projects to decrease production costs, introduce new technology, optimise processes and future-proof manufacturing systems at Saiccor Mill,” said Alex Thiel, CEO of Sappi Southern Africa.
“These investments will secure the mill’s future by increasing its global cost competitiveness and significantly reducing its environmental footprint.”
Thiel confirmed that Sappi was currently in the process of engaging with the relevant authorities and consulting with communities and various other stakeholders to obtain the required support for the planned investments, collectively known as Project Vulindlela; chosen to emphasise that the projects pave the way for additional future investment.
“The ongoing cost savings we will derive from these projects amount to at least R300m per annum,” said Thiel.
“With reference to the environmental benefits of the projects, CO2 emissions will be cut in half and waste to landfill will reduce by 48%.
“In addition, SO2 emissions will reduce by 35% and water use efficiency will increase by 17%. All of this while earning more revenue for the province and country and providing a secure future for our workforce, their families and the communities where they live.”
Saiccor Mill and Sappi Forests, which sources and supplies the timber required by the mill, are already major contributors to the KZN economy through job creation, community investment, local supplier programmes, research and development facilities and training and development programmes.
In total Sappi’s KZN operations comprising three mills, forestry operations and sales and export services provides a direct contribution of some R12bn per annum to the KZN economy. This number rises to R60bn per annum when reflecting indirect benefits. Project Vulindlela will add a further R1bn per annum direct benefit to the KZN economy.
“Saiccor produces dissolving wood pulp from which our customers produce items such as textiles, pharmaceutical, beauty and household products,” said Thiel.
Sappi’s packaging papers are used to protect products, especially in the agricultural sector, and speciality papers are used in the convenience food, confectionery, cosmetic and luxury markets, while tissue products serve the household, medical and industrial markets, Typek office paper services education and office requirements and its newsprint supports local media use.
It is also one of the world's largest manufacturers of dissolving wood pulp (DWP), used worldwide by converters to create viscose fibre for fashionable clothing and textiles, pharmaceutical products as well as a wide range of consumer and household products. Almost all of the production of its mills in South Africa is exported.
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