| Mon 7 Jul 2003, 11:07 | | Sappi profits from new investment tax breaks |
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Sappi profits from new investment tax breaks
July 7, 2003
By Margie Inggs
Durban - New tax-linked investment allowances up to R10 billion would be approved by the department of trade and industry's Strategic Industrial Partnership (SIP) over the next two years, Alec Erwin, the minister of trade and industry, said on Friday.
The allowances, which will provide R3 billion in tax relief, are one of the department's key incentive programmes that are critical to job creation and the development of the economy.
Speaking at the official opening of the R330 million expansion of Lignotech South Africa - a joint venture between Sappi Saiccor and Norwegian-based Borregaard - Erwin said Lignotech, now the world's largest producer of speciality lignin chemicals, had met all the SIP's requirements.
Lignotech's application was approved by Erwin in September.
"Using advanced technology, Lignotech is creating an interesting and modern product for the South African economy," he said.
The plant uses waste solids from the Sappi Saiccor plant to manufacture lignin, a binding and dispersing agent that is widely used in industry and agriculture.
"This has improved the quality of effluent pumped from Sappi Saiccor and the quality of water on the world-renowned Aliwal Shoal," Erwin said.
To be considered for SIP tax relief, industrial projects must invest between R50 million and R18 billion, add value to the economy, comply with international environmental standards and procure support from small medium and micro enterprises
.
Projects must also contribute to the growth, development and competitiveness of specific industry sectors by increasing annual production of the relevant industry in South Africa. Expansions must increase and maintain annual production by at least 35 percent.
Jonathan Leslie, Sappi's chief executive, said the Lignotech expansion had increased the production of lignin from 55 000 to 160 000 tons a year.
"Significant additional investments have also been made in air scrubbers that will enable the plant to maintain emissions within the original permit guidelines, despite a 200 percent production increase," he said.
The expansion has created 36 new direct jobs, while indirectly there is the potential for as many as 380 new indirect jobs to be created in KwaZulu-Natal.
Finn Jebsen, the president and chief executive of Orkla, Borregaard's parent company, said the plant's increased production capacity was of great significance for Borregaard Lignotech worldwide, as the closure of Georgia Pacific's US lignin chemicals plant in 2001 had severely compromised global lignin production.
Shares in Sappi closed 24c up at R90.49 on Friday.
