Sappi plans green assessment for mill expansion
August 4, 2005
By Margie Inggs
Durban - Sappi, the global pulp and paper group, would undertake an environmental impact assessment for a R2 billion expansion of its Sappi Saiccor plant at Umkomaas on the KwaZulu-Natal south coast, the group said yesterday.
The expansion at the speciality cellulose mill will increase capacity by more than 200 000 tons a year to 800 000 tons.
Sappi Saiccor is the world`s top producer of speciality cellulose, which is used in the manufacture of textiles and other fibres, foodstuff, chemicals and plastics. Most of the product is exported to Europe, the Americas and Asia.
Sappi last week announced a $0.04 loss a share for its third quarter as a result of increasing raw material costs and its failure to implement its price increases in North America and Europe.
The group`s R1.1 billion net loss came after five consecutive quarters of profit following a loss in the first quarter of last year.
If the impact assessment gets the go-ahead, construction is expected to get off the ground during the first half of next year. The group hopes the expansion will come on stream in the last quarter of 2007.
`The investment will ensure the optimal use of the mill`s existing assets, and will include the addition of a new production line and associated auxiliary equipment and infrastructure,` said Alan Tubb, Sappi Saiccor`s managing director. `Increasing market demand is the key driver of this consideration to expand.`
The increased production would enable Sappi Saiccor to ensure sustained security of supply to its customers, and would ensure growth of the company`s position in all its target market segments.
`In addition, the expansion will assist Sappi Saiccor in its endeavour to reduce its environmental impact and will benefit the local economy through direct and indirect job creation,` Tubb said.
James Twyman, a UBS analyst in London, said while the proposed expansion `was not huge` in the overall scheme, it was a big expansion at the very profitable Sappi Saiccor mill and was a sensible move for the group.
Bobby Peek, the director of environmental group groundWork, was unfazed by news of the expansion and said he would support it if environmental issues such as air emissions and waste water quality were improved.
Sappi closed R1 down at R68.50 yesterday. The forestry and paper sector was down 1.44 percent.
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