DURBAN - SAPPI, a leading pulp and paper company, has lived up to the promise it made when it released its third quarter results in August to allocate more money to develop its Ngodwana and Saiccor mills in South Africa.

On Friday, Sappi confirmed plans and ongoing projects to significantly increase the dissolving wood pulp (DWP) capacity by 2020.

Sappi said it had started preparatory work for the potential expansion of its Saiccor DWP mill to ensure that the company would be in a position to increase the mill’s capacity by up to 250000 tons per annum (tpa) to meet strong projected demand growth.

The group sees DWP segment as an area to invest in an effort to increase its volumes.

Sappi chief executive Steve Binnie said at the time that South Africa remained important for the company, despite experiencing low economic growth.

He said through Ngodwana the group was looking ahead in spending about R900million as they seek to increase its dissolving wood pulp division with R700m allocated as capital expenditure to increase its capacity.

The group said the overall capital expenditure in the last quarter is expected to be $170m (R2.26billion).

The group said building on the previously announced de-bottlenecking investments which will increase the Saiccor mill capacity by 10000tpa by the end of 2018, work has also started at increasing the chipping capacity and modernising the Saiccor mill wood yard.

New equipment

The new equipment for the wood yard is scheduled to be delivered and installed at the end of 2018, with start-up planned for January 2019.

The wood yard investments will result in cost, quality, environmental and efficiency benefits to the Saiccor mill and is also a major step towards preparing the Saiccor mill to expand by a further 250000tpa.

In addition to this the group is also busy with the preparatory work to enable it to initiate the pre-requisite environmental impact assessment process to study potential impacts, gather community input and model new technology benefits of the proposed 250000tpa expansion, which would increase the Saiccor mill’s total capacity to over 1million tpa.

Investments

The group said the project in Saiccor has the potential to bring additional investments and jobs into the KwaZulu-Natal region, increase foreign revenues for the country and further entrench South Africa as a global leader in forest products.

The Ngodwana Mill is also in the process of expanding its dissolving wood pulp capacity by 50000tpa through de-bottlenecking projects. The group said the work is scheduled for completion by August 2018.

The group said these current and planned investments demonstrate Sappi’s commitment to respond to strong customer demand for additional dissolving wood pulp volumes.

- BUSINESS REPORT