Multi-billion expansion, upgrade for South Coast mill

25 July 2018 | Web Article Number: ME201811006

Commerce & Trade
Construction, Civil & Structural Engineering
Consulting Engineers & Project Management
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Forestry, Pulp & Paper
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SAPPI Limited, a leading global producer of dissolving wood pulp, specialities and packaging papers, printing and writing papers and biomaterials headquartered in South Africa, has provided further details regarding capital investments at its Saiccor Mill in Umkomaas, south of Durban.

The investments include a R2,7 billion capacity expansion project and a planned R5 billion over five years in various continuous improvement initiatives and upgrade projects.

Sappi Limited CEO Steve Binnie said the group had seen significant benefits in serving its global customers from its South African operations and had invested some R4.3 billion 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 R2.7 billion at Saiccor during 2018 and 2019,” Binnie said.

“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.”

Alex Thiel, CEO of Sappi Southern Africa said that in addition to expanding capacity, the company was 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 the Saiccor Mill.

“These investments will secure the mill’s future by increasing its global cost competitiveness and significant 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 R300 million per annum. 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 to our workforce, their families and the communities where they live,” Thiel said.

In total Sappi’s KZN operations comprising three mills, forestry operations and sales and export services provides a direct contribution of some R12 billion per annum to the KZN economy. This number rises to R60 billion per annum when reflecting indirect benefits. Project Vulindlela is expected to add a further R1 billion 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.

Vulindlela will increase the mill’s production from 780 000 tons to 890 000 tons per year, and is expected to create employment opportunities for local job seekers through construction companies and business prospects for entrepreneurs from the local communities around the mill.

During the peak period of the project, there will be between 2,500 and 2,800 contractors working on site at one time. The projects will include a new evaporator, recovery boiler and screening and washing plant, along with upgrades to bleach plant and pulp machines, improved recovery circuits and additional magnesium digesters. The upgrade to the woodyard to process increased timber volumes is being finalised.

“The commitment we had made and implemented during our previous expansion remains” said Thiel "The majority of the workforce will be local community residents employed by contractors on the project”. In addition, many other services and products required during the construction phase and beyond will be sourced from local emerging businesses.

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