Global paper and packaging giant Sappi [JSE:SAP] has thrown its weight behind President Cyril Ramaphosa's $100bn investment drive by announcing a R7.5bn investment in the KwaZulu-Natal economy over the next five years.
The JSE-listed company said its investments in its Saiccor Mill in Umkomaas include a R2.7bn capacity expansion project and a planned R5bn over five years, in various continuous improvement initiatives and upgrade projects.
Group CEO Steve Binnie said Sappi was pleased to be able to support President Ramaphosa’s call for significant investment into the South African economy.
Sappi already contributes 1% of South Africa’s total foreign revenue from its South African operations and supplies the fruit export industry with most of its packaging requirements, which contributes around 4% to the country’s foreign revenue.
Sappi said Saiccor Mill and Sappi Forests, which source and supply the timber required by the mill, are already major contributors to the KZN economy through job creation, community investment, local supplier programmes, world-class 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, provide a direct contribution of some R12bn to the KZN economy per year. This number rises to R60bn per annum when reflecting indirect benefits.
Binnie explained that Sappi had seen significant benefits in serving its global customers from its South African operations.
"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."
Alex Thiel, CEO of Sappi Southern Africa, said in addition to expanding capacity Sappi is planning to invest R5bn 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.
"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.
Sappi said Project Vulindlela would add a further R1bn direct benefit to the KZN economy each year.
Listing the benefits, Thiel said Sappi would also see significant savings from the project:
- The ongoing cost savings derived from these projects would amount to at least R300m a year;
- The environmental benefits of the projects would include cutting CO2 emissions in half and reducing waste to landfill by 48%;
- SO2 emissions are expected to be reduced by 35% and water use efficiency to 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," said Thiel.
* SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.