The paper industry is one that has undergone an enormous paradigm shift in recent years, as environmental considerations have taken the sector by storm.
For long-established names like Sappi SA, the changes have required a shift in focus and an ability to adapt decades-old practices for modern, environmentally-friendly production.
Today, Sappi is a global company which reports on its website that it employs 12,800 people in over 20 countries and maintains manufacturing operations on 3 continents. However, Sappi’s roots are firmly entrenched on South African soil, where in 1936 South African Pulp and Paper Industries Limited (Sappi) registered as a company.
Within South Africa, the company operates a number of divisions:
Sappi Paper and Paper Packaging is headquartered in Johannesburg and according to the company website, operates 5 pulp and paper mills, with a production capacity of 950,000 tons of paper and 750,000 tons of pulp per year.
The company’s products serve a diverse client base and include: newsprint; coated and uncoated fine paper; office and business paper such as stationery, printing and photocopying; security and specialty paper – including passport and election ballot paper; containerboard and packaging paper.
Sappi Specialised Cellulose makes use of the latest technologies and sells dissolving wood pulp (specialised cellulose) to converters for a wide range of consumer products, but in particular for the manufacture of viscose staple fibre (VSF) for clothing and textiles.
“We are the world’s largest manufacturer of dissolving wood pulp (from our 2 mills in Southern Africa and the Cloquet Mill in North America) and we export almost all of the production of our mills,” the company website describes.
The company has invested heavily over the years in new technologies and innovation has seen SAPPI lead the way internationally in promoting greener practices, as the company website describes:
“Sappi is focused on providing dissolving wood pulp, paper pulp and paper-based solutions to its direct and indirect customer base across more than 100 countries. We produce approximately 5.7 million tons per year of paper, 2.4 million tons per year of paper pulp and 1.3 million tons per year of dissolving wood pulp.
“Our dissolving wood pulp products are used worldwide by converters to create viscose fibre for clothing and textiles, acetate tow, pharmaceutical products as well as a wide range of consumer products. Our market-leading range of paper products includes: coated fine papers used by printers, publishers and corporate end-users in the production of books, brochures, magazines, catalogues, direct mail and many other print applications; casting release papers used by suppliers to the fashion, textiles, automobile and household industries; and newsprint, uncoated graphic and business papers and premium quality packaging papers and tissue products in the Southern Africa region.
“The wood and pulp needed for our products are either produced within Sappi or bought from accredited suppliers. Across the group, Sappi is close to ‘pulp neutral’, meaning that we sell almost as much pulp as we buy.”
Additionally, within South Africa, where power supplies are an increasing concern for industries and the population alike, Sappi SA uses pine-tree resin removed before the pulp-and-paper production process to fuel boilers that supply steam to its turbines, enabling the company to meet about 50 per cent of its own energy needs.
Such innovation helps to reduce overheads of course and in August 2014 came the news that Sappi was selling 30,000 hectares of its pine forest land in Mpumalanga as a result of the conversion of its Ngodwana mill from a fibre line to a dissolving pulp mill.
Group Chief Executive Steve Binnie said at the time that the plantation was a small part of the 500,000 hectares of land owned by the paper maker locally.
“It is a lot of land but bear in mind that we have 500,000 hectares of land in South Africa, and this makes the percentage of this land sale very small.”
Binnie said the sale of the land was necessitated by the conversion of the Ngodwana mill. “Our need for [pine wood] became less and we had a need for more hard wood which goes into the dissolving pulp.”
In June of last year, Sappi had converted a fibre line at the mill to produce 210,000 tons a year of specialised cellulose. This product is a sought-after natural, renewable fibre with a wide range of uses in the textile, consumer goods, foodstuff and pharmaceutical industries.
News of the sale came at a time when Sappi had delivered net income of $17 million in its third quarter to June, compared with a loss of $47million a year earlier. The company reported a sales rise to $1.48 billion from $1.42 billion in the previous year’s period – a challenging time for the business.
“Sappi has done a lot of good work to turn around the loss experienced last year to [a] profit. This was achieved mainly through internal initiatives, which included reduction of costs across the business, especially in Europe,” Binnie said.
The optimistic trend continued into the New Year and in January it was reported that Sappi was likely to be able to reduce its interest bill by refinancing a number of bonds.
Sappi was able to reduce its net debt to $1.95 billion by the end of September last year, from $2.25 billion in the previous year, with the sale of its Usutu forest assets in Swaziland a contributory factor.
Amid lower demand for paper, Sappi has been shifting focus to making dissolving wood pulp — specialised cellulose — mainly for textile firms in the Far East.
The paper industry is a global market and the Sappi name retains its reputation and leadership role, with its innovative approach very much driven from its South African origins.