Sappi commits R7.7bn towards dissolving wood pulp mill
The company's Saiccor project is in line with its strategy to shift to dissolving wood pulp, for which there is growing demand
Paper and packaging producer Sappi will spend about $590m in capital expenditure, mainly at the Saiccor dissolving wood pulp mill in KwaZulu-Natal, as part of its strategy to shift from paper to higher-margin segments. The R7.7bn Saiccor project is in line with the firm’s strategy to shift to dissolving wood pulp (DWP), for which there is growing demand from the clothing and textiles industry in particular, and from the packaging industry. DWP, which contributed about 18% to Sappi’s overall sales, accounted for about 50% of the group’s profit. Alongside halving its total debt, Sappi has prioritised investments in DWP and packaging in the past decade. This comes as its traditional graphics paper market has dwindled in the past decade, mainly because of increasing use of technological devices. Improved performance in 2019 would validate Sappi’s strategy, which has seen DWP and packaging dominate its current capital expenditure programme, which will increase to $590m in 2019.
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