Pulp and Paper Sector Summit

Transcription

Pulp and Paper
Sector Summit
Resource Book
Compiled by:
Pulp and Paper Sector Research
Sections in this Document
Introduction and Methodology
Section 1: Global Overview
Section 2: Supply chain
Forestry
Recycling
Pulp
Paper
Section 3: Companies
Section 4: Economic factors
Supply and demand factors
Trade
Investment
Section 5: Employment
Section 6: Findings and Recommendations (summary)
Prepared by CSRSC for Naledi and CEPPWAWU
1
Introduction and methodology
The nature of the brief for this research called for a combination of descriptive and
analytical techniques aimed at generating a practical and strategic approach for labour
in the sector as to how to engage both employers and government. There was a need
to investigate a number of elements relating to the industry and to document the
supply chain as far as possible with a focus on the pulp and paper subsectors. As such
the methodologies employed where quite varied.
Data sources:
Data was collected during a desktop research phase and sources included both
theoretical papers, global industry descriptions and projections, company reports and
economic data on trade from various sources using Comtrade including the UN
statistics division, Tips Trade map and the Department of Trade and Industry.
Employment data was collected from company work place skills plans, the labour
Force Srvey, DTI data, company interviews and reports, industry association and HSRC
studies in the sector.
This data was integrated with data collected from a series of interviews around the
country with various industry players. Interviews included relevant government
departments, industry associations, employer and contractor associations, employers,
labour, research organisations and industry experts. It was not within the scope of the
research to conduct a complete employer survey although this is not seen as a
particular weakness given the exploratory nature of the research and the policy focus
which could adequately be covered through a process of merging qualitative
discussions with statistical data.
Initial data was presented to CEPPAWU in late 2004 at a reference group meeting
resulting in some areas of refocus and the final shape and nature of the report
presented here.
2
Section 1:
Global Overview
3
Introduction
South African Companies in the Global Pulp and Paper Market
In the Price Waterhouse Coopers Global Forestry and Paper Survey (2004) top
100 companies, Mondi, a subsidiary of Anglo American is ranked 15th for 2002
and 2003. Sappi is ranked 20th for 2002 and 2003. Nampak is a new entrant
in 2003 at 65th. Kimberly Clark, the US giant is ranked 4th for 2002 and 2003,
the company has a subsidiary in South Africa. Proctor and Gamble (paper),
another large US multinational is ranked 6 th in 2002 and 10th in 2003, the
company operates a distribution centre in South Africa for its products which
are imported, these include top feminine product brands such as Tampax and
Always and baby diapers, Pampers. Proctor & gamble do produce nappies in
South Africa through a contractor under licence. (See Annexure 1 for full list
of top 100 companies)
Rank
Top 100 Pulp
Companies
&
Paper
Net Sales
(US$ millions)
Net Income
(Loss)
(US$
millions)
2003
4
2002
4
Company
Kimberly-Clark
Country
US
2003
14,348
2002
13,566
2003
1,694
2002
1,675
Return
on
Capital
Employed
(%)
2003 2002
14
15
10
6
US
9,933
9,233
1,015
849
10.1
7.8
15
15
UK
5,628
4,805
350
345
10
12.3
20
20
Procter & Gamble
(paper)
Mondi
(Anglo
American)
Sappi
SA
4,299
3,729
149
220
5.8
7.5
64
NA
Nampak
SA
1,112
486
32
19
10.5
8.1
According to the Price Waterhouse Coopers Global Forestry and Paper Survey
(2004) Companies from the US are by far the largest in terms of sales and net
income, followed by Europe, Japan and Canada. Note the figures for South
Africa are only for Sappi and Nampak, it excludes Mondi that is listed in the
UK (Europe), and the South African subsidiary of Kimberley Clarke and South
African distribution and production by Procter & Gamble, listed in the US.
Financial Information by Country/Region (US $
millions)1
Sales
US
Europe
Finland
Sweden
Other Europe
Total Europe
1
Return on capital
employment
Net Income
2003
$138,865
2002
$135,945
Change
2.10%
2003
$3,653
2002
$793
Change
360.70%
2003
4.70%
2002
4.50%
37,710
16,746
37,342
91,798
33,445
14,191
32,026
79,662
12.8
18
16.6
15.1
609
1,226
651
2,486
369
1,194
1,066
2,629
65
2.7
-38.9
-5.4
2.5
6.2
4.3
3.9
4.5
6.8
5.6
5.4
Source PWC global survey 2004
4
Japan
Other Regions
Australia/New
Zealand
Non-Japan
Asia
Latin America
South Africa
Total Other
Regions
Canada
38,817
35,972
7.9
111
-15
840
1.9
1.6
8,003
6,390
25.2
210
444
-52.7
4.3
2.9
9,126
7,893
15.6
-974
-1,195
18.5
2.8
-0.2
8,718
5,411
31,258
7,850
4,215
26,348
11.1
28.4
19
1,392
181
809
415
239
-97
235.4
-24.3
934
8.3
6.3
6
7.2
7.6
4
18,690
17,547
6.5
266
237
11.8
3.9
3
5
Section 2 :
Pulp and Paper Supply Chain
6
Pulp and Paper Supply Chain
South Africa is self sufficient in the supply of fibrous raw materials for the production of pulp,
paper and board.2 The main source of fibre is pulpwood harvested from domestic plantations. This
is supplemented by forest and saw milling residues, this is made up of thinnings from plantations
for saw logs and of the by products in the saw milling process.
There are two types of wood: hardwood and softwood. In South Africa the hardwood commonly
used in pulp and paper is eucalyptus and the softwood used is pine. Softwood fibres are stronger
than hardwood fibres and is used to meet strength and bulk requirements of the produced paper
mainly newsprint, magazine and packaging grades.
Fine paper manufacture uses hardwood fibres in combination with softwood fibres and filler
material to produce paper with a smooth finish and good printing quality. Hardwood fibres are also
used in high strength corrugated carton manufacture.
The supply of pulp is also supplemented with bagasse, a by product of sugar cane. However, the
sugar industry uses bagasse as a source of energy in its processes limiting the amount of bagasse
available for use by the pulp and paper industries. Pulp mills using bagasse also need to be located
close to sugar mills to reduce transportation and there are spatial considerations to be considered
as sugar is a seasonal industry so large quantities of bagasse must be stored to enable the paper
machine to operate all year round. There are two mills in South Africa that produce paper from
bagasse. The South African pulp industry consumed 229 000 tons of bagasse in 2003.3 It thus
remains a small contributor to the fibre requirements of the industry.
Another important source of fibre is fibre recycling. According to PAMSA, South Africa currently
recycles 52% of its paper consumption increasing its capacity to produce paper products.4
Currently there is research being done on alternative sources of fibre such as hemp and even
pineapple.5
2
3
4
5
Interview with John Hunt PAMSA 5 November 2004
South African Pulp and Paper Industry Statistical Data January to December 2003, PAMSA
Creamer Media’s Research On Line, Paper and pulp contributes to the manufacturing sector, 12/3/2004
Interview with Tom Moyane DTI 5 November 2004.
7
Forestry Value Chain6
Source: South African Forestry, Pulp and Paper Industries, 2004
Raw Material Supply 2003*
recovered paper
8%
bagasse
3%
softwood
39%
hardwood
50%
Raw Material Supply
6
Source: South African Forestry, Pulp and Paper Industries, 2004
8
Raw Materials Consumed*
thousand metric tons
2001
YTD
2001 to 2003
2002
2003
YTD
YTD
Total softwood ( as received)
pine wood round logs with bark
pine chips
3440
3063
377
3452
3072
381
3344
3010
334
-3.1%
2.0%
12.1%
Total hardwood (as received)
eucalyptus wood round logs with bark
eucalyptus chips
other hardwood round logs with bark
other hardwood chips
3576
3228
6
341
3572
3297
5
270
4193
3832
6
355
17.4%
16.2%
20.3%
31.2%
Total bleached softwood pulp (air dried)
bleached softwood pulp sources from mills in SA
bleached softwood pulp sources from outside SA
157
114
43
143
112
31
129
97
32
-9.6%
-13.0%
2.8%
Total unbleached softwood pulp (air dried)
unbleached softwood pulp sources from mills in
SA
unbleached softwood pulp sources from outside
SA
18
40
21
-46.7%
14
37
21
-42.4%
4
3
Total bleached hardwood pulp (air dried)
bleached hardwood pulp sources from mills in SA
bleached hardwood pulp sources from outside SA
227
227
291
291
332
314
18
14.1%
7.9%
Total unbleached hardwood pulp (air dried)
unbleached hardwood pulp sources from mills in
SA
unbleached hardwood pulp sources from outside
SA
18
18
17
-5.1%
18
18
17
-5.1%
Bagasse (as received)
153
164
229
39.7%
Recovered paper (as received)
brown grades
white grades
706
510
196
667
470
197
714
513
201
7.0%
9.1%
2.0%
YTD
Change
-100.0%
Source: PAMSA7
Note: raw material supply is only for the companies that participated in the study, please refer to
footnote below.
7
The companies participating in the industry survey are as follows: Kimberly-Clark SA, Mondi Cartonboard, Mondi Kraft, Mondi Paper,
Nampak Tissue, Nampak Corrugated, Sappi Kraft, Sappi Fine Paper, Sappi Saiccor. An estimate of production and capacities has been
made for companies not participating in the survey.
9
Raw Materials Supply: Forestry
The area of plantation forests in South Africa is 1,4 million hectares or 1,15% of South Africa’s
land area. Most plantation forests are held by companies and private individuals. The State,
which through the State forestry company, SAFCOL and the Department of Water Affairs and
Forestry (DWAF), used to be a major plantation owner but this is changing with the privatisation of
SAFCOL.
Messina
Nelspruit
Pretoria
Johannesburg
Piet Retief
Vryheid
Bloemfontein
Pietermaritzburg
Richards Bay
Durban
Cape Town
Mosselbay
Port Elizabeth
Commercial forests
Location of South African Commercial Forests
Source: PAMSA8
In the higher, cooler areas of KwaZulu-Natal and Mpumalanga, pine plantations are grown for both
sawn timber and pulping use. Eucalyptus trees are grown in the lower lying areas of the KwaZuluNatal Midlands and Mpumalanga, coastal regions of KwaZulu-Natal and in the Tzaneen region of
the Limpopo province. Some cold tolerant eucalyptus species are grown in the Highveld regions of
Mpumalanga. Plantations in the Western and Southern Cape are mostly pine plantations and are
used primarily for sawn timber production. A relatively new block of plantation forest has been
established by Mondi in the Eastern Cape in the Maclear/Ugie district. This block consists of both
pine and eucalyptus plantations and is not yet in full production.9 In South Africa 80% of the land
under afforestation is managed according to standards set by the Forest Stewardship Council to
ensure its sustainability and ensure the industry’s future, the highest percentage in the world for
plantation forest.10
8
9
Draft Background Information: South African Forestry, Pulp and Paper Industries, PAMSA, February 2004
10
10
Northern
KZN
South
Total
Thousand Hectares
50
45
40
35
30
25
20
15
10
5
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Years
New Afforestation by Region 1980 to 2002
Source: Forestry SA
New afforestation over the period from 1980 to 2002 was 357,494 ha, an increase of 26.5% to the
total afforestated area. This averages 15,543 ha of new afforestation per year over the period.
Highest new afforestation from 1982 to 2002 was for pulpwood. The peak of afforestation in this
period (between 1991 and 1992) can be attributed to increase in pulpwood production.
Average per year
Pulpwood
Sawlogs
Mining Timber
Other
Total
Thousand Hectares
50
45
40
35
30
25
20
15
10
5
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Years
New Afforestation by Product 1980 to 2002
Source: Forestry SA
Potential productivity (yet to be fully realised) of South African plantation forests is relatively high
by world standards, averaging about 20m3 per ha per annum. They currently yield about 18.5 - 19
million m3 per year. Of the 14,6 million tons of wood produced by the forests from July 2001 to
June 2002, 9,3 million tons was consumed for pulp production and 3,9 million tons for sawmilling.
The balance was used for other used such as mining supports and poles. 11
11
11
Million m3
Pulp & Paper Mills
Mng. Timber Mills
Total
Sawmills
Other
20
18
16
14
12
10
8
6
4
2
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Years
Intake of Roundwood into Processing Plants 1980 to 2002
Source: Forestry SA
The total increase in intake of roundwood over the period 1980 to 2002 was 5.7 million m3
which represents an increase of 52%. Whist intake of roundwood for mining timber has declined
and intake for sawmills and other process plants has varied relatively little during this period, the
increase comes from the intake at pulp paper and board mills at 8.1 million m3, an increase of
192% over the period. However pulp paper and board mills is processed in 11% of the total 182
plants, the largest type of processing plant being sawmills accounting for 56.6% of the total.
Sawmills
Mng. Timber Mills
Pole Plants
Pulp, Paper & Board Mills
Other
22.5%
3.3%
6.6%
56.6%
11.0%
Number of Processing Plants by Type 2002
Total – 182 plants
Source: Forestry SA
12
Output
Input
3266
Total Industry
13807
2405
Pulp / Paper Mills
705
Sawmills
M. T. Mills
61
109
Pole Plants
60
164
Charcoal Plants
23
101
0
10150
1868
2,000 4,000 6,000
8,000 10,000 12,000 14,000 16,000
Million Rand
Value Addition in Primary Processing Industry 2002
Note : excludes secondary processing (e.g. paper manufacturing)
Source: Forestry SA
Pulp, paper and board mills have a greatest value addition in primary processing as shown in the
table above. Labour intensity varies greatly in the processing sectors. Sawmilling employs about
one worker for every 80 m3 processed; in pulp and paper, the ratio is one worker for every 250
m3. Pulpwood and mining timber plantations employ fewer people per hectare than saw log
plantations. In addition most of this employment has been contracted out in recent years.
Whist the pulp and paper industry is not labour intensive as compared to industries that source
raw materials from sawmills such as building and furniture manufacture, capital returns are greater
on pulpwood than sawlogs. In an interview with a senior manager at a forestry company, he
stated that it was easier and less costly to keep pulpwood and the duration in years required for
pulpwood can be shorter than that required for sawlogs; and then roundwood sold for pulp
fetched about the same amount as that sent to sawmills. In other words, returns on pulpwood are
higher than that of sawlogs. Given the limited land available for afforestation, this could potentially
hinder supply of sawlogs as growers seeking more profitable returns may convert more sawlog
plantations to pulpwood in anticipation of future demand. Thus the challenge will be to ensure
supply to more labour intensive industries that use sawlog products in the interest of maintaining,
and possibly creating, jobs in these sectors.
Labour intensity in the forestry and forest products sector will change significantly over time. For
example, if proportionately more land is used for pulpwood production, overall labour intensity will
decline, both in the forests and in the processing plants. On the other hand, a move to higher
value addition within South Africa, for example through high value sawlog production, and
processing and marketing of quality solid wood products from this resource, could contribute to
higher and more rewarding employment. The choice of appropriate policy would strongly influence
this picture.12
12
The sentiment expressed in this paragraph is contained in the Forestry White paper prepared by DWAF in 1997, however policy today
does not reflect this.
13
Water Usage
Commercial forestry in South Africa begins in the period of the First World War and since its
inception there have been concerns on the water usage of the plantations as farmers would
complain of reduced run off from afforestated areas. The droughts in 1960s led to research into
Afforestation and water usage and led to the creation of the Aforestation Permit System in 1972.
However, the life span of a commercial plantation is up to 35 years so the effect of plantations
planted pre 1972 on water supply have lingered to present day.
Plantation forestry reduces the amount of water entering rivers (runoff) by the equivalent of 100
to 200 mm of rainfall per year. Depending on the timber species, tree age, climatic and edaphic
factors, a mature plantation can reduce stream-flow by up to 500mm a year. The average annual
stream-flow reduction taken over the full lifespan of a plantation is about 120mm. However,
plantation forestry is only practised in the wetter areas, needing a minimum of 800 mm per annum
to be viable. The effects of timber plantations on the amount of water in rivers are most noticeable
in the dry season and in drought years. In 1996, the commercial plantation forests in South Africa
were estimated to consume about 1.65 billion cubic metres of water that would otherwise have
entered rivers and streams, and been available for other uses. This volume equated to about 15%
of the amount used for urban and industrial purposes, or about 5% of the volume used in irrigated
agriculture.13
Currently the South African government through the Department of Water Affairs and Forestry
regulates forestry in terms of the National Water Act of 1998, commercial forestry is regarded as a
Stream Flow Reduction Activity and needs to be licensed. Forestry companies therefore need to
register their plantation areas as a water user and pay a levy, dependent on the catchment and
area of trees. All new aforestation must apply for a SFRA licence.
Water is required in both the pulping and paper making processes. Specific consumption rates for
water vary from 8 tons of water per ton of paper produced to 35 tons of water per ton of paper
produced. These figures are lower than in water rich countries where consumption rates of 50 to
70 tons of water per ton of pulp are not uncommon. A major concern of government is the high
opportunity costs of water in certain localities. The industry needs to compete with others for this
water. Specific industry concerns about water are as follows:
x Medium and long term security of supply
x Cost of water supply
x Use of industry to subsidise cost of domestic water supply14
Climatic Conditions
Forest expansion and the planting of new forests is limited in the country by climatic conditions.
“Therefore, there is only about another 200 000 ha that could be planted in South Africa, which
only amounts to about a 14% growth in land that can be used,” Hunt points out. He says another
way of gaining additional fibre would be by increasing the yield per hectare of the land that has
already been planted. He explains that this could be done by making use of the country’s treebreeding expertise.15
Rainfall governs the extent of plantations, both directly and indirectly. Areas that receive more
than 800 mm of rain per year and have a mean annual temperature greater than 14°C are
preferred for pines and eucalyptus. Rotation lengths are 7 to 12 years (depending on site
13
14
15
SAPPI Forest Products, Main Assessment Report, Qualifor Programme, March 2000.
Creamer Media’s Research On Line, Paper and pulp contributes to the manufacturing sector, 12/3/2004
14
conditions and diameter requirements) for eucalypt species, 14 to 20 years for pine species
pulpwood and 25 to 30 years for pine saw timber. This is a relatively short compared to rotation
periods of 50 to 100 years in the Northern Hemisphere giving South Africa a competitive
advantage. The fast growth of local plantations makes tree breeding a possibility. This led to
South Africa being a world leader in selective breeding and cloning of eucalyptus species. With the
land available for tree plantations limited by climatic conditions, selective breeding enables growth
in future supply of wood. The tree breeders have traditionally focused on breeding for maximum
growth of the plantations. This focus is changing to look at the possibilities of breeding for specific
characteristics in the pulp produced. This opens up the possibility for developing niche pulp and
paper products and the possibility of a sustained competitive advantage.
15
Department Of Water Affairs and Forestry (DWAF)
Whilst numerous attempts were made to have DWAF participation in this study, thee has been no
response to any queries despite verbal commitment to this during a telephone conversation with a
senior official of the department. SAFCOL reports that (some of the) land under afforestation held
by DWAF was merged together with SAFCOL land prior to privatisation.
DWAFs Role in Regulating Afforestation
Governments and forest managers used to consider forests from narrow point of view, seeing, for
example, their value only in terms of wood or land for agriculture. Now, with the increased
emphasis on environmental and social issues, it is acknowledged that these perspectives -and
therefore the way that forests are valued and managed- are changing and must continue to do so.
Plantation forests are subject to licensing requirements as the activity is classified as a Stream
Flow Reduction Activity (SFRA) under the National Water Act.
The National Water Act (Act 36 of 1998) also requires the progressive development of a National
Water Resource Strategy which will provide the framework within which water will be managed at
regional or catchment level. The reason for DWAF requiring licences for afforestation is to ensure
that available water is not oversubscribed, to ensure that other water users in the catchments are
not unfairly prejudiced and to ensure environmental controls are maintained.
The criteria for the issuing of licenses depend on three factors:
x The impact of stream low flows
x The impact on the environment
x The impact on people.16
At the macro landscape level, new planting is restricted or banned in particular catchments where
river systems supply conurbations or important agricultural areas. New planting can only take
place if granted a permit and all planting permits are subject to a full Environmental Impact
Assessment and the approval of the government’s Department of Water Affairs and Forestry. The
aim of the permit system for afforestation is to disperse afforestation amongst catchments, rather
than to limit afforestation generally; permits are administered at the level of quaternary
catchments. The intention is that the increased water use anticipated from a proposed forestry
development should be assessed in relation to all demands for water downstream of the
development. The decision is based on the most favourable use of the water in economic terms
after the provision of community needs; the needs of downstream countries on international
rivers; and the requirement to maintain aquatic ecosystems.
16
16
PAMSA Concerns on Forestry17:
Forestry is the only agricultural activity requiring licensing yet forestry consumes at most 5% of
the national water supply and that other agricultural activity more than 50%, the forestry industry
considers its unique classification rather unfair. The classification as a SFRA also results in a Water
Resource Management Charge. The cost of this is passed down the wood products value chain.
The process of applying for a licence is complex, expensive and time consuming. Amongst other
requirements is the need for an environmental impact assessment of the proposed afforestation of
areas greater than 10 ha, proof of consultation with adjoining land owners and requirements for
publication of intent to plant trees in local newspapers. The licensing system is onerous for large
companies and impossible for small growers to comply with unless they are given external
assistance. The cost of applying for a license can go as high as R6 000 per hectare. The licensing
of small grower schemes has been due to the sponsoring companies providing the expertise and
finance for groups of small growers.
Despite a number of applications for licences, the licensing process together with a breakdown in
co-operative governance (particularly in the national/provincial interface) procedures amongst
relevant government departments has resulted in very few licences are being issued. The reasons
for this are the complexity of the system and the bureaucracy involved. The perception of the
forest industry is that DWAF and the other government departments involved are overcautious
when assessing licensing applications and that the economic benefits of the afforestation are
either not fully understood or given due consideration.
DWAF has a policy of granting licenses for only 70% of the area covered by a title deed, even if
the remaining 30% is suitable for afforestation. This means that significant capital is tied up in
land that cannot be used. The licenses issue has not only constrained the expansion of large scale
commercial forestry, it has severely limited the development of sponsored small grower schemes.
Forestry Ownership
Mondi Holdings and SAPPI have the largest commercial forests concerns in South Africa. The state
used to be the largest owner of commercial forests with 414 000ha prior to the amalgamation of
some forests of DWAF with SAFCOL which have then been portioned off for privitisation. The state
has sold off land to two Black Economic Empowerment Consortium; Singisi Forest Products in the
Eastern Cape and Siyaqhubeka Consortium in Kwa Zulu Natal. Negotiations are underway to sell
Komatiland Forest in Mpumalanga. Despite this the state still holds a large share in commercial
forestry with 224 000 ha.
Owner
Mondi
SAPPI
Private Timber Growers
Other State Holdings
Komatiland Forests*
SAFCOL
Global Forest Products
17
Planted
Area Employment
(1000ha)
301
500
475
590**
237
153
129
71
3019
67
2000
17
Small Growers
Singisi Forest Products*
Siyaqhubeka Consortium*
Other Corporate Growers
Total
43
43
18
41
18 900
(24 000)
80
1350
* Note: commercial forests under SAFCOL that have been or are
in the process of being privatised.
** Employment for SAPPI Forests includes 75 ha in Swaziland.
The table includes the recently leased area of 140 000 ha of
forestland to MTO and Amatola although not indicated as
separate entries.
Forestry SA estimates employment in the forestry sector at 60 000 with many more employed by
contractors to the industry. FIETA estimates employment in the forestry sector at 39 173.
Source: PAMSA18
SAFCOL
The Department of Public Enterprises (DPE) states that “The objectives of government,
mobilisation of private capital and economic empowerment, were realised” through the privitisation
of SAFCOL. The total afforestated land of SAFCOL prior to privatisation was approximately 264 000
hectares. SAFCOL is primarily a sawlog producer, but pulpwood dimensions are produced in the
process of producing sawlogs. Some stands were dedicated fibre/pulpwood stands, but these were
minimal. About 15% of SAFCOLs timber production is sold as pulpwood. In most instances pulp
wood are incidental to sawlog production, such as small logs resulting from thinning operations,
or treetops which are not suitable for processing in sawmills.
SAFCOL forestry assets were grouped into five forestry packages:
1. Singisi (Eastern Cape, North)
2. Siyaqhubeka (KZN)
3. Amatola (Eastern Cape, South)
4. MTO (Southern and Western Cape)
5. Komatiland (Limpopo/Mpumalanga)
The combined 82 000 ha of Singisi and Siyaqhubeka forestry asset packages have been sold to
investors. Mondi and Imbokdvo Lemabalabala (BEE partner) bought the 75% stakes in
Siyaqhubeka for R100 million. Singisi and Singalana (BEE partner) bought the 75% stake in Singisi
for R45 million. Amatola Forest Holdings and Wildbreak Investments (BEE partner) have leased 25
000 ha in the Eastern Cape. MTO and Cape Timber Resources (BEE partner) have leased 115 000
ha of state land in the Western and Southern Cape.
Whilst SAFCOL and DPE have not provided any information on the lease of Komatiland Forest, it
was reported in April 2004 that government had reached an agreement for the lease of 187 000
ha or 75% of the Komatiland Forest including two sawmills and a veneer plant to a consortium
including Bonheur for R396 million. Bonheur is 70% owned by Global Forest Products and 30% by
18
18
Imbokodvo Lemabalabala Holdings. Together with smaller saw millers, Yorkcor, A South African
company, opposed the sale on the ground that it gives Global Forest Products too much market
share as it had acquired some of Mondi’s forestry concerns three years earlier. Information on the
outcome of this deal has not been available.
SAFCOL retains 25% stake on behalf of government in each of the packages. Of the 25% stake
held by SAFCOL on behalf of the government, 19% is earmarked for community trust and ESOPs.
Ownership of land is retained by the State. Instead, a lease agreement is entered into between
government and private investor, which governs use of forest land. Requirements of the investor
must be satisfied in a formal business plan undertaking that deals with various government
objectives; including job retention, skills development, community development, further
investment and similar issues.
SAFCOL land that has not yet been privatised continues to be used for commercial purposes. Very
small portions of SAFCOL land is leased for purposes such as cellphone towers. The only material
lease is a notarial lease with Mondi for the operation of a plantation in the Barberton area. This
plantation was acquired from the STK with the lease in place.
Currently SAFCOL employs 3019 employees, this has dropped by 1302 since 2000. There has been
significant changes due to the privatisation process. SAFCOL retrenched workers from the regional
offices and head office and took transfer of DWAF workers, employment of these workers has
been transferred with the privatisation transactions.19
Net Profit (Loss)
120
Net Profit (Loss)
millions rands
100
80
60
40
20
0
-20
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Net Profit (Loss) 16.3
32.7
19.2
16.5
8.6
-10.6
15
31.9
32.9 103.9
Source: Department of Public Enterprises
Forestry Companies
Siyaqhubeka Forests
Mondi and Imbokdvo Lemabalabala (BEE partner) bought the 75% stakes in Siyaqhubeka for R100
million. Siyaqhubeka Forests plans to convert all its forests to pulp wood. At present, eucaplytus is
19
Data and information on SAFCOL was sourced from an interview With Mulungisi Vungwana at the Department of Public Enterprises,
November 2004
19
produced for pulp is sold to Mondi and pine is sold to SAPPI, but delivered to Mondi in an
exchange arrangement between SAPPI and Mondi that saves on transport costs. Siyaqhubeka
Forests produce 300 000 tonnes of eucalyptus pulpwood and 150 000 tonnes of pine pulkp wood
per annum. In addition they also produce about 100 000 cubic metres of eucalyptus and pine saw
logs, 9 000 cubic metres of treated poles and 9 000 cubic metres of eucalyptus saw timber for
export.20
Most of the labour at Siyaqhubeka is outsourced and of the 1500 workers only 80 are directly
employed by the company. While most contractors are affiliated to the South African Contractors
Association there may be some black emerging contractors that are not. The workers of
Siyaqhubeka are unionised under the National Industrial Commercial Workers Union.
Singisi Forest Products
Singisi and Singalana (BEE partner) bought the 75% stake in Singisi for R45 million, the holding
company is Hans Merensky. Singisi General Manager Piet Van Zyl was unavailable for an interview.
Amatola
Amatola Forest Holdings and Wildbreak Investments (BEE partner) have leased 25 000 ha in
Hogbak and Stutterheim areas of the Eastern Cape.
MTO
MTO and Cape Timber Resources (BEE partner) have leased 115 000 ha of state land in the
Western and Southern Cape. Cape Timber comprises of Cape Sawmills and Wild Peachh
Investment Holdings.
Komatiland Forest
Whilst SAFCOL and DPE have not provided any information on the lease of Komatiland Forest, it
was reported in April 2004 that government had reached an agreement for the lease of 187 000
ha or 75% of the Komatiland Forest including two sawmills and a veneer plant to a consortium
including Bonheur for R396 million. Bonheur is 70% owned by Global Forest Products and 30% by
Imbokodvo Lemabalabala Holdings. Together with smaller saw millers, Yorkcor, A South African
company, opposed the sale on the ground that it gives Global Forest Products too much market
share as it had acquired some of Mondis forestry concerns three years earlier. Information on the
outcome of this deal has not been available.
Global Forest Products
In 2001 Mondi Limited together with a US based international investment management firm,
Global Environmental Fund Management Corporation launched a joint venture, Global Forest
Products (Pty) Ltd (GFP). GFP is an integrated forest products company, located in Mpumalanga
and headquartered in Sabie, South Africa. GFP manages 92000 ha of land, predominantly pine
plantations. The company also owns and operates conversion facilities including three sawmills, a
plywood mill and two value added remanufacturing plants. Mondi Limited previously wholly owned
these assets but after a strategic decision that timber processing was a non core business, set up
the joint venture as part of its exit strategy from the industry.21
20
21
Interview with Mr Kewley, Siyaqhubeka Forests, November 10 2004.
Global Forest Products (Pty) Ltd, Forest Management Cerification Report, Qualifor Programme Associated Documents, 5 April 2002.
20
Subsequently, Mondi Limited has sold its shares in GFP to the IDC.22 GFP is one of the largest
suppliers of softwood products to the South African market and surplus is exported. Currently GFP
grows eucalyptus on a ten year cycle for pulpwood and produces 105 tonnes/annum. Pine pulp
logs are a secondary product from the saw log plantations and GFP produces 211 tonnes/annum
as well as 130 tonnes of softwood chips for pulp, a by product of the sawmill process. GFP
employs 2000 workers in its forests and another 2000 in its sawmills. 23
NCT Forestry Cooperative Limited24
NCT is a supplier of quality round wood timber and the largest forestry-marketing organisation in
southern Africa. It was established in 1949 as a marketing co-operative to cater to the needs of
private and independent timber growers. As a co-operative, its members who share in profits, own
NCT. Today Membership stands at 2039 shareholding members, representing a total area of 300
000 ha – 21% of afforested land in South Africa.
NCT’s role is to act as agent for both members and processors, to negotiate prices on behalf of its
members and offers a range of services including, timber order allocations, timber transport coordination, accounts and technical forest advice.. The coooperative’s area of management and
operation stretches from the Western Cape through the Eastern Cape, into KwaZulu-Natal to
Mpumalanga and Limpopo Province and including Swaziland. The head office and Southern Natal
District office are based in Pietermaritzburg with additional district offices in Greytown, Richards
Bay, Vryheid, Nelspruit and George.
Eucalyptus timber and wattle is exported in log form by NCT itself and in woodchip form previously
through CTC and ShinCel and now through it new facility in Durban. Chipped Pine sawmill waste is
sold to pulp producers.
NCT has constructed a new wood chip facility in the Port of Durban. It is a joint venture between
NCT Forestry and a management consortium, Zululand Chip Management Company (Pty) Limited.
The facility has a capacity of 360 000 air dry tonnes of hardwood chips per annum and is the
fourth wood chip export facility in South Africa but the only one in Durban; the three existing
plants are all located in Richards Bay - CTC, ShinCel and Silvacel (Mondi). This wood chip facility is
aimed at the export of eucalyptus hardwood chips from Durban to pulp and paper manufacturers
in Japan. The plant became operational in July 2004 with the first export shipment taking place at
the end of January 2005.
Forestry concerns of Mondi and Sappi
Mondi and Sappi have the largest commercial forests concerns in South Africa. The forestry assets
of both Mondi and Sappi, provides the companies with a pulp revenue stream that hedges the pulp
purchases of their paper operations, thereby reducing their exposure to the volatility of world pulp
prices.
Sappi owns and manages 515 000 hectares of Pine and Eucalyptus plantations in South Africa and
75 000 ha in Swaziland. Mondi manages an area of 537 000 ha, of which 335 000 ha are
afforestable, in Mpumalanga, KwaZulu- Natal, Eastern Cape, Limpopo Province and Swaziland.
Between them, Sappi and Mondi own one percent of the total land area in South Africa and
directly employ just over 1000 workers in their forestry operations.
22
23
24
Interview with Shaun McCartney, Global Forest Products, 8 November 2004.
Interview with Mr Keyne, Global Forest Products, 8 November 2004.
www.nctforestry.com
21
Outgrowers and Small Emergent Farmers in Forestry
Since 1983, the forestry industry has been managing timber growing initiatives amongst small
scale emerging farmers. Farmers with use rights to communal land in districts close to the
markets, such as near Richards Bay, have planted Eucalyptus grandis or wattle (Acacia mearnsii)
in lots of about 0.5 to 2 ha, entering the industry at their own initiative. Sappi and Mondi have
initiated outgrower (contract farming) schemes in KwaZulu/Natal and the Eastern Transvaal, as
part of corporate social investment programmes, or as commercial schemes with the goal of
securing raw material supplies. The South African Wattle Growers Union (SAWGU) has opened its
membership to small growers of wattle, and actively supports the expansion of the small-grower
sector through extension services, training and loans. In addition, the Natal Timber Cooperative is
actively providing extension services to aspirant tree-growers in the small-farmer sector and is
establishing technology transfer agreements with the CSIR and others to ensure quality support to
these growers. As many as 7,000 farmers may be involved in forestry in this way.
The number of growers involved in the various schemes by the end of 1999 was approximately
12 300. They had planted 24 200 ha in KwaZulu-Natal and the Eastern Cape.25 Apart from the
organized schemes, a further 19 250 ha involving 6 600 people is estimated to have been planted
by individuals on their own initiative. The total area planted by small growers is therefore
estimated to be 43 500 ha and involves 18 900 individual growers. These figures are again
confirmed in 2004 by PAMSA. For each 8 hectares planted, it is estimated that an additional job
(apart from the owner) is created. For the managed schemes, the sponsoring company needs to
employ one additional person for every 1000 ha planted in the scheme. Total employment
generated is estimated at over 24 000 people. Net profit generated by small grower schemes
averages at R9100/ha over the rotation of the crop (six to eight years). This can be as high as
R16 000 depending on factors such as soils, rainfall and plantation management.26 The potential
for these schemes to grow is substantial. Forestry South Africa estimates that the afforestation
could reach 137 000 ha and involve 29 000 growers
PAMSA states that the land tenure system in rural areas is a major constraint on the expansion of
small grower schemes. Traditional land tenure systems are complex and not well understood by
the industry. In KwaZulu-Natal, the local traditional leader is able to grant use of land to
individuals. This results in individuals with sufficient security of tenure that they can plant trees
and know that they will be able to reap the harvest. The decision to plant trees is thus primarily
that of the individual on whose allocated land the trees will be planted. In the Eastern Cape, the
land tenure system appears more complex. The right to use land appears to vest more with the
community than the individual. Any forestry operation, therefore, has to have the approval of the
community. Mechanisms such as the Communal Property Association (CPA) are required to initiate
afforestation projects. Setting up a CPA is a lengthy and laborious process. The length of a
forestry rotation (6-10 years) further compounds the problem. The Communal Land Rights Bill
presently before the legislature will have an impact on afforestation projects although it is still too
early to define the impact.
25
Edwards, MPB, Report on Small Grower Afforestration Development in Kwazulu-Natal and Eastern Cape, Forestry South Africa, Sept
2000
26
Cairns, RI, Report on Outgrower Timber Schemes in Kwazulu-Natal: Do they build sustainable rural livelihoods and what interventions
should be made?, A contribution to the IIED-CSIR coordinated project: Instruments for sustainable private sector forestry, 2000
22
Case Study: Outgrowers for eucalypt production in KwaZulu/Natal 27
Since 1983, more than 4,000 black farmers in KwaZulu/Natal have joined the small-grower
commercial timber schemes administered by Sappi Forests, Mondi Timber and the Lima Rural
Development Foundation (a non-government organization contracted to Sappi). Tarmers join the
schemes under contract and are provided with technical assistance, subsidized inputs and loans for
the establishment and maintenance of small Eucalyptus grandis plantations. The average size of
these plantations is 1.2 ha. Trees are planted in plots on land where individual farmers have rights
to use the land this way. After six to eight years the timber companies expect to purchase all trees
subsidized by the schemes. They retain first rights to the timber from subsequent coppice
regrowth. The cost of loans and certain inputs are then deducted from the gross payment to
farmers. The timber is processed in pulp mills at Mandini, Richards Bay and Umkomaas. At
present, small-grower schemes contribute less than 1% of the total intake at these mills, a
contribution which will grow to about 2.5% when these woodlots are in full production.
Strengths
x Participating households receive income as payment for their labour in establishing,
maintaining, and protecting woodlots Woodlots are also used as a means of saving.
x Outgrower schemes reach the poorest and most isolated farmers, since the timber
companies operate in isolated and neglected rural areas and have a vested interest in
seeing that woodlots are successfully cultivated and profits are acceptable to farmers;
advance payments for site preparation, weeding and fire protection allow even those
farmers with meagre cash incomes to participate.
x Women participate in the schemes on an equal footing with men; 49% of all woodlots are
owned by women.
x Most households (77%) plant less than 50% of their total land allocation to trees. Trees
are normally planted on lands previously used for grazing or on marginal (especially steep)
lands. Woodlots do not seriously compete for household land and labour, but rather
diversify the number of farming enterprises and spread labour inputs more evenly through
the year.
x Outgrower schemes inject capital into under-developed areas and provide farmers with
timely and appropriate inputs, professional advice, an assured market and local
employment spin-offs.
Weaknesses
x Smallholders can have little or no influence over the terms of contract. The formation of
growers' associations can balance the power of companies in negotiating the terms of
contracts. Present associations, supported by Mondi, need to develop their independence.
x Risks arise from depending on a single crop for a single market; diversification is useful
here. Wattle, for example, provides a greater diversity of products that can be sold into
various markets, providing greater opportunity to maximise income.
x Outgrower schemes may cause inequities. In areas of rapid afforestation newcomers are
less likely to procure unused land for their own households. Some households may have
joined the schemes in order to tie up unused land.
x Farmers may sometimes overlook more profitable alternatives such as sub-tropical fruit,
and need balanced extension services to facilitate a proper choice of land use.
x The schemes have resulted in a certain amount of discord and concern among rural
communities. About 18% of growers recount cases of conflict with neighbours concerning
27
The State of Forestry in South Africa Today
23
stock damage, boundary disputes and deliberate fire in individual plots. People have raised
concerns about the affects of afforestation on stream runoff and groundwater levels.
x
The commercial woodlots are not well integrated into farming systems e.g. for building
poles production and general benefits such as windbreaks, shade, fodder, prevention of soil
erosion, and soil enrichment.
Social Responsibility of Forestry Companies
In South Africa all the major forestry companies have social responsibility programmes. The social
benefits for forestry workers have been in the form of land (for cultivation and grazing), housing,
water and sanitation, transport, primary and adult education and opportunities for sport and
recreation. With an increase in contract labour it is unclear whether these benefits extend to
workers not directly employed by the forestry companies. In addition, it is also not known what
relationship existed between the government and communities located in close proximity to state
owned forests or how privatisation of these forests has impacted on communities.
In some areas forestry companies allow local communities to grow crops, especially legumes such
as groundnuts, between newly planted timber trees. This practice benefits the local community
from having access to additional land on which to grow food and possibly earn an income, and the
forestry companies benefit from improved weed control and soil fertility. Some forests also allow
for surrounding communities to collect medicinal plants from the forests.
24
Raw Materials Supply: Recycling
South Africa has a well developed and successful infrastructure for the collection and recycling of
paper. Of the 1,78 million tons of paper consumed in South Africa in 2002, about 278 000 tons is
non-recoverable (tissue etc.) leaving 1,38 million tons of potentially recoverable paper. Of this
amount, 922 00028 tons was collected for reuse in paper mills in 2002, that is about 52% of its
consumption of paper, which is equivalent to European levels of fibre recycling. This increases
capacity to produce paper and reducing volumes that must be handled by solid waste disposal.
PAMSA estimates that there are 13 small recycled-paper-based mills in South Africa.
The collecting of paper for recycling is a source of direct employment for more than 10 000 people
in South Africa. Collecting of recycled paper has also been a first step into paper manufacturing for
some paper manufacturers.
A related benefit of recycling paper is that the cost of solid waste removal and disposal is reduced
for local government authorities. Recycled fibre is a cheaper fibre source than virgin fibre.
Advances in paper making technology have resulted in more and more products being made with
recycled fibre. The quality of such products approaches and in some cases can exceed that of
product made using virgin fibre. Some products can use varying proportions of recycled and virgin
fibres thereby exploiting supply and pricing opportunities. Recycled fibre can be used in the
manufacture of a wide range of paper products: tissue paper, corrugating box papers, newsprint
and various other packaging grades. The proportion of recycled fibre in the products also varies
from 100% recycled fibres to a few percent.
The wood fibres integral to the paper-making process can be recycled up to six times before they
lose their strength and become unsuitable for recycling. It takes 1.2 tons of waste paper to make
approximately 1.12 tons of recycled paper. It is estimated that every ton of recycled waste paper
saves three cubic metres of valuable landfill space and 17 trees. The recycling process requires
only half the amount of water needed to produce paper from virgin fibre. When compared to the
wood pulping process, recycling results in energy savings of up to 40%, while producing less water
pollution and less air pollution.
28
Source: Paper Recyclers Association of South Africa, Powerpoint presentation, Recycle for the future, Jan 2004.
25
Source: www.Mondi.co.za
The value of paper collected for recycling varies. The lowest value papers are those of mixed
grade and those contaminated with materials such as dirt, wax staples and glues. Brown
(unbleached grades) papers tend to have a lower value than bleached papers. Uncontaminated
waste from converting plants (pre-consumer) is most valued due to the consistent grade of paper
and its cleanliness. These would typically include off-cuts and trimmings from printers or
corrugated box manufacturers. Mixed waste salvaged from municipal dump sites are generally the
lowest priced. Separation of waste paper at source is the key to retaining its value. Some grade of
paper cannot use recycled fibres for either health reason i.e. liquid packaging papers or paper
property reasons i.e. photocopy papers. The next diagram shows the major sources of recycled
fibre. It also illustrated the opportunity for increasing collection from homes and offices.
PRE-CONSUMER (15%)
Recovered
922
Not Recovered
459
Available
For Recycling
1381
POST-CONSUMER (85%)
Convertors &
Allied
Industries
Other Business
Domestic
(Homes)
Offices
(Retail. W/S etc.)
=
202
513
50
157
=
5
115
193
146
Landfilled
Sources of recycled paper collection in South Africa29
(Numbers are thousands of tons)
Mondi Recycling
29
Source: paper Recycling Association of South Africa
26
Mondi Recycling source and supply 300 000 tons of all waste paper grades to Paper and Board
Mills per annum. On a national scale there are 82 Buy-Back Centres in operation which collectively
generate 60 000 tons of waste paper per year. Mondi Recycling has provided 500 Paper Barrows
to hawkers and invested R3,5 million in the Buy-Back Centres in the form of scales, Paper Barrows,
bins and portable offices.
Sappi Waste Paper
Sappi Waste Paper is a division of Sappi Kraft, it supplies Sappi Kraft with waste paper for use in
Sappi's mills throughout South Africa. One of these, Sappi's Cape Kraft Mill, runs on 100% recycled
fibre. Based at Sappi's Head Office in Johannesburg, Sappi Waste Paper has a national network of
recycling operations throughout the country. The company drives the procurement of waste paper
through on-site waste management and recycling programmes. Sappi Waste Paper also utilises an
extensive network of recycling centres which purchase waste paper from numerous street
collectors.
Nampak Paper Recycling
Recycled paper represents a significant part of Nampak's packaging operations. According to
Charles Bromley, one of the company's paper cluster directors, about half of the raw materials
used in its (corrugated) paper activities is recycled. Every year Nampak Paper Recycling collects
and recycles 200 000 tons of paper, according to the company's marketing executive, Di van
Breda. "We collect office paper, magazines, newspaper and corrugated board. Non-cardboard
materials are converted into tissue paper jumbo reels and supplied to Nampak Tissue as raw
material. Brown paper is converted into cardboard, which is supplied to our corrugated division as
raw material."
Smaller Recyclers
There are several smaller waste paper recycling mills, mainly producing tissue paper. In total
there are about 12 mills, including Unicell, Jacaranda, Genpak, Green Tissue.
27
Conversion: Pulp
Messina
Nelspruit
Pretoria
Johannesburg
8
9
7
Piet Retief
South African Pulp Mills
1.
2.
3.
4.
5.
6.
7.
8.
9.
Sappi Saiccor
Mondi Merebank
Sappi Stanger
Sappi Tugela
Mondi Felixton
Mondi Richards Bay
Mondi Piet Retief
Sappi Ngodwana
Sappi Enstra
Vryheid
5 6
Bloemfontein
Pietermaritzburg4
3
Richards Bay
2
1
Durban
Cape Town
Mosselbay
Port Elizabeth
Location of South African Pulp Mills
Source: PAMSA
Pulp mills are located close to the forestry or bagasse resource. The one exception to this is the
location of Sappi Enstra mill in Springs. The reason for this unusual location is that the mill was
originally designed to pulp maize residue or straw which is available on the Highveld. In common
with other seasonal agricultural fibre crops, the cost of operating the mill only when straw is
available makes the manufacture of pulp from maize straw uneconomic. Mills dependent on
recycled fibre for their raw material supply are usually located near urban centres to minimise
transportation costs. These mills are covered in the section on recycling.
28
Pulp Production In South Africa
Company
Mill
Products
2001 Capacity (1000
ts)
576
Mondi
Richards Bay
Mill
Hardwood and softwood Kraft paper
Piet Retief Mill
60
Flexiton Mill
HARDWOOD AND SOFTWOOD NSSC
PULP
Unbleached Bagasse pulp
Merebank Mill
Thermomechanical pulp
220
70
Groundwood Pulp
Sappi
SilvaCel Mill
Ngodwana Mill
Hardwood Pulp
Hardwood and softwood Kraft paper
66
*
410
Groundwood Pulp
Tugela Mill
Unbleached softwood pulp
100
230
Hardwood NSSC pulp
Stanger Mill
Enstra mill
Saicor Mill
Bleached Bagasse pulp
Bleached hardwood pulp
Dissolving pulp
Total
120
60
90
500
2602*
*1.9 million green metric tonnes of hardwood woodchips/annum
Most pulp mills also have paper machines on site. This eliminates the need for the pulp to be dried
and transported before being converted to paper. Only one pulp mill in South Africa does not have
paper making capacity, Sappi Saiccor produces dissolving pulp which is used in the chemical
industry and not for paper production.
Pulp production (from raw material other than recycled waste) in South Africa is carried out by two
companies, Mondi and Sappi. However recent developments may see the entrance of NCT Forestry
Cooperative and the Swedish market pulp producer, Sodra Cell into this market. They have
embarked on a joint venture, forming a company called Pulp United and are currently assessing
the feasibility of constructing a pulp mill in KwaZulu Natal. NCT and a management consortium,
Zululand Chip Management Company (Pty) Limited have also built a new chipping plant in Durban.
The facility has a capacity of 360 000 air dry tonnes of hardwood chips per annum and was
operational towards the end of 2004.
Whilst the table below is incomplete for data on quantity of dissolving pulp produced for 2001 to
2003, most of this product is exported, so information can be taken from export figures and for
2003 amounted to 535 thousand tonnes. A fair amount of chemical pulp production is exported
but most of mechanical pulp and semi-chemical pulp produced is used for local consumption.
29
Pulp Production
thousand tons
1999 to 2003
2001
2002
1999
2000
2003
YTD
YTD
YTD
YTD
YTD
YTD
Change
270
285
274
285
277
-2.70%
171
chemical pulp
1372
1419
1296
155
155
-0.10%
1323
1350
2.00%
dissolving pulp
476
557
2118
2261
1740
1763
1782
1.10%
Pulp
mechanical pulp
semi-chemical pulp
Total Pulp
Source: PAMSA30
The Pulp Process
There are two major categories of pulp. Mechanical pulp is produced by applying
mechanical force to the wood resulting in a separation of the fibres to form pulp. This
process is only used on softwood to produce so called “wood containing” papers such as
newsprint and magazine grades. The major benefit of mechanical pulping is that it
produces a 90% plus yield on the dry wood used. The pulp is, however, much weaker
than chemical pulp and has a tendency to yellow with age.
30
30
.
Mechanical Pulp
Chemical Pulp
Energy consumption
1000 KW/tonne of pulp
Self-sufficient
Yield (from wood material)
95%
45%
Fibre length
Fibres broken
Mainly longer fibres
Paper strength
Lower
High
Production costs
Lower
Higher than in case of mechanical pulp
Chemical pulp is made by chemically dissolving the lignin (the natural polymer that binds
the fibres together in wood) from the wood. Chemical pulp has a high strength and can be
bleached to a high brightness. The yield of chemical pulps is about 50% on dry wood
used. Chemical pulping is suitable for hardwood and softwood. The most common
chemical pulping process is called the kraft process. This process uses sodium hydroxide
and sodium sulphide as the pulping agents. This process has the advantage that all the
pulping chemicals can be recycled and reused.
Most chemical pulp is produced for paper making (paper-grade pulp). A portion of the
chemical pulp produced is intended for the cellulose industry where it is used to produce
chemical products such as textile fibres, cellulose acetate film and explosives. This grade
of pulp is known as dissolving pulp. Sappi Saiccor is the world’s largest producer of this
grade of pulp.
31
Conversion: Paper and Board
South African Paper Mills
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Cape Town
SA Tissue
Goodview Investments
Central Tissue
Hygenic Paper
Mondi Merebank,
Rafello Paper Mills
SA Paper Mills
Sappi Stanger
Nampak Riverview
Tongaat Tissue
Sappi Tugela
Mondi Felixton
Mondi Richards Bay
Mondi Piet Retief
Sappi Ngodwana
Sappi Enstra
Kimberly Clark SA
Mondi Cartonboard
Lothlorien
Unicell Mill
Nampak Rosslyn
Waldens Paper Mill
Nampak Kliprivier
Expert Tissue
Heidleburg
Ligia Paper Industries
Sappi Adamas
Sappi Cape Kraft
Nampak Belville
Janjirkar Paper Mill
Messina
Pretoria
10
Johannesburg
11
13
Nelspruit
8
9
12
7
Piet Retief
Vryheid
Bloemfontein
5 6
Pietermaritzburg4
Richards Bay
3
1
2
Durban
14
15
Mosselbay
Port Elizabeth
Location of South African paper mills
Source: PAMSA (3)
Paper and Board Production in South Africa
Most pulp mills also produce paper. But sometimes the two operations are separate, with paper,
especially specialist grades, being produced nearer the markets. Bulk pulp is traded and shipped
around the globe in dried blocks for this purpose. Mondi and Sappi dominate the market, KimberlyClark and Nampak both have mills producing tissue paper, Nampak also has a board mill. Unicell is
one of the smaller companies producing board from recycled waste. There are several smaller
privately owned mills that have sprung up in the last five years. Almost all these mills produce
tissue paper although there are a few that are producing cartonboard. Many of the small paper
mills start and up grade their mills with second hand plant equipment imported mainly from
Europe and reconditioned.
32
Paper Conversion
Paper manufacture is a highly capital intensive operation. As a consequence, paper machines have to run
continuously to be economical. They consequently produce large quantities of paper in roll or sheet form
that must be converted into another form before being used. Some of the converting operations such as
sheeting or coating can be done in the paper mill. Most are performed by a separate converting operation.
Printing and writing grades are sold by paper companies in roll or sheet form. Bulk printers such as
newspaper operations run continuously fed printers. Smaller print runs generally require the paper to be
delivered in sheet form. As there are numerous consumers of printing and writing grades of paper, some of
whom require only a few kilograms of paper at a time, a well developed infrastructure of paper wholesalers,
merchants and distributors has developed for these grades. Typical value added products produced from
printing and writing grades are newspapers, magazines, advertising flyers, school and office stationary and
books.
Packaging converters normally supply industrial companies and as a consequence, their production volumes
are high. They are generally supplied directly from the paper makers in reel form. Typical packaging
products produced are corrugated cartons for the fresh produce and industrial market, packaging for display
of goods in supermarkets (i.e. cereal boxes, powdered soap boxes etc.), paper sacks for cement, potatoes
etc and paper grocery bags. Nampak is the largest packaging convertor in South Africa.
Tissue converting involves the conversion of rolls of tissue from a paper machine into facial tissues,
serviettes, paper towels and sanitary products. Unlike in packaging papers, where the converted products
are supplied to industrial customers, the tissue converting industry is mostly aimed at the consumer products
market. Some tissue companies convert their own production into consumer products while others sell to
dedicated converting operations.
Converters of paper products generate cuttings from the paper they use. This forms an important source of
good quality recycled fibre for the paper manufactures. Most major paper companies in South Africa operate
recycled paper collection divisions who contract to converters to collect their waste.
Company
Mill
Products
Total
(1000 ts)
52
Kimberly-Clark
Enstra Mill
Crepe tissue
Mondi
Richards Bay Mill
Felixton
Piet Retief
Springs Mill
Merebank Mill
White top and craft liner board
Fluting medium
Unbleached linerboard
Carton Board
News print and telephone directory
paper
SC mechanical
Uncoated fine paper
Other grades
260
100
130
125
230
100
220
16
Nampak
Belville Mill
Klipriver Mill
River view Mill
Rosslyn Mill
Crepe tissue
Crepe tissue
Crepe tissue
Fluting and testliner
25
23
10
50
Sappi
Ngodwana Mill
240
140
390
Cape Kraft Mill
Enstra Mill
White top and Kraft linerboard
Newsprint
Kraft linerboard, fluting and other kraft
paper
Testliner, fluting and ceiling board
Uncoated printing and writing paper
Coated fine paper
Tissue paper
Uncoated industrial and packaging
paper
Germiston Mill
Testliner
80
Tugela Mill
Unicell
Capacity
80
170
80
30
40
33
Other
Approximately 12 Other
smaller mills often
dealing with recycled
paper
77*
total
2648*
Major Paper and Board Mills in South Africa
Value of Total Production
Million Rands
31
(*Estimate)
2001 to 2003
2002
2003
2001
YTD
YTD
YTD
YTD
Change
Printing and Writing Paper
4874
5758
5602
-2.7%
Packaging Paper
4390
5414
4771
-11.9%
Tissue Paper
1164
1186
1286
8.5%
10428
12357
11658
-5.7%
Paper and Board
Total Paper and Board*
Source: PAMSA
32
The tables above and below suggest a fairly constant (stagnant) sector in the writing packaging
and tissue sub sectors. Although there are year on year fluctuations in different product lines the
overall trend in both volume and value is fairly flat. Where fluctuations do occur these can be
ascribed to fluctuations in the currency especially the dramatic drop in the Rand and its more
recent strengthening against major currencies as well as the cyclical nature of global supply and
demand in the pulp and paper sectors. Tissue is more often a conversion of recycled material and
therefore may demonstrate different cycles to those product lines with either mechanical or
chemical pulp as a direct input. Some product lines are more focused around export whereas
others such as tissue paper are more likely to be bound for the domestic consumption market as it
is generally considered too bulky for transport reducing its trade efficiencies. In this regard it is
interesting to note that tissue (read domestic market) records a consistent growth in value of
production and is one of the few sectors to attract new market entrants on the supply side over
this period.
Paper and Board Production
thousand tons
1999 to 2003
1999
2000
2001
2002
2003
02 -03 YTD
YTD
YTD
YTD
YTD
YTD
Change
Printing and Writing Paper
834
852
863
904
916
1.3%
uncoated paper
339
361
382
398
405
1.7%
75
66
62
80
77
-4.1%
328
333
328
338
336
-0.6%
92
92
91
88
98
11.2%
1062
1138
1245
1265
1264
-0.1%
Paper and Board
coated paper
newsprint and telephone directory paper
SC mech and lightweight coated paper
Packaging Paper
31
www.paperloop.com, 2004
32
34
liner board
646
711
802
815
840
3.0%
fluting
213
216
232
229
224
-2.0%
other kraft, paperboard & fibreboard
203
211
211
222
200
-9.9%
Tissue Paper
145
134
150
154
152
-1.6%
tissue paper
145
134
150
154
152
-1.6%
2041
2124
2257
2324
2331
0.3%
Total Paper and Board
Source: PAMSA33
The performance of the industry is reflected in the utilisation of manufacturing equipment as
shown below. All paper grades were produced at over 90% of the capacity of the mills. The
utilisation of bagasse was relatively low at 77,8%. This was due to substitution of other fibre
grades for bagasse pulp. These would be waste paper in the case of fluting made from bagasse
and bleached hardwood for bagasse used in fine papers.
Figure 3. Equipment utilisation
Percent of capacity
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Mechanical Chemical Semi-chem
pulp
pulp
pulp
Bagasse
pulp
Paper mills Newsprint
Writing &
printing
paper
Packaging
paper
Paper and Board Processes
Making paper consumes large amounts of energy and water. For example, in 1992 the US paper
industry was the third largest consumer of energy after the petroleum and chemicals sectors. But
the paper industry differs from others in that it generates a significant proportion of its own energy
needs by burning by-products (residues, bark, etc.). This is considered a renewable energy source
and, unlike fossil fuels, does not contribute to a net increase in carbon dioxide emissions as it
usually offset by forest regrowth. The US industry, for example, generates 55% of its energy
needs; in this way and other countries are making increasing use of renewables.
33 33
35
Water is an essential ingredient in pulp and paper making. It is used to create the pulp and to
flush away unwanted impurities. Emissions to water are one of the most significant environmental
impacts of pulp and paper making.
Numerous grades of paper are produced. They can be summarised into three major groups:
printing and writing grades, packaging grades and tissue grades.
As a generalisation, printing and writing grades use mechanical and/or chemical pulps as raw
material. The pulps used are generally bleached. They also use filler materials such as clay,
limestone or titanium dioxide. The weight of the sheet (grammage) for printing and writing grades
are relatively light – 40 to 120g/m3.
Packaging materials are mostly made using unbleached chemical pulps. The use of bleached fibres
is increasing as more use is made of the packaging materials in advertising. Packaging papers are
generally classified into three groups. Linerboard and fluting are used for the manufacture of
corrugated cartons. They are sometimes referred to as containerboard. Lightweight papers used
for paper bags are often referred to as sack kraft. Board used for the manufacture of folding boxes
such as used for cereals, soap powders etc. is called cartonboard and is generally much heavier
than other packaging grades.
Tissue is made from deinked recycled fibres and bleached pulp. Tissue making requires
substantially different equipment than for the manufacture of other paper grades. It has the
advantage that it can be economically produced on a smaller scale than most other grades.
36
Section 3:
Pulp and Paper Companies
in South Africa
37
Companies in the South African Pulp and Paper Sector
In the Price Waterhouse Coopers Global Forestry and Paper Survey (2004) top 100 global
companies, Mondi, a subsidiary of Anglo American is ranked 15th for 2002 and 2003. Sappi is
ranked 20th for 2002 and 2003. Nampak is a new entrant in 2003 at 65th. Kimberly Clark, the
US giant is ranked 4th for 2002 and 2003, the company has a subsidiary in South Africa.
Proctor and Gamble (paper), another large US multinational is ranked 6 th in 2002 and 10th in
2003, the company operates a distribution centre in South Africa for its products which are
imported. Proctor & Gamble do produce nappies in South Africa through a contractor under
licence.
Rank
Net Sales
2003
2002
1
1
Net
Income
(Loss)
Return on
capital
employed
Company
Country
2003
2002
2003
2002
2003
2002
International Paper
US
$25,179
$24,976
$302
-$880
3.80%
2.80%
2
2
Georgia-Pacific
US
20,255
23,271
254
-735
4.4
4.13
3
3
Weyerhaeuser3
US
17,844
16,771
13
16
2.4
2.5
4
4
Kimberly-Clark
US
14,348
13,566
1,694
1,675
14
15
5
5
Stora Enso
Finland
13,745
12,090
165
-212
2.1
4.5
6
7
UPM
Finland
11,234
9,907
415
520
3.8
5.2
7
10
Svenska Cellulosa
Sweden
10,562
9,091
629
588
5.9
7
8
9
Oji Paper
Japan
10,465
9,635
105
-142
2.5
0.5
9
8
Nippon Unipac
Procter & Gamble
(Paper)
Japan
10,053
9,696
43
-5
1.3
1
US
9,933
9,233
1,015
849
10.1
7.8
Metsäliitto
Finland
9,393
8,387
-18
118
1.2
3.9
2.3
10
6
11
11
12
13
Boise Cascade
US
8,245
7,412
8
11
2.1
13
12
Smurfit-Stone
US
7,722
7,483
-197
65
1.1
2.8
14
14
US
7,553
7,242
-6
-389
1.9
3.2
15
15
MeadWestvaco
Anglo American
(Mondi)
UK
5,628
4,805
350
345
10
12.3
16
16
Jefferson Smurfit
Ireland
5,359
4,455
-76
93
4
6.5
17
18
Amcor
Australia
4,856
4,071
234
463
6.4
7.7
18
17
4,186
5.4
4
4,550
4,000
126
1,300
180
19
-1,450
0.4
-2.5
20
20
Sappi
France
Singapor
e
South
Africa
4,759
19
Worms
Asia Pulp and Paper
(Est)
4,299
3,729
149
220
5.8
7.5
64
65
Portucel
1,130
1,027
75
84
3.6
4.8
Nampak
Portugal
South
Africa
1,112
486
32
19
10.5
8.1
Rayonier
US
1,101
1,117
50
54
4.7
5.3
Australia
New
Zealand
398
285
48
29
13.3
22.8
385
302
-158
-115
-20.9
-2.3
65
66
NA
61
99
NA
Gunns
100
NA
Tenon
34
Sappi is the leading producer of coated woodfree paper in North America, Europe
and Africa commanding 26% market share in North America, 22% in Europe and
60% in Africa. Sappi Saiccor, in South Africa, is the world’s largest and lowest cost
producer of dissolving pulp, used in the manufacture of viscose fibre, with a 15%
34
source PWC global survey
38
share of the world market. The South African operations of Sappi comprised 24%
(2003 financial year).
Mondi forms part of Anglo American plc’s wholly owned Paper and Packaging
Division. Anglo American has its primary listing on the London Stock Exchange. The
South African operations of Mondi comprised 33% (2002 financial year).
Forestry concerns of Mondi and Sappi
The forestry assets of both Mondi and Sappi, provides the companies with a pulp
revenue stream that hedges the pulp purchases of their paper operations, thereby
reducing their exposure to the volatility of world pulp prices.
NCT Cooperative Limited is a supplier of round wood timber and the largest
forestry-marketing organisation in southern Africa. It was established in 1949 as a
marketing co-operative to cater to the needs of private and independent timber
growers. As a co-operative, its members who share in profits, own NCT. Today
Membership stands at 2039 shareholding members, representing a total area of 300
000 ha – 21% of afforested land in South Africa. NCT has recently entered the pulp
market in South Africa with the construction of a new wood chip facility in the Port of
Durban in 2004. It is also conducting a feasibility study for a pulp mill in KwaZulu
Natal.
Nampak is a South African listed company whose primary business is in packaging.
They do, however, operate three tissue mills and one corrugating papers mill in
South Africa. Nampak is Africa’s largest packaging manufacturer. It is also one of the
top six manufacturers of folding cartons in Europe and enjoys a strong position in
several important niche markets, including the healthcare market.
Other pulp and paper companies in South Africa are usually privately owned small
businesses. using recycled waste. Many of the small paper mills start and up grade
their mills with second hand plant equipment imported mainly from Europe and
reconditioned. Almost all these mills produce tissue paper although there are a few
that are producing cartonboard. Most of these mills have entered the market in the
last 10 years, with investment rate in new operations increasing dramatically in this
period and many of these mills are growing (see section on investment). There are
also some smaller conversion companies that are producing toilet products and
packaging.
39
SAPPI
Sappi is a South African-based international forest products company, and has been
ranked as the 20th top pulp and paper manufacturers in the world in 2002 and 2003.
From a totally South African company in 1989 which exported approximately 50% of
its total capacity to about 50 destinations throughout the world, the company has
grown to an international organisation with manufacturing facilities on four
continents Today, Sappa is the global market leader in its core businesses of coated
woodfree paper and dissolving pulp.
Shareholding details are unclear, one report says that the largest shareholder is
Buhrmann with 19,9 percent of the company. Buhrmann is an international businessto-business services and distribution group and one of the world's major suppliers of
office products and graphic systems for the business market. The head office is
located in the Netherlands.
Other reported shareholders include First National
Nominees (Pty) Ltd, South Africa, Industrial Development Corporation of South Africa
Ltd (although no record of shareholding is reported in the IDC Annual Report 2004),
Nedcor Bank Nominees Ltd, South Africa and Sanlam Ltd, South Africa.
Background
South African Pulp and Paper Industries Limited, registered as a company in
December 1936. the first mill was built near Springs using straw, a maize by product
for paper production. Over the next 35 years, the company built up mills and
plantations and in 1973 it re-registered as Sappi Limited. In 1977 Sappi formed three
operating subsidiaries, Sappi Fine Paper, Sappi, Kraft and Sappi Forests, each with its
own board of directors. In 1980 Sappi formed a new division, Sappi Timber Products,
specialising in sawmilling and in 1981 began producing linerboard from waste paper.
In 1986, Sappi created Sappi International to handle export marketing of all Sappi
products.
In 1988 Sappi acquired Usutu Pulp Company in Swaziland, one of the world's leaders
in unbleached softwood kraft market pulp production and in 1989, acquired Saiccor,
the world's single largest producer of dissolving pulp which it then expanded in 1995.
Sappi purchased five fine paper mills in the United Kingdom, and established Sappi
Europe, with it's head office in London in 1990. Over the next five years Sappi
acquired Speciality Pulp Services in Hong, 99% of Hannover Papier, Germany's
leading producer of coated woodfree paper and 75% stake in S D Warren, the USA's
largest manufacturer of coated woodfree paper, establishing Sappi Limited as the
world's leading producer of these grades. During the same time, Sappi established
Sappi Trading, the group's international trading company, Sappi Europe SA launched
as the pan-European sales organisation for Sappi products and Sappi shares are
listed on London and Frankfurt stock exchanges, and Paris Bourse.
In 1997, Sappi acquired Europe's largest producer of coated woodfree paper, KNP
Leykam and restructured the Sappi group as two focused operating divisions - Sappi
Fine Paper, domiciled in London, managing the coated and uncoated fine paper
businesses, and Sappi Forest Products, domiciled in Johannesburg, managing the
diversified forestry, pulp, particleboard and containerboard businesses. Sappi Fine
Paper became the world's largest producer of coated fine paper. It is the market
leader in Europe, North America and Africa and is the largest exporter of coated
40
papers to Asia. All companies in the Sappi group shed their former names and
assumed the name 'Sappi' worldwide. In 1998, The Sappi group listed its shares on
the New York Stock Exchange.
From 2000, Sappi strategy is to focus on pulp and paper and the company began to
shed it non core operations. Between 2000 and 2003, Sappi sold Sappi Novobord,
the particleboard and medium density fibreboard manufacturing division of Sappi
Forest Products, Sappi Mining Timber, the mining timber division of Sappi Forest
Products as it no longer fits Sappi's strategy, which focuses on pulp and paper and
Boskor sawmill to Swartland Meubels, a family owned business. At the same time
Sappi Fine Paper North America closed down its Mobile Mill in Alabama, exiting the
US uncoated paper business and acquired Potlatch Corporation's coated fine paper
business and its Cloquet pulp and paper mill in Minnesota, USA. Sappi Europe closes
its Transcript Mill in Scotland, exiting the carbonless paper market.
Recent International Investment35
Sappi has invested in 34% of Jiasngxi Chenming Paper Co, to make their first direct
investments in China along with global South Korean company Shinmoorim
(7.5%)China's largest local paper company, Chenming Group(47.2%), The
International Finance Corp (7.5%0 and Jiangxi Paper Industry (3.8%). Sappi's equity
contribution will be approximately US$60 million.
The IFC, the private sector arm of the World Bank Group, is supporting the
construction of the light weight coated paper machine with a 350,000 ton annual
capacity, a bleached thermo mechanical pulp (BTMP) mill, and deinking plant. The
financing will also support an ancillary power plant and transportation infrastructure
in Nanchang, the capital of Jiangxi Province in southeast China.
The total project cost is an estimated at almost $487 million. IFC is providing $72.9
million in equity and loans for its own account and is arranging an $205 million
limited recourse project financing. The mill is scheduled to start paper production in
the first half of 2005.
35
SAPPI Press Release, December 2004
41
SAPPI
Johannesburg
SAPPI trading
Hong Kong
SAPPI fine
paper
SAPPI forest products
Johannesburg
Sales offices
Africa
North America
Boston
Europe
Brussels
South Africa
Johannesburg
Mills
Mills
Mills
Cloquet
Alfeld
Adamas
Muskegon
Blackburn
Enstra
Somerst
Ehingen
Stanger
Westbrook
Gratkorn
Australia
Central
America
Europe
Export Services
(pulp)
Export
Services (SA)
Southern
Africa
Export Services
(USA)
Kenya
Lanaken
SAPPI
Forests
SAPPI
Saiccor
SAPPI Kraft
Divisions
Mills
Mills
SAPPI Forests
SAPPI Saiccor
Cape Kraft
Sawmills
Ngodwana
Maastricht
Nash
Nijmegen
Tugela
Usutu
Divisions
SAPPI Waste Paper
Sappi Fine Paper
Sappi Fine Paper is a global business with manufacturing assets in eight countries on
three continents. It has three divisions, in Southern Africa, Europe and North
America. The company has a total paper capacity of 4.3 million metric tons and the
division represents 83% of group sales and 66% of group operating income,
contributing US$190 million in 2003. Sappi is the world's leading producer of coated
fine paper with production capacity of 3 450 000 tonnes per annum.
42
source: www.sappi.co.za
Sappi Forest Products
Sappi Forest Products, is a pulp and commodity paper products business based in
Southern Africa Sappi Forest Products is the world's largest producer of dissolving
pulp with production capacity of 600 000 tonnes a year, equating to 15% of world
market share in the commodity. The division produces dissolving pulp, bleached and
unbleached kraft pulp, containerboard, packaging paper, newsprint and sawn timber.
The three business units of Sappi Forest Products are Sappi Saiccor, Sappi Kraft and
Sappi Forests and represented 17% of group sales and contributed 35% of group
operating profit in 2003.
The division owns and manages 540,000 hectares of Pine and Eucalyptus plantations
in Southern Africa. It also produces newsprint and kraft packaging paper and
beneficiates wood into timber products. It has strong market share positions in South
Africa in its main product areas:
Containerboard - 51%
Sackkraft - 81%
Newsprint - 43%
43
Sappi Saiccor
Sappi Saiccor is the world's largest manufacturer of chemical cellulose (dissolving
pulp) and has the capacity to produce approximately 600,000 tons of Elemental
Chlorine Free (ECF) chemical cellulose per annum. In 1995, Sappi Saiccor spent more
than US$250 million in expanding and upgrading the mill's facilities increasing
capacity from 450,000 to 600,000 tonnes per annum.
Almost 100% of the pulp produced is exported to countries in Europe, the Americas
and Asia. It is used in the manufacture of a wide range of products including
textiles, chemicals and plastics. Sappi Saiccor's chemical cellulose is used extensively
to make viscose staple fibre, an important blend and constituent for textile yarn, and
an increasingly important product in non-woven fibre applications. The chemical
cellulose is also used in the manufacture of lyocell (solvent spun) fibres. These are
natural cellulosic fibres used to produce fabrics that are soft, strong and absorbent
for both the woven and non-woven industries. The acetate-flake market is also an
important outlet for Sappi Saiccor's pulp. Acetate flake is used primarily in the
manufacture of products such as cigarette filters, as well as in high-quality yarns and
fabrics.
Sappi Kraft
Sappi Kraft currently produces newsprint and packaging papers, more than half of
South Africa's kraft packaging paper requirements, including linerboard, corrugating
medium, bag and sack kraft. These products are used in the South African market
and exported.
Sappi Waste Paper is a division of Sappi Kraft. Its core objective is to supply Sappi
Kraft with waste paper for use in Sappi's mills throughout South Africa. One of these,
Sappi's Cape Kraft Mill, runs on 100% recycled fibre. Sappi Waste Paper has a
national network of recycling operations throughout the country. The company drives
the procurement of waste paper through on-site waste management and recycling
programmes. Sappi Waste Paper also utilises an extensive network of recycling
centres which purchase waste paper from numerous street collectors.
44
Divisions
Mills/Factories/
Plantations
Sappi Fine Paper
Cloquet mill
Sappi Fine
Muskegon mill
Paper
North
Somerset mill
America
Westbrook mill
Alfeld mill
Blackburn mill
Ehingen mill
Sappi Fine
Gratkorn mill
Paper
Lanaken mill
Europe
Maastricht mill
Nash mill
Nijmegen mill
Sappi Fine
Adamas mill
Paper
Enstra mill
South
Stanger mill
Africa
Sappi Forest Products
Sappi Kraft
Sappi
Saiccor
Sappi
Forests
Products Produced
Bleached chemical pulp for own consumption Coated woodfree graphic paper Bleached
chemical pulp for own consumption Coated woodfree graphic paper Bleached chemical pulp
for own consumption Coated woodfree graphic paper Coated woodfree graphic paper,
coated and uncoated speciality paper
Bleached chemical pulp for own consumption Coated woodfree graphic paper, coated and
uncoated speciality paper Coated woodfree graphic paper Bleached chemical pulp for own
consumption and market pulpCoated woodfree graphic paper, uncoated woodfree paper
Bleached chemical pulp for own consumptionCoated woodfree graphic paper, uncoated
woodfree paper Bleached chemi-thermo mechanical pulp for own consumptionCoated
mechanical graphic paper Coated woodfree graphic paper Uncoated business paper Coated
woodfree graphic paper
Uncoated woodfree graphic paper Bleached chemical pulp for own consumption Uncoated
graphic and business paper Bleached bagasse pulp for own consumption Coated woodfree
graphic paper and tissue paper
Saiccor mill
Waste-based linerboard and corrugating medium
Unbleached kraft pulp for own consumption, bleached chemical pulp for own consumption
and market pulp Mechanical pulp for own consumption Kraft and white top linerboard
Newsprint Unbleached kraft and semi-chemical pulp for own consumption
Kraft linerboard and corrugating medium Other kraft packaging papers Unbleached kraft
market pulp
Dissolving market pulp
KwaZulu Natal
Mpumalanga
Usutu (Swaziland)
Sawmills
Plantations (pulpwood and sawlogs)
Plantations (pulpwood and sawlogs)
Forests (pulpwood)
Sawn timber
Cape Kraft mill
Ngodwana mill
Tugela mill
Usutu mill
Capacity
(’000 Tons)
paper
pulp
240
260
760
110
350
120
230
820
480
320
30
240
Employees
410
110
490
3,270
110
130
230
170
5,480
30
180
110
100
60
2,020
60
240
140
300
90
410
100
350
230
600
230 ha
235 ha
75 ha
80 m3
2,500
660
990
590
750
Source: 2003 Sappi Annual Report
45
SAPPI Employment
Category
Legislators, Senior Officials &
Managers
2004
M
African
Coloured
1
1
Asian
0
2005
White
Disabled
65
Total
67
African
Coloured
1
1
Asian
White
1
67
Disabled
Total
70
F
0
1
0
2
3
0
1
0
1
2
M
20
7
52
513
9
592
22
9
60
500
591
Professionals
F
4
3
7
74
1
88
1
3
14
87
105
Technicians & Associate
Professionals
M
313
28
167
591
7
1099
393
31
197
600
1221
F
22
9
30
139
0
200
38
12
31
122
203
M
528
19
104
26
1
677
552
16
88
26
682
Clerks
F
51
29
52
283
5
415
58
27
50
288
423
Service Workers, Shop &
Market Sales Workers
M
9
3
2
18
32
6
0
1
21
28
F
0
0
1
8
9
0
0
1
6
7
Skilled Agricultural & Fishery
Workers
M
34
1
2
55
92
39
3
4
54
100
2
F
2
0
1
6
0
9
2
1
0
4
7
M
142
17
96
381
11
636
136
17
104
369
626
0
Craft & Related Trade Workers
F
1
0
0
1
Plant & Machine Operators &
Assemblers
M
1702
77
205
153
2
1
0
0
0
1
2137
1396
43
186
91
1716
23
2
2
2
29
F
54
3
1
4
62
M
1108
76
27
9
1220
0
Elementary Occupations
F
251
19
5
0
275
0
Apprentices & Section 18(2)
Learners
M
25
1
4
0
30
total
Overall total
38
5
9
12
64
F
1
0
1
0
2
9
1
2
1
13
M
3882
230
659
1811
30
6582
2583
125
650
1740
5098
F
386
64
98
517
6
1065
132
47
100
511
790
4268
294
757
2328
36
7647
2715
172
750
2251
5888
Source: SAPPI Workplace Skills Plan, 2004, 2005, FIETA
46
In its 2003 Annual Report Sappi reports 7510 employees in South Africa. In the 2004 Workplace Skills
Plan submitted to FIETA, the total employment for the group is 7647 excluding an additional 472 non
permanent workers. However, the 2005 Workplace Skills Plan reports a drop in employment to 5888,
a reduction of 1759 jobs. This can be attributed to no jobs being recorded under the category of
Elementary Occupations in 2005, shedding 1495 jobs in the category since 2004, these functions have
most probably been outsourced. There are no other significant differences between the employment
reports with the exception of Plant & Machine Operators & Assemblers category where a further 465
jobs were lost between 2004 and 2005. Significantly, of the 1759 workers that lost their jobs between
2004 and 2005, 1553 were African.
The actual annual payroll for 2004 is reported to be R814 024 376, whilst the estimated annual payroll
for 2005 is almost half of the previous year at R443 237 727.
Sappi Percentage Employment By Race
2005
Learners
Assemblers
category
Workers
Service Workers, Shop & Market
Sales Workers
Clerks
Professionals
Professionals
Managers
0%
African
Coloured
20%
40%
Asian
60%
80%
100%
White
47
Mondi
Mondi is part of the Anglo American Industrial Corporation group of companies. Anglo Forest
Products, operating under the Mondi International name, is an integrated paper and packaging group
with operations and interests in Europe and South Africa. It has been ranked as 15 in the worlds top
pulp and paper companies for 2002 and 2003. The Group has integrated production from forestry
through to paper products and is principally involved in the growing of timber and manufacture of
pulp, graphic paper, packaging papers and converted packaging. The packaging businesses are in the
industrial packaging and corrugated packaging sectors and more recently in the flexible packaging
sector.
Previously, Mondi has been managed along geographic lines, with Mondi Europe and Mondi South
Africa under separate structures. In 2004, Mondi has reorganised the group's uncoated woodfree
businesses under a global product structure and to consolidate the group's packaging interests into
two substantial integrated entities.
Anglo American
Mondi
100%
Mondi Packaging Paper
Mondi Packaging corrugated
Mondi Packaging
100%
Mondi Business
Paper
100%
Mondi Business Paper Austria
Mondi Business Paper Hungary
Mondi Packaging bags
Mondi Business Paper Hadera
Mondi Packaging Flexibles
Mondi Business Paper SCP
Mondi Packaging coating
Mondi Business Paper Syktyvacar
Mondi Business Paper South Africa
Europapier
90%
Ayelsford
Newsprint
50%
Mondi Shanduka
Newsprint
50%
Mondi Packaging
South Africa
50%
48
Mondi Business Paper
Neusiedler is one of the largest European producers of uncoated woodfree high-quality office paper
and is wholly owned by Mondi. With seven mills located in Austria, Slovakia, Hungary, Israel and
Russia and 14 paper machines, the company has an annual production capacity of some 1.7 million
tonnes of paper, of which 1.4 million tonnes is uncoated woodfree paper. The integrated pulp capacity
is approximately 900,000 tonnes. Neusiedler's market position in Western and Eastern Europe has
been considerably strengthened by its increased participation to 98% of the voting stock of the
Russian pulp and paper mill, Syktyvkar.
Mondi South Africa's wholly-owned graphic paper interests will all be in the uncoated woodfree sector
and all exports outside of sub-Saharan Africa will be sold through the existing Neusiedler sales and
distribution networks. The Merebank business will in future be known as Mondi Fine Paper South
Africa and will report under Neusiedler. The Merebank Mill produces uncoated woodfree, newsprint,
super-calendered magazine, telephone directory and carbonless copy papers off five paper machines.
It has annual production capacities of 270,000 tonnes of uncoated woodfree paper and 312,000
tonnes of mechanical papers, as well as 262,000 tonnes of converting capacity.
The integration under Mondi Fine Paper South Africa's includes Mondi South Africa's eucalyptus
forestry operations, the SilvaCel woodchip mill and the Richards Bay mill. The SilvaCel woodchip
facility, formerly under Mondi Kraft has the capacity to chip and load some 1.9 million green metric
tonnes of hardwood (eucalyptus and wattle) woodchips per year. At present, all the woodchips are
exported to the Pacific Rim, mainly Japan, where they are used to manufacture pulp and paper
products.
The Richards Bay mill produces a range of products. These include Baycel, a premier grade bleached
market pulp, which is made from 100% eucalyptus hardwood fibre, and Baywhite, a whitetop kraft
linerboard. About 65% of the mill's annual sales is exported.
Internal pulp consumption for increased woodfree paper production will increase as a result the RB
720 pulp mill project to be completed next year and the rebuild of the Merebank PM1 machine.
Specific arrangements will be made with Mondi Packaging in Europe and South Africa to
accommodate the strategic, marketing and sales requirements of the PM2 whitetop linerboard
machine at the Richards Bay mill. The existing export marketing arrangements for bleached
eucalyptus pulp, woodchips and Baywhite linerboard via MSI in Dublin will continue.
Mondi Packaging Europe
Mondi Packaging Europe is a leading corrugated packaging group with operations in the United
Kingdom, France, Poland and Ireland producing a full range of corrugated products. It has an annual
production capacity of 1.6 billion m2 from 45 plants across the United Kingdom, France, Poland and
Ireland. The group has developed into Europe's fifth largest corrugated producer. During 2002, it
expanded its presence in the UK, France, Ireland and Poland through the acquisition of four
integrated plants and two large sheet plants. The Group manufactures 1 million tonnes of corrugated
paper in the UK, Poland, Russia and the Czech Republic. Swiecie is the largest producer of corrugated
paper in the Group, with an annual production capacity of 340,000 tonnes of unbleached pulp and
80,000 tonnes of semi-chemical pulp. It produces 580,000 tonnes of corrugated case materials and
49
around 110,000 tonnes of sack kraftpaper. Swiecie has rebuilt its PM3 to enhance the capacity and
quality of testliner.
In December 2003, Mondi Packaging Europe acquired the Bauernfeind corrugated paper and
packaging group with operations in Austria, Germany, Belgium, Switzerland, Italy, Poland and China.
This significantly repositions Mondi's corrugated business, with increased European coverage, making
it now the 4th largest corrugating group in Europe. Mondi has reached an agreement in principle with
Frapag AG` 30% partner in the Frantschach Group based in Austria, to acquire their remaining
shareholding. Frantschach is the world's largest industrial sack packaging group. 100% ownership of
Frantschach provides for a simpler integration with. Frantschach Packaging is the world's largest
producer of industrial packaging and sack kraftpaper, with three paper mills and about 40 sack plants
situated throughout Europe and the Middle East as well as one operation in Malaysia. In 2002 it
successfully expanded the flexible and industrial packaging business. The group has eight flexible
packaging, seven barrier coating and two release liner operations. Total annual production capacity is
approximately 2.6 billion industrial sacks, 600,000 tonnes of sack and other kraftpaper, 180,000
tonnes of market pulp, 470 million consumer bags, as well as 1.6 billion m2 of barrier coated material.
The group is a world market leader in double-sided polyethylene coated release liners and a leading
European supplier for stand-up pouches. The activities of Frantschach and Mondi Packaging Europe
will be fully integrated to form a single packaging business Mondi Packaging Europe.
The corrugated paper mills acquired as part of the Bauernfeind transaction will form a separate
division within Mondi Packaging and will be combined with the paper mills which are currently part of
the Frantschach pulp and paper division. This division will control the strategic, marketing and sales
arrangements for the PM21 linerboard machine at Syktyvkar and for the PM2 whitetop linerboard
machine at the Richards Bay mill.
Mondi Packaging South Africa
Mondi has consolidated its South African packaging paper and board, converting and waste paper
recycling businesses/operations into a single new entity to be known as Mondi Packaging South Africa.
The component parts of Mondi Packaging South Africa are:
x
x
x
x
The corrugated packaging businesses of Mondipak.
The solid packaging and industrial board businesses of Mondi Cartonboard based at the
Springs mill.
The Felixton and Piet Retief corrugating paper mills as well as the domestic sales and
marketing organization of Mondi Kraft.
The waste paper collection and processing activities of Mondi Recycling.
MONDIPAK is a division of Mondi Ltd, which is a wholly owned subsidiary of Anglo-American.
MONDIPAK was originally formed when Consol sold their three South African based corrugated plants
to Mondi Ltd. Consol Corrugated was then renamed MONDIPAK, in April 1998. These three plants
were located in Kuils River, Alrode and Phoenix. In November 1998, Kohler Limited (a wholly owned
subsidiary of Rembrandt) offered its South African corrugated division for sale. At the time, Kohler
Corrugated consisted of eight manufacturing plants, located in the Western Cape (Epping & Paarl),
Port Elizabeth, East London, Pinetown, Brakpan, Nelspruit and Walvis Bay - as well as a number of
sales offices elsewhere. The intention was that these operations would be amalgamated with the
plants of the new MONDIPAK company. However, as part of the deal (in accordance with the
50
requirements of the Competitions Board of South Africa) Mondi Ltd had to sell two of the corrugated
plants. These two plants (Alrode and Phoenix) were sold to Golden Era in September 1999. Mondipak
is a manufacturer of corrugated packaging, specific to customer requirements, for the agricultural and
industrial markets. The division has eight integrated corrugating plants that also service sheet plants
strategically located in southern Africa, with a production capacity of 400 million m2 of corrugated
board.
Mondi Cartonboard has two board machines based at Springs in Gauteng. It manufactures a range of
coated packaging board and industrial board for carton printing, stationery, construction and core
winding applications. The capacity is 133,000 tonnes.
The Felixton Mill is situated near Empangeni alongside a sugar mill, and was acquired by Mondi in
1982. It was the first paper mill in South Africa to process bagasse fibre, a by-product of sugar cane,
together with waste paper, to produce fluting. The mill produces fluting using a mix of bagasse and
waste paper fibre. The product, branded Bayflute, is sold both locally and internationally.
The Piet Retief mill produces paper products for the corrugated packaging industry, manufacturing
high quality linerboard using eucalyptus logs, pine chips and waste fibre, was acquired by the division
in 1982. Recent environmental upgrades to the Piet Retief mill have increased its waste paper
recycling capacity and reduced its air pollution.
Aylesford
Mondi has 50% share in Aylesford Newsprint, a UK producer of newsprint using 100% recycled fibre.
The mill recycles 500,000 tonnes per annum of recovered paper and is conveniently located south of
London, from where much of the waste paper that is recycled at the mill is sourced. Aylesford is a
single-site operation with two paper machines and a total annual production capacity of 400,000
tonnes. The company has set world records for the production of newsprint, its PM14 producing
newsprint at a speed of over 1.6 kilometres per minute.
Europapier
Mondi owns 90% of Europapier, the largest paper merchant in Austria, Hungary, Slovakia, Slovenia
and Croatia and has a leading position in Poland, the Czech Republic and Romania. Europapier sells
graphic papers, office communication papers and other office supplies as well as packaging.
Black Economic Empowerment
MCI Resources renamed Shanduka, acquired 42% shareholding in Mondi South Africa's integrated
newsprint business (MNB), in an empowerment transaction that values the business at ZAR 1 100
million, finalized in 2004. A further 8% in MNB has been set aside for further broad-based
participation by Mondi South Africa employees and by relevant communities. In a similar deal,
Shanduka also acquired 42% of Mondi Packaging. Shanduka is a Black Economic Empowerment
Company, chaired by Cyril Ramaphosa. Shanduka also has shares in Alexander Forbes (30%),
Rentworks (50.1%), and two other Black Economic Empowerment Companies. One of these is Dinalta
(15%) that has a 15% share in The Bidvest Group and 15% share in Dinalta New Ventures. The other
is Tutuwa Consortium (40%) that has shareholding in Liberty Group.
51
2001
2002
000 tonnes
000 tonnes
000 tonnes
million sqm
million units
million units
1,143
188
1,290
780
2,400
305
1,476
182
1,520
1,121
2,600
470
000 tonnes
000 tonnes
000 tonnes
million sqm
000 sqm
000 gmt
000 tonnes
510
290
528
275
137
1,248
132
518
320
573
300
127
1,648
143
Europe
Graphic Papers
Pulp
Packaging Papers
Corrugated Packaging
Industrial Bags
Consumer Bags and Pouches
South Africa
Graphic Papers
Pulp
Packaging Papers
Corrugated Packaging
Lumber
Woodchips
Mining Timber
Comparison of Mondi European and South African production36
Comparing the same product production in the graph above it is immediately apparent that the Mondi
European operations have far greater production than those in South Africa. South Africa remains a
significant producer of pulp production, but contributes only 26% of total production in graphic paper,
27% of production in packaging paper and 21% in corrugated packaging in 2002.
The graph below shows that across the three categories of packaging papers, pulp and graphic
papers production increases occur both in South Africa and Europe from 2001 to 2002 but it these
increases are greater in Europe. With increased investment in Europe during 2003 and 2004, it is
expected that production output differences between South African and European operations would
have grown even larger as a result of increased total production output at the European operations.
36
Source: Mondi
52
Mondi Europe SA Product Production
Comparison 2001/2002
Packaging Papers
Pulp
3,500
Graphic Papers
3,000
000 tonnes
2,500
2,000
1,500
1,000
500
0
europe
2001
europe
2002
south
south
africa 2001 Africa 2002
Mondi Operations In South Africa
Given that the changes in the company are relatively new, below is a summary of Mondi Divisions in
South Africa prior to the reorganisation under Mondi’s global operations. Note that Mondi
Division
Mondi Paper
Location
Merebank Paper Mill Durban
Cartonboard
Springs, Guateng
Mondipak
Mondi Kraft
Richards Bay Mill,
Felixton and Piet Retief
SilvaCel – Richards Bay
Mondi Forests
Mondi Recycling
Mondi Timber
Mpumalanga, KwaZuluNatal, Eastern Cape,
Limpopo Province and
Swaziland
Production Capacity
270,000 tonnes of uncoated woodfree paper
312,000 tonnes of mechanical papers and
262,000 tonnes of converting capacity per
annum
a range of coated packaging board and
industrial board at 133,000 tonnes/annum.
400 million m2 of corrugated board/annum
330,000 tonnes of eucalyptus pulp/annum
450,000 tonnes of corrugating papers/annum
1.9 million green metric tonnes of hardwood
woodchips/annum
The area managed is 537,000 hectares, of
which 335,000 hectares are afforestable.
sources 316,000 tonnes of waste paper per
year
3 sawmills consume 218,000 m3 of Mondigrown sawlogs per annum of pine and
saligna lumber for the furniture and industrial
markets.
53
Mondi Forests
Mondi Forests owns and manages extensive hardwood and softwood plantations. It has land holdings
in Mpumalanga, KwaZulu- Natal, Eastern Cape, Limpopo Province and Swaziland. The area managed
is 526,000 hectares (this includes Peak Timber Ltd, its associated company in Swaziland, with about
32 000 hectares of land). Of this, 335,000 hectares are afforestable. 329 000 hectares are planted 31,7 percent to pine, 58,9 percent to gum, 8,7 percent to wattle and the remainder planted to sugar
cane. Mondi Forests has a sustainable annual production of just under 6 million tons of timber
including pine, eucalyptus(gum) and wattle. This accounts for almost a third of the total timber
production in South Africa. Current log production exceeds 5,4 million tons per year with 88,5 percent
devoted to pulp logs, 6,1 percent to saw logs and 5,4 percent to mining timber, poles and other
products
Mondi Recycling
Mondi operates the largest wastepaper collection and recycling operation in South Africa, sourcing
316,000 tonnes of waste paper per year. Collection is from converters, other industries, hawkers,
small businesses, retail and wholesale businesses, offices, schools, homes and community paper
banks. Mondi Recycling has secured a R500 000 loan from the Industrial Development Corporation for
suppliers to provide them with capital to set up small businesses. Mondi estimates that it has 5000
suppliers ranging from hawkers to small businesses.
Investment Plans for 2005
The main projects in South Africa for 2005 are projects that have already been approved and started
in the last few years but not yet completed:
x In Richards Bay, the RB 720 project aimed at increasing pulp production at Mondi Business
Paper South Africa from 550 000 to 720 000 tons (R1.7billion) and includes the new waste
water treatment plant (R218.4 million).
x Construction of PM31 in Merebank (R1.4 billion) which will increase the capacity by 270 000
tonnes of uncoated woodfree papers for office communication.
The main projects for 2005 in Europe are:
x Conversion to EFC (elementary chlorine free) bleach at Mondi Business Paper Syktyvkar at a
cost of around R179.4 million
x Conversion of PM3 at the Kematen site of Mondi Business Paper Austria at a cost of around
R40.6 million.
x R78.8 million conversion of the bark boiler at the Ruzomberok site of Mondi Business Paper
SCP.
x R15.6 million for a supply chain management programme.
x At Mondi Business Paper, Hadera R66.3 million is being invested in a new flow box and a new
small format line.
54
Employment
Employment
Division
Mondi Group
Office
Mondi Recycling
Mondi Paper
Mondi
Cartonboard
Mondi Kraft
Mondi Forests
Mondi Mining
Supplies
Total
2004
2005
Actual Annual
Payroll
2004
Estimated
Annual Payroll
2005
61
97
1211
90
95
1210
R 30,059,439
R 10,436,812
R 241,110,020
*
R 10,958,652
R 241,008,000
253
1592
634
472
500
R 65,666,515
R 275,465,867
R 72,138,969
R 68,480,360
*
R 126,078,487
737
4585
974
*
R 45,288,170
R 740,165,792
R 45,288,170
*
Employment figures for the table above are taken from the workplace skills plans submitted by Mondi
for each division for 2004 and 2005.
* Incomplete data: estimated annual payroll for the Mondi Group Office was excluded in their 2005
workplace skills plan and no 2005 workplace skills plan was submitted for Mondi Kraft.
The actual annual payroll for 2004 was R740 165 792, but differs greatly from one division to the
next, for Mondi Group Office the average actual annual payroll per employee was R492 778.00 whilst
for Mondi Mining Supplies the average actual annual payroll per employee was R61 449.00. Estimated
annual payroll for 2005 does not take into account increase in employment in Mondi Cartonboard and
Mondi Mining Supplies, whist Mondi Forests reports a drop in employment of 134 jobs from 634 to
500, yet the estimated annual payroll for 2005 is nearly R54 million higher than actual annual payroll
for 2004.
Total employment recorded for Mondi Consolidated in the workplace skills plans submitted for 2004 is
4544, of which 3893 are male and 651 are female.
There are a total of 131 Legislators, Senior Officials & Managers, of which 127 are male and 5 are
female. 117 are White, 5 are Black, 1 Coloured and 8 Asian.
Of the 2180 Black employees 1465 are employed in the Plant & Machine Operators & Assemblers and
Elementary Occupations categories, 215 in the category of Craft & Related Trade Workers, 186 as
clerks, 192 as Technicians & Associate Professionals and 43 as professionals.
Of the 1274 White employees, 65 are employed in the Plant & Machine Operators & Assemblers
category, 303 in the category of Craft & Related Trade Workers, 214 as clerks, 254 as Technicians &
Associate Professionals and 247 as professionals.
Of the 1011 Asian employees, 449 are employed in the Plant & Machine Operators & Assemblers
category, 198 in the category of Craft & Related Trade Workers, 130 as clerks, 175 as Technicians &
Associate Professionals and 47 as professionals.
55
Mondi Consolidated 2004
Percentage Employment by Race
Total Employment = 4544
Non-Permanent Workers
Learners
Assemblers
Workers
Clerks
Professionals
Professionals
Managers
0%
10%
20%
30%
African
40%
50%
Coloured
60%
70%
80%
Asian
90%
100%
White
56
Nampak Limited
Nampak Limited is listed on the JSE Securities Exchange South Africa in the Business Support Services
sector. It is largest and most diversified packaging manufacturer in Africa with operations in the
United Kingdom and Europe. Nampak is Africa’s largest packaging manufacturer. The company posted
a turnover of more than R18 billion last year - paper represents 45% of this value.
It produces packaging products from metal ,paper, plastic and glass, is a major manufacturer and
distributor of tissue products, and has a significant position in the paper merchanting market. The
group operates from manufacturing sites in South Africa, Kenya, Malawi, Mozambique, Namibia,
Nigeria, Swaziland, Tanzania, Zambia, Zimbabwe, the United Kingdom, Belgium, France, Holland,
Ireland and Italy. The group is actively engaged in the collection and recycling of all forms of used
packaging. Nampak also exports to many countries world-wide. NamITech, a subsidiary company
operating in the security sector of the IT industry servicing the telecommunications and financial
services industries and to large corporates.
.
Shareholding
Remgro, Allan Gray and Sanlam are the top three shareholders in Nampak, holding just over 37% of
the shares in the group. In total, 20 shareholders hold 80% of Nampak shares.
Type of production
Metals and Glass (for packaging)
Paper
Rigid Plastics (for packaging)
Flexible Plastics (for packaging)
Subsidiaries and Joint Ventures
Nampak has numerous subsidiaries and joint ventures in South Africa, Africa and Europe. Countries in
Africa where Nampak has investments are: Ethiopia, Kenya, Malawi, Mozambique, Namibia, Nigeria,
Swaziland, Tanzania, Zambia and Zimbabwe. For a full list of these joint ventures and subsidiaries
including percentage shareholding, refer to the following tables taken from the Nampak Annual Report
for 2003. The subsidiaries and joint venture’s income after taxation attributable to the holding
company for the year ending 30 September 2003 is R931.7 million, up from R732.5 million in 2002.
These investments performed better in 2003 than 2002 where the aggregate amount of losses
attributed to the holding company was R109.8 million, in 2003 the aggregate amount of losses was
R12.2 million.
57
58
59
Source: Nampak Annual Report 2003
Investment activities
M.Y. Holdings plc, a Nampak subsidiary acquired the total issued share capital of Gallagher Printers
Limited of Ireland with effect from 17 October 2002 for a consideration of R40 million. Gallagher is a
niche business specialising in cartons, leaflets and commercial printing for the healthcare industry.
Kohler Packaging Limited sold its Bubblepack business and machine in accordance with the
requirements of the Competition authorities to Nampak.
During 2003, the group completed a number of significant transactions. In two separate transactions,
Pamodzi Investment Holdings, an empowerment company, acquired a 28% stake in NamITech
through its subsidiary company, Clidet No 426 (Pty) Limited (“Clidet”). As part of the combined
transactions, NamITech acquired the remaining interests in Integrated Card Technology and
60
NamITprepaidz from the respective minority shareholders in those companies in exchange for equity
in NamITech. Nampak Products Limited subscribed for 12 206 redeemable preference shares in Clidet
as part of the funding mechanism to assist Pamodzi to make the acquisitions and Nampak’s resultant
shareholding in NamITech decreased to 51.08%.Clidet has been consolidated in terms of AC412.
Subsequent to the above transactions taking place, Nampak announced that it had reached
agreement to sell its 51.08% interest in NamITech to Allied Technologies Limited ("Altech") for a
consideration of R329.5 million in cash, a further amount of approximately R68 million in cash for its
loan and R125 million for the preference shares in Clidet. The transaction is subject to the approval of
the Competition authorities. Subsequent to 30 September 2003, the Competition Commission
recommended to the Competition Tribunal that the acquisition by Altech of a controlling shareholding
in NamITech should not be permitted.
Following an internal restructuring, Nampak Products Limited purchased the following businesses as
going concerns with effect from 1 June 2003:
the entire business of Printpak Limited;
the Flexible and Cartons and Labels businesses of Kohler Packaging Limited;
the Rotoflex-Quix business of Metal Box South Africa Limited; and
the entire business of Kohler Flexible Packaging (Pinetown) (Pty) Limited.
Printpak and Kohler Carton & Print were merged to create Nampak Cartons & Labels.
Disaki Cores and Tubes (Pty) Limited was incorporated on 30 July 2003 as a Black Economic
Empowerment partnership. Nampak’s Cores and Tubes business was sold as a going concern for a
consideration of R52 million, effective from 1 September 2003, to Disaki Cores and Tubes which
operates from plants situated in Johannesburg, Cape Town and Durban. Disaki employs 243 people
and services approximately 150 customers throughout the country. Nampak retains 70% share in this
new company.
During 2003, Redibox, a Nampak subsidiary, purchased the assets of Pica Box Manufacturers cc and
the assets of Pica Box Western Cape (Pty) Limited for an aggregate purchase price R3.96 million.
These businesses manufacture and market pre-erected boxes on pallets from sites in Port Elizabeth
and Cape Town. Redibox also purchased the business of B & B Distributors of George as a going
concern for a total consideration of R1.58 million. The business, which trades as Redibox George,
markets a range of packaging products from its premises in George,Western Cape.
Following a strategic review, the PET business in Spain and the protective clothing business in the
United Kingdom were sold for a total consideration of R149.8 million and Kohler Packaging sold its
45% shareholding in Pyramid Holdings Limited for R2.4 million.
Company Performance
Performance of Nampak Paper by operating profit is up by R245.8 million from R417.7 million (no
abnormal items) in 2002 to 663.5 million (including abnormal items of income of R22.5 million) in
2003. Operating Profits in Africa grew by R73.6 million from R378.5 million in 2002 to R452.1 million
(including abnormal items of income of R18 million). Operating profits of European operations grew
considerably more by R172.2 million contributing 70% of total operating profit for Nampak Paper,
from R39.2 million in 2002 to R211.4 (including abnormal items of income of R4 million) in 2003.
Some of may be attributed to new investment
61
Employment
The following table of employment at Nampak comes from its annual report for 2003. It does not
however state whether the employment figures are for South Africa or the group as a whole. Also, it
does not state whether it includes Nampak subsidiaries. It gives the group’s staff complement in the
management and skills band but does not define what is considered skilled work. Nampak reports
employment in these two bands at 5058. The only other available data for Nampak employment is
that of Nampak tissue, as submitted to FIETA for 2005. (please refer to section on Nampak Tissue
below)
62
Nampak Paper
Nampak paper has operations in Africa and Europe. The company produces a broad range of leading
paper-based carton packaging includes folding cartons, corrugated cartons, liquid cartons, display
cartons and composite containers. The division also produces wet glue paper labels, leaflets, multiplewall paper sacks and bags as well as paperboard cores, cones and tubes. Also manufactured from
paper is a range of speciality coated papers and industrial packing materials. Non-packaging paper
products include a range of printed books and diaries, tissue products and paper merchanting.
Revenue generation from the operations in Africa are almost double that of Europe for 2003, however
revenue of the European operations have increased substantially from 2002 to 2003.
Nampak Paper in South Africa
Disaki
Previously Kohler Cores & Tubes, Disaki, the leading cores and tubes manufacturer in South Africa, is
an empowerment company jointly owned by Nampak and local black businessman, Vince Raseroka.
Disaki primarily manufacture spirally wound cores and tubes and paperboard cones, as well as
angleboard, speciality expanded cell material (Dufaylite / the Kohler cell) and composite containers.
There are three plants in Cape Town, Durban and Gauteng.
Nampak Cartons and Labels
Nampak Cartons & Labels is South Africa's leading producer of litho printed folding cartons. The
company also produce gravure printed labels, specialising in paper based wet glue labels, and has a
book and diary printing operation. The division operates nine different factories, incorporating six
lithographic plants, two gravure printing plants and one book printing operation. These are segmented
into the following business units:
Nampak Cartons & Labels Gauteng
Nampak Cartons & Labels Western Cape
Nampak Cartons & Labels KZN
Nampak Cartons & Labels Eastern Cape
Nampak Gravure
Interpak Books
63
Nampak Corrogated
This division produces corrugated cartons and trays, sheet board SFK, and other specialist products
such as corrugated coffins and furniture. The plants are situated in:
Gauteng:
Wadeville
Rosslyn
KZN:
Pinetown
Pietermaritzburg
Cape:
Epping
East London
Port Elizabeth
Swaziland
Elopak S.A.
Elopak South Africa (Elopak SA), a joint venture between Nampak and Elopak of Norway,
manufactures the Pure-Pak range of gable topped cartons. The Pure-Pak range of cartons is targeted
at the non-carbonated liquid beverage market. The range of liquids that can be contained in Pure-Pak
cartons includes milk, fruit juice, wine, maas and cream. Dry powders can also be packaged in PurePak cartons. Nampak Liquid’s Isithebe plant handles all converting of cartons.
Nampak Liquid
Nampak Liquid is the largest and most diversified supplier of liquid packaging solutions, primarily to
the non-carbonated beverage, dairy and sorghum beer industries in Africa, South of the equator.
There are a total of nine plants situated around the country, in the following locations:
Bloemfontein
Cape Town
Industria, JHB
Isithebe
Pietersburg
Port Elizabeth
Vredendal
Vryburg
Durban
Nampak Sacks
Nampak Sacks is South Africa's leading supplier of multi-wall paper sacks and self-opening bags,
producing in excess of 190 million sacks and 600 million bags annually. There are two plants, Mobeni
in Durban and Epping in Cape Town. The products are used in the following markets:
Construction: Cement
Food:
Tea
Sugar
Maize & Flour
Salt
Agricultural: Potatoes
Retail trade: Pet food
Charcoal
64
Peters Papers
Nampak's paper merchandising division, Peters Papers, is one of the leading paper merchants,
graphics and mill agents in South Africa. As a result, Nampak holds a substantial share of the
country's paper merchanting industry, representing more than 40 leading graphics suppliers from
around the world and have full access to products from South Africa's leading local paper
manufacturers. The company markets a diverse range of papers, boards and graphics sundries to the
printing, packaging and office equipment manufacturing markets, with sales in excess of 100 000 tons
per annum, while speciality grades sold on a direct indent basis are approximately 20 000 tons per
annum. The division has operations in South Africa's major centres: Gauteng, Kwazulu Natal, Western
Cape, Eastern Cape and Mpumalanga. It also operates in Botswana, Swaziland, Namibia and
Mozambique.
Nampak Tissue
As the Nampak Group's consumer products division, Nampak Tissue produces a wide range of
products from toilet paper, to nappies, kitchen paper to wound dressings. Nampak Tissue produces
the many recognised household brands including:
Twinsoft
Twinsaver
Lifestyle
Cuddlers
Glad foil
Hulett foil
Nampak Tissue has paper manufacturing mills in: Klipriver in Gauteng; Belville in Cape Town;
Riverview in Kwa-Zulu Natal and Swaziland. Nampak Tissue has manufacturing plants in: Pretoria,
Pietermaritzburg, Klipriver, Durban, Cape Town, Swaziland, Mozambique, Tanzania and Kenya.
Sancella is a joint venture between Nampak Tissue and SCA Sweden, which encompasses the
Cuddlers, Lifestyle and Tena brands. Nampak Tissue manufactures and distributes Cuddlers and
Lifestyle products and imports and distributes Tena products. There are 18 raw materials used in the
production of nappies, and about 80% of these are imported from Europe, mainly France and Sweden
and from Colombia. Many of these raw materials could be produced locally, with investment in
appropriate technologies. The Nappies produced are consumed locally and exported to Namibia,
Botswana and Swaziland.37
Nampak Recycling collects, processes and controls approximately 200 000 tons of paper a year. This
volume is converted into wastepaper products at its paper mills located in Southern Africa. The noncardboard materials collected are converted into tissue paper jumbo reels, by Nampak's paper mills
and used in the manufacture of various tissue products, such as toilet paper and roller towel. Waste
paper is collected, sorted, baled and distributed to mills where tissue is manufactured. The quality of
waste collected in South Africa is not always good, as there can be undesirable quantities of glue, ink
and china clay. Office paper that is high quality is desirable as the raw material but it is possible to
meet Nampak tissues demand locally so some of this is imported. However, in the future this may be
met locally as sourcing potential has not been extended to domestic homes and recovery rates can be
improved. 38
37
38
Interview with Simon Ndimande, Nampak Tissue Klipriver, 2004.
Interview with Philip Sapto, Nampak Tissue, 2004
65
Nampak Tissue employs 936 workers and its actual annual payroll for 2004 was R151 993 184. Non
core functions such as cleaning, building maintenance and canteen services. Distribution is outsourced
to Biddulphs. Casual labour to fill in when workers are ill, injured or in the case of overtime shiftwork,
employed adhoc are sourced from Transman. Whilst general plant maintenance is done in house,
shutdowns and new installations are outsourced. 39
NAMPAK Tissue
2005
Category
African
M
7
Coloured
3
Asian
2
White
38
Disabled
Total
50
Legislators, Senior
Officials & Managers
F
2
1
1
4
8
Professionals
M
F
9
5
3
0
2
0
22
15
36
20
M
17
17
0
34
68
Professionals
Clerks
Service Workers, Shop
& Market Sales Workers
Skilled Agricultural &
Fishery Workers
Craft & Related Trade
Workers
Plant & Machine
Operators & Assemblers
31`Apprentices &
Section 18(2) Learners
Non-Permanent
Workers
Total male & female
Total
39
F
5
1
0
0
6
M
F
M
32
18
3
24
1
1
11
12
4
7
29
16
74
60
24
F
M
0
7
2
0
9
0
0
10
14
18
F
M
0
42
F
0
0
0
0
0
M
250
54
63
6
373
F
M
4
25
44
56
0
4
2
0
50
85
F
M
4
23
4
0
31
0
F
M
0
0
F
0
M
F
343
38
381
168
77
245
100
19
119
141
50
191
752
184
936
Interview with Philip Sapto, Nampak Tissue, 2003
66
Nampak Tissue 2004
Pecentage Employment by Race
Total = 936
31`Apprentices & Section 18(2) Learners
category
Plant & Machine Operators & Assemblers
Skilled Agricultural & Fishery Workers
Service Workers, Shop & Market Sales Workers
Clerks
Technicians & Associate Professionals
Professionals
Legislators, Senior Officials & Managers
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%
African
Coloured
Asian
White
67
68
Kimberley Clarke
Kimberley Clarke is a global company based in the United States. The South African operations of
Kimberly-Clark, represent a small component of their global business. Its South African operation is
51% owned by Kimberly-Clark and 50% (minus I share) is owned by First Asian Investment Company
FASIC, now 82% owned by Nedbank Limited. On 1 April 1999, Malbak Limited, a subsidiary of
Nampak Limited, sold its effective 50% shareholding in Kimberley-Clark to The Lion Match Company
Limited (“Lion Match”). Lion Match in turn sold its shareholding to Fasic Africa (Pty) Limited (Fasic).
Fasic has an irrevocable put option, subject to the same terms and conditions as the original sale, to
sell to Malbak Limited the shares acquired during the first five years of ownership should KimberlyClark Corporation USA sell its interests in Kimberley -Clark.and exit from South Africa. Conditions
governing such an exit by Kimberly-Clark Corporation exclude conduct or omission on part of the
partners and any changing political environment in South Africa. The directors have assessed the
financial performance of K.C. and are satisfied that an exercise of the put option is remote. This put
option expired on 31 March 2004.40
Carlton Paper of SA (Pty) Ltd, formerly a subsidiary of Kohler has been bought over by Kimberely
Clarke. Its Enstra facility near Springs was upgraded to include a waste paper recycling plant. The
new plant almost eliminates the use of virgin pulp and consumes 72,000 tons of waste paper per
annum.
There has been an increase in employment at Kimberley Clarke between 2004 and 2005, from 855 to
1094. this increase has mainly been in the category of Plant & Machine Operators & Assemblers.41
40
41
Nampak Annual Report 2003, www.nampak.co.za
The following employment data was sourced from Workplace Skills Plan, FIETA 2004
69
Kimberley Clarke 2005
Percentage Employment By Race
Total Employment = 1094
Apprentices & Section 18(2) Learners
category
Clerks
Professionals
0%
African
Coloured
20%
40%
Asian
60%
80%
100%
White
70
Kimberley Clarke
Employment 2004
Employment 2005
Category
African
Coloured
Asian
White
M
F
M
F
5
3
6
7
1
0
3
3
5
1
3
1
30
15
31
15
Clerks
M
F
M
F
44
2
33
1
9
0
16
6
6
1
6
2
69
6
6
32
M
F
4
7
1
1
0
6
2
17
Fishery Workers
M
F
Workers
M
F
6
0
0
0
0
0
29
0
Plant & Machine
M
F
279
1
55
44
2
0
17
2
M
F
Apprentices & Section
18(2) Learners
M
F
Non-Permanent
Workers
M
0
F
0
Legislators, Senior
Professionals
Professionals
total male&female
Totals
Disabled
1
0
1
0
Total
African
Coloured
Asian
White
41
19
43
26
3
1
3
6
2
0
4
0
9
2
2
2
31
16
30
16
45
19
39
24
128
9
61
41
43
2
28
5
4
2
2
9
11
2
4
3
75
13
2
26
133
19
36
43
7
31
8
4
0
0
1
5
3
1
12
10
35
0
6
0
3
0
0
0
29
0
38
0
353
47
370
18
81
52
30
14
15
84
496
168
0
0
7
5
0
0
0
0
0
0
7
5
0
0
9
4
0
0
0
0
1
0
10
4
0
0
M
386
85
22
185
3
678
468
96
57
185
F
25
54
11
87
0
177
41
63
28
156
855
509
411
139
33
272
3
Total
0
0
0
0
1
0
Disabled
159
85
341
806
288
0 1094
71
Unicell
Unicell is a new entrant into the South African market with their first corrugating papers mill in
Germiston being commissioned in 2002. Unicell is owned by the Sharma Group, a privately owned
company with operations in India, South Africa, Swaziland, Trinidad & Tobago, United Arab
Emirates, United States of America, United Kingdom and Zambia.
The major shareholder of Unicell is Cosco Ltd which has an 85% equity stake and is an investment
holding company controlled by the Sharma Group. The Sharma Group has a long history in the
paper manufacturing business, and owns paper mills and converting plants in Botswana, South
Africa, Swaziland, United Arab Emirates and Zambia.
Industrial Development Corporation of South Africa has a stake in the project. The mill has
employed the state-of-the-art twin wire technology and has capacity to produce 70,000 metric
tons per year of high quality Kraft papers of all grades including white top liner, fluting, virgin and
test liners. The plant complements the existing group capacity of 50,000 metric tons at Swazi
Paper Mills in Swaziland. This project has taken the groups Kraft capacity in the region to 120,000
metric tons per year.
Unicell operates an integrated paper mill, consisting of deinked pulp (DIP) mill, tissue paper mill
and converting lines. The DIP mill has the capacity to produce 120 tons per day (40,000 tpa) of
deinked pulp from waste paper. Fifty percent of the output is fed into the downstream tissue
facility to produce 60 tons per day (20,000 tpa) of tissue paper and converted tissue products. The
remaining deinked pulp (20,000 tpa), in the form of wetlap, is sold to Swazi Paper Mills, an
existing client of IFC, and a part of the Sharma Group.
Unicell Global Operations and Production
Unicell Paper Mills Caribbean Limited, Trinidad & Tobago
High quality all grades of tissue paper, bath tissue, kitchen towels, facial tissue, napkins/serviettes
and Industrial towels.
Unicell Paper Mills (S.A) Pty Limited., South Africa
High quality Kraft papers of all grades including white top liner, fluting, virgin and test liners.
Swazi Paper Mills Limited, Swaziland
Kraft paper from 100% recycled waste paper for the corrugated box industry
Emirates Paper Mills Limited, U.A.E
High quality Tissue paper including white and coloured bathroom tissue, facial tissue handkerchief
tissue, kitchen towels, diaper wrap tissue, hand towel and napkin for both consumer and away
from home products.
Unicell Paper Mills Inc., U.S.A
All grades of high quality tissue paper, bath tissue, kitchen towels, napkins/serviettes, facial tissue
and industrial towels.
Zambezi Paper Mills, Zambia
High quality tissue, packaging paper, board and economical writing and printing paper
Recent development:
Gayatri Paper took over Unicell Paper Mills in Germiston, the 50,000 tonne/yr containerboard
facility, from the Sharma Group in December 2004. Gayatri is a South African investment vehicle,
but details of the deal and the new owners have not been made available.
72
Unicell
Employment 2004
Category
M
Legislators, Senior
Professionals
Professionals
Clerks
Fishery Workers
Workers
Plant & Machine
18(2) Learners
Non-Permanent
Workers
Total male & female
Total
African
0
Coloured
0
Asian
7
White
3
Disabled
Total
10
F
M
F
M
0
0
0
1
2
2
14
2
1
0
0
20
F
M
F
M
0
0
0
9
0
0
2
0
1
0
1
2
3
0
3
4
4
0
6
15
F
M
0
0
0
0
0
0
F
M
11
0
4
4
0
19
F
M
0
57
0
2
0
8
0
3
0
70
F
M
F
M
F
M
F
M
0
57
4
0
0
0
0
0
0
0
0
0
136
4
35
16
0
57
4
0
0
0
0
191
F
4
2
2
7
15
140
6
37
23
206
Unicell 2004
Total = 206
Clerks
Professionals
0%
African
Coloured
20%
40%
Asian
60%
80%
100%
White
73
Green Tissue and Janjirker Paper Mill
The Aziz family own Green Tissue, a tissue converter, in Beaconvale, Cape Town. The facility
currently converts 10,000 tonnes/yr of tissue into toilet paper, facial tissues and napkins, as well
as making paper plates. The Aziz brothers plan to install a diaper line, a feminine hygiene products
unit and a pocket handkerchief line at the plant in the near future.
The family also owns Janjirker Paper Mill that currently produces 4,000 tonnes/yr of tissue on one
unit. They are sourcing a new tissue PM that they aim to install at their plant in Bellville, near Cape
Town, by the end of 2005.
Green Tissue and Janjirker have a combined turnover of some Rand 83 million/yr.
Employment at Green Tissue42
Green Tissue
Employment 2004
Category
Managers
Professionals
Professionals
Clerks
Workers
Assemblers
Learners
total male&female
Totals
African
M
F
M
F
M
F
M
F
M
F
M
F
M
F
M
F
M
F
M
F
M
F
M
F
Coloured
Asian
White
0
0
5
0
0
0
0
0
0
0
31
0
0
6
5
24
0
0
0
0
0
0
0
0
0
0
0
0
0
26
0
1
0
0
0
0
0
0
0
0
31
0
10
57
0
0
0
0
31
67
0
Disabled
Total
5
0
0
0
0
0
0
6
36
24
0
0
0
0
0
26
0
1
0
0
0
0
41
57
0
0
0
0
98
42
Workplace Skills Plan, FIETA 2004 No data on Janjirker Paper Mill was available as no WSP was submitted. The Aziz family was
unavailable for an interview.
74
Green Tissue 2004
Total = 98
category
Clerks
Professionals
0% 10%20%30%40%50%60%70%80%90%100%
African
Coloured
Asian
White
75
Cape Waste Paper Pty Ltd
Cape Waste Paper is a privately owned, family run business that statered 21 years ago. When it
began it was the only recycler in Cape Town. It supplies waste as raw material to SAPPI, Nampak
and Mondi and uses some in its own tissue mill. Recently with the strong rand there has been less
demand for waste pulp as exports in recycled finished goods have dropped. Cape Waste has
began exporting its surplus waste to India, Indonesia and China. Of the 66 000 tonnes of waste
pulp produced, 18 000 tonnes were exported in 2003. The company owns 2 tissue mills TOPCO in
Tongaat and SA Tissue in Pietermaritzburg, that produces 12 000 tonnes a year and employs
about 40 people. It is looking to invest in two more tissue mills in the near future. The company
employs 176 people in total. The collection of the waste paper is subcontracted out and there are
about 110 vehicles involved in this and it supports about 300 people. 43
Employment 200444
Cape Waste
Category
M
African
Coloured
Asian
White
0
0
0
0
0
0
3
0
Disabled
Total
3
Managers
F
M
0
Professionals
F
0
Professionals
M
0
0
F
M
0
0
0
0
0
0
0
0
3
0
Clerks
F
Service Workers, Shop & Market
Sales Workers
M
0
F
0
Workers
M
0
F
0
M
0
F
Assemblers
M
F
F
Learners
F
M
M
3
0
7
0
14
13
21
13
17
2
7
21
24
23
0
0
0
0
0
0
1
0
0
0
4
3
25
2
21
34
49
39
M
total male & female
Totals
43
44
0
F
0
M
42
48
0
8
0
98
F
26
46
0
6
0
78
68
94
0
14
0
176
Interview with Managing Director of Cape Waste Mr Nick Van Wyk
Data sourced from workplace skills plans, 2004 FIETA
76
Cape Waste 2004
Total = 176
category
Clerks
Professionals
0%
African
Coloured
20%
40%
Asian
60%
80%
100%
White
77
New Africa Packaging (PTY) LTD – T/A GENPAK
Employment 200545
GENPAK
Category
Legislators, Senior
Professionals
Professionals
Clerks
Fishery Workers
Workers
Plant & Machine
18(2) Learners
Non-Permanent
Workers
Total male & female
1
0
1
0
Total
4
1
0
0
2
F
M
F
0
1
0
0
0
0
1
0
0
0
0
1
1
1
1
M
1
0
1
1
3
F
M
0
0
0
2
2
0
M
F
M
F
M
African
0
0
Asian
4
1
White
0
0
Disabled
F
M
F
M
F
M
F
M
F
M
F
M
F
0
0
19
0
0
0
0
17
1
39
1
0
0
0
0
0
0
0
0
6
2
0
0
0
1
3
78
2
0
0
12
4
2
6
Total
80
Actual Payroll R 2 259 428 (2004)
45
Coloured
0
0
0
16
0
19
0
17
1
46
6
0
0
92
12
8
0
104
Data sourced from workplace skills plans, 2005 FIETA, no other information was available.
78
GENPAK 2004
Total = 104
Category
Clerks
Professionals
0%
African
Coloured
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Asian
White
Other Companies
Pulp United
Pulp United is a joint venture between South Africa's NCT Forestry Cooperative46 and the Swedish
market pulp producer, Sodra Cell. Södra Cell, like NCT, is a timber co-operative servicing some
35,000 members. Pulp United is undergoing a feasibility study to build a 300,000 tonne/yr pulp
mill in South Africa and an investment decision is expected by the end of the third quarter 2005.
The firm is studying potential sites in Richards Bay and elsewhere in the KwaZulu Natal region, as
well as technology for the eucalyptus-based bleached chemi-thermomechanical pulp plant. Pulp
United has short-listed two suppliers and expects to receive tenders in May or June. The pulp
plant's raw materials would be supplied by local forest owners and members of NCT. The mill
could start up as early as the third quarter of 2007.
Lothlorien (Pty) Ltd
Lothlorien runs a small paper mill that produces tissue from waste paper that is collected through
the companies collection branches located in all major centres in South Africa. The company is
installing a 35,000 tonne/yr twin wire testliner machine at its containerboard mill in Alberton, near
Johannesburg and will start production by April/May 2005. The equipment will double the plant's
existing capacity.
Crystal Paper Group
Crystal Paper owns several small tissue mills in Heidelburg, some 40 km south of Johannesburg.
The subsidiaries, Egoli Tissue, Crystal Paper Mills and Paper and Pulp Industries have a combined
capacity of 14,000 tonnes/yr. Crystal Paper also has two converters, Universal Tissue and Crescent
Packaging, in Heidelburg. Universal Tissue processes 12,000 tonnes/yr of tissue into toilet paper,
46
See forestry companies
79
napkins, handkerchiefs, facial wipes and away-from-home products, while Crescent Packaging
converts 5,000 tonnes/yr of containerboard into corrugated packaging, but has a capacity of
12,000 tonnes/yr.
The Dosani family manages the group via a London-based holding company. The clan also has
other business interests in the UK and in Malawi.
The Crystal Paper Group is building a new paper and board mill in Wadeville, Johannesburg. The
$15 million facility will house a 6,000 tonne/yr tissue machine and an 18,000 tonne/yr cartonboard
and coreboard unit.
The group has completed civil works for the plant and will start production on the tissue machine,
P4 in April 2005. Installation of the board unit, has begun and should be completed in January
2006. PM 4 is a second-hand Toscotec machine imported from Europe, while PM 1 is an old Voith
Paper unit picked up overseas.
Gardenia Paper Products
Gardenia manufactures 7,000 tonnes/yr of tissue at a facility in Roslyn, near Pretoria, with most of
the output converted on site into toilet paper. Gardenia Paper Products has also started up a 7,000
tonne/yr tissue machine at a new mill in Kagiso, near Johannesburg. The second-hand unit began
production in December 2004.
The firm plans to bring a second 7,000 tonne/yr tissue PM online at the site in mid-2005 or early
2006.
Rafalo Paper Mills and Correll Tissue
Rafalo Paper Mills has a 11,000 tonne/yr tissue facility in Durban. It is building a new deinking
plant at the facility to start up in February or March 2005, boosting the quality of fiber produced
and doubling its tissue output in the future. The investors behind Rafalo also own Correll Tissue,
which is located close to the Rafalo mill and converts all of its output into toilet paper and
industrial wipes.
Hygienic Tissue Mills
Hygienic Tissue Mills (HTM) is a family-owned firm based in Pietermaritzburg. The company
produces 1-ply bathroom tissue (500 sheets/roll) on two fully automated PCMC converting lines
with a Hayssen packer. Products are sold under the brand names Ultra Fresh and Best Tissue. The
capacity of the converting plant is 35 tonnes/day wadding. HTM also makes its own cores.
The company currently buys jumbo rolls from Kimberly-Clark South Africa but is set to begin
producing its own tissue paper in May/June 2005. HTM is assembling a Valmet twin-wire tissue
machine, the 65 tonne/day will nearly double the capacity of the converting plant, HTM aims to
export some output to converters elsewhere in Africa. HTM's managing director is Yunus Essa.
With the new tissue mill set to have
South African Paper Mills
South African Paper Mills (SAPM) currently manufactures 6,000 tonnes/yr of kraft paper in a
weight band of 40-165 g/m². Output is sold as jumbo reels and later processed into wrapping
paper, packaging paper, envelopes and exercise book covers. The firm's owner-manager is Anesh
Madaree.
80
SAPM is set to enter the corrugating materials sector in 2005 with a new containerboard machine
at its mill in Durban. The 18,000 tonne/yr unit, PM 4, is slated to start production of 80-230 g/m²
testliner and recycled fluting by the end of the month.
The privately-owned company aims to commission another small unit in January next year. The
17,000 tonne/yr PM 3 will manufacture kraft paper in a 40-120 g/m² basis weight range. Both
machines are second hand: PM 4 came from a Stora Enso mill in Sweden, while PM 3 was acquired
from an unnamed location in Germany.
Ligia Paper Industries
The new Ligia Paper Industries tissue plant was inaugurated on July 28 2004. The mill is owned by
China's Chang An Industry and is located in Welkom. Ligia Paper Industries' two paper machines
can produce a total of 15 tonnes/day of tissue from recycled fiber. Output from the two PMs is
converted onsite into toilet paper, kitchen rolls and napkins, depending on orders. The Free State
Development Corp. provided Rand 6.8 million ($1.1 million) in grants to the Rand 15 million
project.
Alex White Holdings
Ltd This holding company is involved in the printing and packaging industry. Major shareholders
include S A Mutual Life Ass Soc, Kane TP, Kay PD, Kane PJ, Kane R, Brunner HV, Didaxs Holdings
AG, Kane S. Alex White & Co (Pty) Ltd was established in 1913 and the division has concentrated
on sheet fed litho printing and has established itself as a leading specialist printer. Pharmaceutical
Publishers was acquired by Alex White and Company in 1995. Cape Wrappers (Pty) Ltd was
founded in Paarl in 1951. Initially producing fruit wrappers and bottle wrappers, the company
gradually expanded into other areas of flexible packaging and was acquired in 1982 by Alex White
Holdings. The company is listed on the JSE.
Consol Limited is an industrial company with activities in the packaging and rubber sectors. The
packaging division manufactures and markets glass, plastic and paper packaging and glass
tableware. It also mines and processes industrial minerals. The rubber division was disposed of in
January 1997. Anglovaal Industries Limited is Consol's holding company with a 60.6% interest in
the share capital of the company.
81

Pulp and Paper Sector Summit

Transcription

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