Oct 12, 2012
400 jobs on the line as Sappi mothballs paper machineBack
Natal|Energy|Packaging|Paper|Sappi|KwaZulu-Natal-based Tugela Mill|Tugela Mill|Energy|Increased Energy|Lightweight Containerboard Products|Packaging|Paper And Packaging|Products|PM2
© Reuse this
Although expected to be substantially lower, Sappi pointed out on Friday that the eventual number of positions impacted by the suspension would be known at the conclusion of the 60-day consultation period.
“Sappi remains committed to its approach that retrenchments are a last resort, and as such, will work with staff to investigate options to minimise retrenchments,” the company assured.
PM4 was manufacturing lightweight containerboard products; however, the current cost structure and market conditions did not allow it to operate profitably.
Sappi said the Tugela mill had not delivered satisfactory financial returns in recent years, despite ongoing corrective actions and interventions to address increased energy, labour and raw materials costs.
The mill’s competitiveness has further been challenged by overcapacity in the local paper market, an influx of imported products, weak demand for certain papers and depressed selling prices.
The company indicated that suspended production at PM4 would enable the repositioning of the Tugela mill’s cost structure and ensure the sustainability of its other paper machine, PM2, which produced a range of fluting and liner products.
Sappi said it would be in a position to restart PM4 when market conditions improved, adding it was confident that, given current market conditions, sufficient capacity still existed at the mill to meet all local containerboard requirements.
No disruptions in supply as a result of the closure of PM4 were anticipated.
During 2011 and 2012, Sappi undertook various measures to return the Tugela mill to profitability, including closing the PM3 paper machine, the kraft continuous digester pulp circuit, right-sizing the mill to service the remaining assets and ceasing sack kraft production at PM4.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Other Agriculture News
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Updated 1 hour 35 minutes ago South African construction company Group Five says work on the rehabilitation of the 800 km stretch of the Plumtree–Mutare highway, in Zimbabwe, should be completed by the end of this year. Giving evidence before the Parliamentary Porfolio Committee on Transport...
Updated 1 hour 38 minutes ago The Space Operations division of the South African National Space Agency (Sansa) revealed on July 17 that it had supported the successful launch of the US National Aeronautics and Space Administration’s Orbiting Carbon Observatory-2 (OCO-2) satellite on July 2. The...
Updated 1 hour 38 minutes ago Phase 1A of Johannesburg’s Rea Vaya bus rapid transit (BRT) system should carry around 42 000 people a day, while it was been expected that Phase 1B, rolled out last year, would add another 60 000 daily passengers. However, the entire system is currently carrying...
Updated 1 hour 38 minutes ago A stormwater project in Bedforview, east of Johannesburg, has stalled for eight months after project managers in the Ekurhuleni municipality resigned and municipal managers were placed on special leave without designating replacements. Construction to reinforce the...
Updated 1 hour 38 minutes ago The design of the Beit Bridge border post is the biggest impediment to efficient freight movement between Zimbabwe and South Africa, says Cross-border Road Transport Agency CEO Sipho Khumalo. Beit Bridge is the busiest border post in Africa. A research study on the...