http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 18.21Change: -0.17
R/$ = 16.20Change: -0.05
Au 1196.25 $/ozChange: 2.25
Pt 929.50 $/ozChange: 4.50
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters About Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jul 04, 2008

Weaker rand, strong demand offers sound start-up platform for chemicals-cellulose expansion

Back
 
 
 
 
 
 
Africa|Efficiency|Engineering|Environment|Health|Power|PROJECT|Resources|Sappi|Waste|Water|Africa|Energy|Product|Environmental|Waste
Africa|Efficiency|Engineering|Environment|Health|Power|PROJECT|Resources|Sappi|Waste|Water|Africa|Energy||Environmental|Waste
africa-company|efficiency|engineering|environment|health|power|project|resources|sappi|waste-company|water|africa|energy|product|environmental|waste
© Reuse this The $460-million expansion of the Sappi Saiccor chemical-cellulose facility, in KwaZulu-Natal, was over 90% complete, and once ramped-up to its full nameplate production of 800 000 t/y would entrench the group's position as the world's pre-eminent manufacturer of dissolving pulp. It would also further enhance Sappi's ranking as one of the world's lowest-cost producers, Southern Africa CEO Jan Labuschagne tells Engineering News in an interview.



The plant, which is situated 50-km south of Durban, currently has the capacity to produce 600 000 t/y of elemental chlorine-free chemical cellulose, the bulk of which is exported to countries in Europe, the Americas and Asia.

The biggest single consuming industry remains the garment trade, where chemical-cellulose is being employed increasingly to give fabrics a silky shimmer and feel, not only for use in high fashion items, but also in day-to-day garments.

However, the product is also used as an input in the food, pharmaceuticals, chemicals and plastics industries in applications as diverse as headache tablets, through to the handle on a screwdriver.

Labuschagne says that the expansion, dubbed ‘Amakhulu', also represents a ‘step change' for the industry, given that most of Saiccor's competitors, such as Rayonier, are still producing at rate of between 300 000 t/y and 500 000 t/y.

But the facility's cost advantage does not come exclusively from these economies of scale. Its access to the low-cost, renewable fibre resources of KwaZulu-Natal, which is a fast-growing timber region, is also a material benefit.

Sappi is also convinced that the demand trajectory, underpinned by robust garment-sector growth in Asia, will be more than adequate to absorb the additional output it plans to place into the market.

"The market is still very tight," Labuschagne reveals, adding that Sappi is inundated with requests from customers for additional tonnages.

This said, rising interest rates and slowing consumer demand worldwide could have a short-term impact. There has already been a softening in the viscose market, which has precipitated a fall in spot prices from around $1 500/t to around $1 000/t. But current price levels are still well above historical trends.

"We think that the markets were running too hot, and actually see the recent decline as positive for the long-term health of the market," Labuschagne asserts, noting that the investment decision was based on far more modest trend prices.

Sappi is still forecasting average yearly growth of four per cent, and Labuschagne discloses that the group has already secured offtake orders for more than 80% of the expanded production.

The timing of the ramp-up also offers something of a ‘sweet spot', particularly given the rand's recent weakening against the dollar.

"This will substantially shorten the pay-back period," Labuschagne confirms, revealing that, at current exchange rates and pulp prices, there could be a 25% to 30% reduction when compared to the payback period initially budgeted.

Commissioning is due to begin late in the current quarter and the facility is expected to be running at full capacity from the middle of the Sappi's next financial year. And, while the actual expansion is for 300 000 t/y, Sappi has decided to close 75 000 t/y of existing high-cost capacity.

The project should also improve Saiccor's environmental impact through the reduction of air emissions, improved waste-water quality and increased energy efficiency.

In fact, the project will result in the production of an additional 40 MW of electric power, which in South Africa's current power-constrained environment is a significant advantage.

A key challenge, though, is the rise in some of Saiccor's own inputs, particularly some of its chemicals inputs.

Sulphur prices, for instance, have surged tenfold over the last 18 months, while caustic-soda prices have gone up by about 50% over the last six months. But these prices have been offset by strong increases in pulp price, which underpins the chemical-cellulose price.

"Therefore, the financial model for the project is more robust today than it was when we completed the feasibility study," Labuschagne enthuses.

Edited by: Martin Zhuwakinyu
Creamer Media Senior Deputy Editor
© Reuse this

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
 
Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Electricity News
Trade and Industry Minister Dr Rob Davies
Updated 16 minutes ago An extensive feasibility study of fuel cells has been launched in South Africa in a bid to make the most of South Africa’s vast platinum resources. If successful, Isondo Precious Metals (IPM) believes the manufacturing of fuel cell components could be up and running...
Updated 3 hours ago Telecommunications provider Vumatel has temporarily halted digging activity in Blairgowrie to secure cable locators that will assist the contractors in pinpointing the exact location of power utility City Power’s electricity cables. The area had been experiencing...
Updated 3 hours ago The Department of Cooperative Governance and Traditional Affairs (Cogta) in the Free State is confident there will be no electricity cuts in the province, despite municipalities owing Eskom R842-million. This after Eskom said if Free State municipalities did not...
Article contains comments
Article contains comments
More
 
 
Latest News
Standard Bank economist Goolam Ballim
Updated 4 minutes ago Standard Bank economist Goolam Ballim estimates that Finance Minister Pravin Gordhan has a yearly funding gap of between R30-billion and R50-billion to close through a combination of expenditure cuts and tax hikes in his upcoming Budget in order to stave off a...
Trade and Industry Minister Dr Rob Davies
Updated 16 minutes ago An extensive feasibility study of fuel cells has been launched in South Africa in a bid to make the most of South Africa’s vast platinum resources. If successful, Isondo Precious Metals (IPM) believes the manufacturing of fuel cell components could be up and running...
Updated 27 minutes ago While market acceptance of wearable technology – clothing and accessories incorporating computer and advanced electronic technologies – is on the increase, regulation and policy frameworks surrounding the use of this fast-growing technology in the workplace need to...
More
 
 
Recent Research Reports
Construction 2016: A review of South Africa's construction industry (PDF Report)
Creamer Media’s Construction 2016 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; key participants; local demand; geographic diversification; corporate activity; black economic...
Energy Roundup – February 2016 (PDF Report)
The February 2016 roundup covers activities across South Africa for December 2015 and January 2016 and includes details of a Government Gazette notice that confirms Cabinet’s decision to move ahead with the 9 600 MW nuclear procurement programme; State-owned power...
Energy Roundup - December 2015 (PDF Report)
The December 2015 roundup includes details of State-owned utility Eskom’s application to claw back R22.8-billion; South Africa’s ranking as an investment destination for renewable energy; and a nuclear expert’s thoughts on reactor designs for South Africa’s nuclear...
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
 
 
 
 
 
This Week's Magazine
Power and automation company ABB is in the launch phase of its highest payload, multipurpose industrial robot, the IRB 8700. The robot has a reach of 3.5 m and can handle a payload of up to 800 kg. “When designing the IRB 8700, we emphasised reach and payload, as...
Identity and Access Management (IAM) is a critical facet of a connected security ecosystem, as controlling the confidentiality, integrity and authorisation of data access and use is key to securing new digital business channels. However, companies face several...
RORY YOUNG Managed security services provide companies with a means to actively monitor their environment and ward against threats
Data underpins digital business models, the digital economy, the Internet of Things and the fundamental changes in the ways people interact and protecting data is crucial to securing new ways of doing business, says T-Systems South Africa information and...
The City of Cape Town will issue a tender for the procurement of electric buses for its MyCiTi service, in line with the council’s commitment to lower its carbon footprint, says executive mayor Patricia de Lille. The tender, to be advertised early in February, will...
The iSimangaliso Wetland Park Authority signed a R10-million contract last month with local tailings storage facility specialists Cyclone Engineering Projects to remove about 100 000 m3 of dredge spoil obstructing the natural course of the uMfolozi river, in...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $149 Close
Subscribe Now for $149