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Sappi Closing Adamas Mill in South Africa

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Sappi Southern Africa, Johannesburg, will shutdown its Adamas paper mill in Port Elizabeth, South Africa. Permanent closure of the mill is expected to be finalized at the end of August. This brings to a conclusion the process announced this past May to investigate continued operation of the Adamas mill.

The company says it concluded an agreement with mill employee representatives and redundancy notices have been issued to the staff specifying redundancy terms and provisions for outplacement and training support for all employees. The Adamas mill, which has operated in Port Elizabeth for 47 years, employs 213 people.

Alex Thiel, CEO of Sappi Southern Africa, said that "when we began the consultation process, we fully recognized and commended the enormous efforts that employees and mill management have put in to try to make the mill competitive and to find a way to create a future for the mill. Unfortunately these efforts have been unsuccessful. We recognize this is a difficult decision affecting our employees, their families, and the local communities and we would like to thank all of them for their hard work and support. Unfortunately, this action became necessary to address the severe cost pressure that we are facing and the uncompetitive nature of this old and small mill."

Volumes produced at the mill have been transferred to the company's Enstra and Tugela mills. Sappi expects to take a charge of approximately $5 million in respect of these closure costs in the fourth financial quarter ended September 2011. The company will maintain its presence in the Eastern Cape in regard to marketing and sales as well as the collection and purchase of collected fiber (used for recycled paper) through Sappi ReFibre.

Furthermore Sappi, in partnership with AsgiSA-EC, has developed a joint proposal with a strategic goal of accelerating the establishment and management of 30,000 hectares (ha) of commercial tree plantations by 2020 in the Eastern Cape. It is anticipated that these partnerships will be developed between Sappi and communities that hold land rights, with Sappi being the "implementation partner" as a provider of technical, managerial, and administrative support to the community businesses. This development is expected to create 1,400 direct and permanent unskilled jobs and a further 125 jobs for skilled workers. Using industry trends, it is expected that some four to five indirect jobs would be created for each direct job, meaning almost 8,000 additional jobs. In rolling out the project, Sappi and AsgiSA-EC have already developed close to 150 ha in conjunction with the Mkambathi and Sinawo communities.

 

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