Johannesburg, South Africa, 03 August 2011 -- Sappi Southern Africa has today announced it will shut down its Adamas paper mill in Port Elizabeth, South Africa. The permanent closure of the mill is expected to be finalized at the end of August. This brings to a conclusion the process announced on 24 May 2011, to investigate the continued operation of the mill.

Sappi Southern Africa has concluded an agreement with its Adamas mill employee representatives and redundancy notices specifying terms and provisions for outplacement and training support have been issued to staff members to ensure that people have the best possible opportunity to secure new employment. The Adamas mill employed 213 people.

The mill has operated in Port Elizabeth for 47 years.

"As I mentioned when we began the consultation process, we fully recognize and commend 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," said Alex Thiel, CEO of Sappi Southern Africa. "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.”

The volumes produced at the mill have been transferred to Sappi Enstra and Sappi Tugela mills.

Sappi expects to take a charge of approximately USD 5 million in respect of these closure costs in the fourth financial quarter ended September 2011.

Sappi will maintain its presence in the Eastern Cape as regards marketing and sales and the collection and purchase of collected fiber (used for recycled paper) through Sappi ReFibre.

Forestry investment

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 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 1400 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 a further almost 8000 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.