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Created before Nov 2016
Last update: 2016-03-20 00:00:00 BankTrack
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Sappi Limited is a South African pulp and paper company with global operations. It was originally incorporated as South African Pulp and Paper Industries Limited in 1936, by the South African government, to replace costly imports with locally manufactured paper and packaging products. It produces and sells commodity paper products, pulp, chemical cellulose and forest and timber products for Southern Africa and export markets. In 2013, it was the world's largest producer of dissolving wood pulp.
It has extensive (Approx. 500 000 hectares) timber plantations, 16 chemical cellulose, pulp and paper mills in 7 countries on three continents, sales offices in 11 countries, and sells its products in over 100 countries.
48 Ameshoff Street
2001 Braamfontein Johannesburg
Stephen (Steve) Robert Binnie |
Sappi is a listed on the Johannesburg Stock Exchange. It delisted from the Frankfurt stock exchange in 2005, the London Stock Exchange in 2009 and the New York Stock Exchange at the end of 2013. Its top 20 shareholders can be found here. As of December 2013, the top five were:
Allan Gray Limited - 19.4%
The production of plantation timber and the manufacturing of Sappi's paper and cellulose products are responsible for a wide range of negative social, economic and environmental impacts. Negative social impacts include some that affect Sappi workers and members of local communities immediately and directly, as well as a number that have either indirect or 'downstream' impacts - only being felt years later.
Direct social impacts include:
- Physical injuries (mainly to plantation and transport workers)
- Exposure to toxic chemicals (pesticides and herbicides)
- Exposure to polluted air in and around pulp mills
- Disruption of family life for plantation contract workers
- Displacement of rural communities by plantations
- Loss of access to surface water after plantations are established
- Loss of access to sacred sites such as ancestor's graves
- Loss of access to wild plants and animals for medicine and food
- Loss of short-term income from existing land uses e.g. food farming
- Rural depopulation due to fewer jobs available in timber plantations
Indirect or ‘downstream' social impacts include:
- Gradual onset of disease due to exposure to toxins
- Conflict over natural resources due to loss of water and biodiversity
- Loss of livestock (cattle) due to reduced grazing
- Increased crime from non-local contract workers
- Increased risk of assault on women walking through plantations
- Increased costs to the state/taxpayers for support to the timber industry
- Cost of repairing damage to public roads caused by overloaded trucks
- Expensive infrastructure required for exporting low-value products (e.g. wood chips)
- Low financial returns on public funds invested into Sappi equity and loans
- The opportunity costs of using good fertile farmland for high risk plantations
- Costs of degradation and lost productivity are deferred to future generations
- The future cost of remediating land polluted through mill waste disposal
Negative effects on the natural environment are also either immediate and direct or indirect but can sometimes only become evident many years later.
Direct environmental impacts include:
- Destruction of natural vegetation including dependent wildlife
- Displacement of less damaging land-uses such as food-farming
- Loss of habitat and food for migrant animal and bird species
- Reduction of groundwater resource under and around plantations
- Introduction of potentially invasive alien plantation tree species
- Increased soil compaction caused by heavy logging equipment
- Increased livestock grazing burden on scarce remaining grassland areas
- Emissions of carbon through soil disturbance and the buring of residues
- Pollution from the use of fertilisers and pesticides
Indirect and deferred negative environmental impacts include:
- Increased fire risk to adjacent farms and habitat, especially forests
- Erosion and loss of top soil caused by disturbance during logging
- Increased silt load/turbidity causing downstream erosion and siltation
- Introduction of alien invasive plants and animals into plantation areas
- Loss of the naturally occurring indigenous soil micro-organisms
- Overall landscape degradation due to cumulative impacts over time
- Worsened effects of climate change due to soil desiccation by plantations
- Increased greenhouse gas emissions from plantations, pulp mills and dumps
- Waste products in rubbish dumps emit methane and pollute groundwater.
- Pollution from dumped ash and mill sludge.
- The impacts and after-effects of mill closures.
In South Africa, endangered species such as the Blue Swallow, Wattled Crane and the Oribi Antelope have all been severely impacted by the loss of natural habitat caused by plantation expansion, as well as increased exposure to risks from toxic agrochemicals and poaching by temporary contract plantation workers. These impacts are a direct result of the conversion of biodiverse grasslands into sterile timber plantations, described by some as a ‘green blanket of death'; of which Sappi's are among the worst in southern Africa.
In 1996 Sappi was investigated, among 10 other main producers of carbonless paper, by the European Commission for illegal price fixing in various countries in the EU. Although found guilty of earning millions by fixing the price of printing paper, Sappi was granted full immunity from the fine due to its cooperation with the EC's cartel investigating unit. Other companies implicated were fined a total of $145 million
export credit agencies
Sappi's global financial dealings are controlled mainly by its administrative headquarters in Brussels, with Southern Africa and US operations taking subsidiary roles. For Sappi in Southern Africa, local institutions Nedbank and First National Bank (FNB) to a lesser degree, are used for retail banking purposes. For raising operating capital and funds to meet its commitments to its creditors and bondholders, Sappi uses commercial banks such as Nedbank Capital. In the EU, it appears that Sappi finances its operations via bonds issued by wholly owned subsidiaries, PE Paper Escrow GmbH, and Sappi Papier Holding GmbH. Sappi rolls over its short-term bond-finance debt on a yearly basis in order to maintain its liquidity, while trying to reduce its debt, currently well over USD 2 Billion, as well as the high interest it has to pay (USD 250 Million p.a.). Its total debt is spread over the three currencies: USD 59%, EUR 28% and ZAR 13%, split between public debt (87%) and bank debt (13%)