SAPPI Southern Africa has announced that it has initiated a consultation process with staff and relevant union representatives to prepare for the possible closure of its Adamas Mill in Port Elizabeth, where 213 jobs are on the line.
The company, which produces paper and paper packaging, said the decision came after difficult market conditions and sustained input cost increases had forced it to revisit its financial situation.
Sappi Ltd corporate affairs head Andre Oberholzer said Port Elizabeth’s mill was small compared with the country’s other mills.
“It is an old facility, built in the 1960s and the capacity is very small at the moment, with the capacity to produce only 40000 tons. The size of the mill, the age of the equipment and the increase in other costs has forced us to make this review.
“We think that now is the best time to have this financial consultation. We have done everything we could within Sappi and this situation is most unfortunate,” Oberholzer said.
He said Sappi was preparing to engage with the 213 staff members employed at the mill, from workers to management. “We are prepared to sit down with staff. We will put our options on the table and staff will have the opportunity to give their options.”
The decision also supports Sappi Southern Africa’s strategy to improve the competitiveness of its fine paper business by aligning its production capacity to market demand.
The Adamas mill originally produced board for the motor industry and subsequently uncoated writing and printing papers with a significant percentage of recycled fibre.
Oberholzer said the company could save significantly by moving its operations closer to raw material sources and major clients.
Marketing and sales functions would remain in the Eastern Cape. Sappi also planned to create jobs through a partnership with AsgiSA-EC to establish 30000ha of commercial tree plantations in the Eastern Cape by 2020.
Cosatu Port Elizabeth local secretary Gerald Fundani said the organisation would sit down with the Chemical, Energy, Paper, Printing, Wood and Allied Workers’ Union (Ceppwawu), Sappi management and employees to explore options.
Nelson Mandela Bay Business Chamber chief executive Kevin Hustler said the chamber was saddened by the news of the possible closure of a long-established business in the city, and a long-standing chamber member.
“The city cannot afford job losses of any scale and we are concerned about the effect on employees and their dependants, as well as the loss of specialised skills to other regions.”
Additional reporting by Sapa