Oct. 30 (Bloomberg) -- Sappi Ltd., the world’s largest maker of glossy magazine paper, will close its Usutu pulp mill in Swaziland and reorganize its forestry assets in the country in response to falling demand and fire damage.

The combination of “adverse market conditions” and cumulative damage since an August 2008 fire that destroyed 40 percent of Usutu’s timber crop has meant the Usutu mill is no longer sustainable, the Johannesburg-based company said in a statement to the city’s stock exchange today.

The Usutu mill, which employs as many as 600 people and has the capacity to produce 190,000 tons, will be shut by the end of January, Sappi said. Sappi will seek ways to use the forest assets, which may include “the introduction of new investors.”

Demand for pulp and paper has fallen as recessions in the world’s largest economies caused job losses and curbed consumer spending. On Oct. 22 Sappi announced the planned closure of its Kangas mill in Finland because of lower demand for coated magazine paper.

Sappi won’t comment further because local stock exchange regulations prevent the company from giving price sensitive information before it reports earnings next month, Andre Oberholzer, the company’s spokesman, said in an interview on his mobile today.

To contact the reporter on this story: Nicky Smith in Johannesburg at nsmith38@bloomberg.net

Last Updated: October 30, 2009 04:08 EDT