Sappi Saiccor Plant Said to Be Battling With Water Shortage

Sappi Ltd. (SAP), the world’s biggest producer of dissolving wood pulp, is struggling to maintain cellulose production at its main South African plant because of a water shortage, said a person with knowledge of the matter.

The situation is reaching a critical stage, said the person, who asked not to be identified because it hasn’t been made public. Contingency plans include the release of water from a storage dam into the Umkomaas River to raise levels.

The Saiccor plant, 50 kilometers (31 miles) south of the port of Durban on the country’s east coast, pumps water from the Umkomaas estuary that flows into the Indian Ocean. Below average rainfall over the past five months and the absence of a snow melt in the Drakensberg mountains have lowered water volumes in the river, the person said.

Sappi doesn’t “anticipate any disruption to production,” Andre Oberholzer, a spokesman for the Johannesburg-based company, said in an e-mailed response to questions. The Saiccor mill has contingency arrangements for the low flow experienced in KwaZulu-Natal rivers before spring rains start in about a month, he said.

Saiccor has the capacity to produce 800,000 metric tons a year of dissolving wood pulp and uses water for cooling, transportation, equipment cleaning and to generate steam for power generation. Sappi is increasing its focus on dissolving pulp, used to make luxury clothing, sportswear and pharmaceuticals, as the product carries a higher profit margin than paper.

Other mills in Sappi’s specialized cellulose division include Ngodwana in South Africa’s Mpumalanga province and Cloquet in Minnesota.

To contact the reporters on this story: Derek Alberts in Pietermaritzburg at dalberts@bloomberg.net; Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Dylan Griffiths, John Bowker, Karl Maier

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