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Impact of adverse weather and flooding in KwaZulu Natal province, South Africa on Sappi’s South African operations
Sappi Southern Africa Limited
(Incorporated in the Republic of South Africa)
Registration number: 1951/003180/06
Alpha code: SSAI
JSE code: SAPCB
("Sappi" or the "Company")
ISIN: ZAE000296083
Impact of adverse weather and flooding in KwaZulu Natal province, South Africa on
Sappi’s South African operations
With reference to the original announcement of 13 April, the weather conditions in the affected
areas have improved and mopping up operations are in progress. The South African
government declared a national state of disaster and are mobilizing resources and expertise
to deal with the immediate emergency and the required reconstruction. Sappi’s employees
have returned to work.
There is no material damage to any of the plants and the immediate focus is on reinstating
logistical supply chains for raw materials and finished goods. Mill operations have resumed
with Tugela and Stanger Mills fully operational as of 21 April. Production at Saiccor Mill has
started up in a phased manner and output will take a few days to ramp up to full capacity.
Damage to public infrastructure including rail and road connections will take time to restore.
Alternative arrangements to ensure delivery of raw materials and transfer of finished goods
have been made. Additional warehousing facilities were secured.
Although the Port of Durban resumed operations, export deliveries could be impacted
negatively for a few weeks due to damage to access roads, congestion and limited availability
of vessel space.
The estimated impact of the lost production at the three mills is approximately 23,000 tons,
mainly dissolving pulp. In addition, approximately 45,000 tons of inventory (including dissolving
pulp of 30,000 tons) was damaged in the warehouses. Insurance is in place for business
interruption and inventory damage subject to normal excesses and Sappi’s insurance captive
first loss provisions. As a result, there will not be a material impact on EBITDA for the year.
However, the estimated net loss after external insurance proceeds of approximately $28 million
will be reflected as a special item expense.
“Although the disruption to production and customer deliveries were outside our control, we
are making every effort to minimise the negative impact on our customers”, said Steve Binnie
Chief Executive Officer of Sappi Limited.
22 April 2022
Debt sponsor : Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Date: 22-04-2022 10:17:00
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