Delivering on our strategy and 2020Vision
Lowering the costs of pulp: Matane Mill
We completed the acquisition of Matane Mill shortly after year-end. Located in Matane, Quebec, the mill currently has 129 employees and capacity of 270,000 tpa of aspen and maple high-yield pulp. A key advantage is that it is situated 5 km away from a port.
- The acquisition supports our strategy and 2020Vision cost advantages and growth in higher margin packaging and speciality paper. It will also increase pulp integration by supplying high-yield pulp to our US and European packaging operations, enabling us to secure supply of a raw material critical to product quality
- Reduce input pricing and volatility in profitability
- Avoid higher capital cost of internal high-yield pulp capacity.
High-yield pulp is used in a variety of applications: providing higher bulk, opacity and stiffness in the final product, with demand primarily driven by the packaging board and printing paper markets. Globally, the high-yield pulp market is some 5 million tons, 40% of which is produced in Canada due to lower fibre and energy costs.
Payment of the adjusted net acquisition price of approximately US$158 million will be made in the first quarter of FY20, funded via a new term loan.
Generating savings and environmental benefits at Saiccor Mill
Project Vulindlela, which was around 40% complete at year-end, will boost Saiccor Mill's production of DWP to 890 000 tpa, taking it to about 10% of the global market. Cost savings attributable to Vulindlela are expected to be at least ZAR300 million a year.
The project will also deliver significant environmental benefits which include:
- Coal consumption reducing by over 130 000 tpa, which means fossil carbon emissions will be halved
- Gaseous emissions decreasing by approximately 40%
- Water consumption being reduced by 5%
- Water use efficiency increasing by 17%
- Energy efficiency being improved by 10% and renewable-energy use increasing by 20%