South African paper manufacturer Sappi said on Wednesday it would shut down its 47-year old Adamas mill, in Port Elizabeth, citing severe cost pressures and the uncompetitive nature of the mill.

The closure would affect some 213 workers.

Public affairs officer Alijah Masondo said Sappi implemented programmes aimed at making the mill more competitive, but its technical age and size, as well as high costs, particularly electricity and fibre, resulted in the decision to close.

The mill was also too distant from local markets and raw material supply.

Investigations were under way to determine the future options for the site. “These could in future result in the sale of the site, or in the relocation of some equipment and machinery to other Sappi units,” Masondo told Engineering News Online.

The news follows hot on the heels of the closure of its entire Biberist mill, in Switzerland, after failing to find a buyer. Some 550 workers are affected at Biberist.

Sappi Southern Africa CEO Alex Thiel thanked its Adamas employees for their hard work.

The paper and pulp group has concluded an agreement with Adamas mill employee representatives. Unionised workers at Adamas were generally associated with the Chemical, Energy, Paper Printing, Wood and Allied Workers Union, an affiliate of the Congress of South African Trade Unions.

Sappi has issued redundancy notices to staff, specifying the redundancy terms, as well as the inclusion of provisions for outplacement and training support for all employees to ensure that people have the best possible opportunity to secure new employment.

“We are working on relocating some employees to other Sappi mills within the group, where there are opportunities. The Adamas mill employees are a priority with regard to opportunities for employment that does become available within Sappi,” Masondo explained.

It is expected that finalisation of the mill closure would be concluded by the end of August, with volumes produced at the mill being transferred to Sappi Enstra and its Tugela mills.

“We expect to take a charge of approximately $5-million in respect of these closure costs in the fourth financial quarter ending in September,” Thiel said.

Sappi would maintain its presence in the Eastern Cape through marketing and sales, as well as the collection and purchase of collected fibre (used for recycled paper) through Sappi ReFibre.

Meanwhile, a partnership between Sappi and AsgiSA-EC would see the acceleration of the establishment and management of 30 000 ha of commercial tree plantations by 2020 in the Eastern Cape.

This development is expected to create 1 400 direct and permanent unskilled jobs and a further 125 jobs for skilled workers. Sappi also pointed out using industry trends that it is expected that some four to five indirect jobs would be created for each direct job, creating a further 8 000 jobs.

Sappi and AsgiSA-EC have already developed close to 150 ha in conjunction with the Mkambathi and Sinawo communities.

Sappi has identified 7000 ha of land and aims to plant 3000 ha during 2011/12.