S.African paper and pulp industry may face increased pressure in future - CNBC Africa

S.African paper and pulp industry may face increased pressure in future

Southern Africa

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“South Africa’s paper industry has been under pressure. One of the main difficulties has been the fibre supply,” Jane Molony, Executive Director of the Paper Manufacturer’s Association told CNBC Africa on Friday.

She said that in 2008, the South African government signed the BBBEE Forest sector transformation Charter and one of the commitments was to make 100,000 hectares of land available for planting trees. To date, only 12,000 hectares of those trees have been planted.

This means that over the next five years, 20 000 hectares of trees have to be planted every year should the government fulfil its Charter commitment.

Molony stated that the Minister of the Department of Agriculture, Forestry and Fisheries, Tina Joemat- Pettersson, promised last year to fulfill the government charter commitment of providing a grant for small growers. 

However, the Minister failed to address the promised grant in her budget speech nor was it accounted for in the budget.  

Private enterprises on the other hand have already assisted with developing 20 000 small growers. The private sector have played thier part but there has been a lack of support from government's side. 

it was also reported that imports of packaging grades have increased since 2008, between 30 to 50 per cent.

“On the upside, it means that the packaging grade demand in South Africa has increased but on the down side, that level of import is horrific,” she added

On the global paper industry front, it was reported that there is an overcapacity of products such as newsprint. Molony believes however that reducing capacity does pay off.

Evidence of this can be seen in the latest newspaper contracts in Europe as well as in the United Kingdom. Both regions experienced decent price increases.

She added that the paper and pulp industry is on the rise as more people realise that paper is the most sustainable option, especially when it comes to packaging.

 “With the increase in internet based shopping, you see more demand for paper based packaging. You might order something on the internet but how does that get delivered? It needs to be protected and paper does the job,” Molony explained.

“Paper is so much more than just paper, it’s an entire sector. You can also produce a lot more than just paper from wood.”

She believes that even though the country may face challenges in future, the paper and pulp industry at the moment is stable and is still ranked as globally competitive.

“Amongst the large players, we are in the top 20 producers in the world, with companies such as Sappi’s and Mondi’s,” Molony concluded.