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Industrial stalwart Sappi, which traces its roots in South Africa to 1936, has expressed frustration at the slow pace of government action against cheap imports of office paper, newsprint and toilet paper from Asia, saying Pretoria’s ties to Brics and the EU are a contributing factor.The multinational, which was founded in South Africa and still derives 26% of its revenue from the country, said urgent remedial action is needed to protect the domestic industry from a surge in imports.“Dumping of toilet paper is the latest concern. We find the price being offered in the local market is far below our cost of production. The problem with all these is that the approach from government is very slow and limited because it is either WTO trade or our Brics and EU trade partners,” André Oberholzer, head of corporate affairs at Sappi, said on Thursday.“We have been engaging directly with [trade, industry & competition] minister Parks Tau and his officials to explain the problems we are facing and making a request that the government needs to look at other options for supporting domestic industry.Sappi (Dorothy Kgosi) “Our message is that industry needs urgent action from the government and there needs to be a recognition of the investments we make, including local job creation, supplier development and transformation.” About 150,000 people are employed in the forestry and forest products sector, from planting trees to recycling.South Africa is running a significant trade deficit with its Brics allies, particularly China. The trade deficit between South Africa and its Brics partners has grown by $9.6bn, research shows. The findings call into question the nature of the country’s continued participation in the bloc it joined in 2010.Conducted by top academic Bhaso Ndzendze, professor of politics and international relations at the University of Johannesburg, the study calls for a Brics treaty to be established to eliminate tariff and nontariff barriers.Imports from China have wreaked havoc across industries, hurting sectors such as steel and cement. Multinational packaging and paper group Mondi this year asked South Africa’s authorities for trade protection as cheap office paper imports flood the market, eating into its revenue in the country where it was founded 60 years ago.Our message is that industry needs urgent action from the government and there needs to be a recognition of the investments we make, including local job creation, supplier development and transformation.— André Oberholzer, head of corporate affairs at SappiMondi Rotatrim, which has just undergone a brand-refreshing exercise, is one of South Africa’s most recognised premium office paper brands.It is this market position that the England-headquartered Mondi aims to get protection for via an antidumping tariff. Sappi has come out in support of Mondi’s application to the South African authorities.Sappi has also asked the government to impose a 5% tariff on imports of newsprint, in rolls or sheets, arguing that without this protection the local print industry runs the risk of extinction.Sappi’s mill is the only operational newsprint facility in South Africa and across the Southern African Customs Union, the world’s oldest customs union.Sappi’s Ngodwana Mill has an annual production capacity of more than 570,000 tonnes, comprising product categories including dissolving wood pulp, kraft linerboard, newsprint and uncoated flexible packaging.The mill’s newsprint capacity is 110,000 tonnes, representing about 20% of the mill’s overall capacity.Packaging manufacturer Mpact earlier this year issued retrenchment notices in its carton board business, which has been overwhelmed by cheaper imports and the strengthening rand, with nearly 400 jobs on the line.Tau has initiated a process to amend the International Trade Administration Commission Act to include new provisions enabling the commission, upon the direction of the minister, to investigate imports that may adversely affect the national security interests of the republic.The commission under the proposed changes will have to take into account the displacement of domestic products by imports and the effect on local employment and investment. Sappi’s third-quarter results to end-June show that the scheduled maintenance shutdown at the Ngodwana Mill reduced earnings by about $22m, affecting sales volumes during the period.“Demand for office paper and newsprint remained stable. Profitability continued to be impacted by intense competition from low-priced imports,” the results say.Business Day
