Meeting long-term demand growth for cellulosic-based fibres
Why it's material
Our extensive capacity in the DP sector is aligned with our strategy of diversifying into higher margin segments and positioning ourselves for future growth. This is highlighted by the completion of DP debottlenecking projects at Cloquet, Saiccor and Ngodwana Mills in recent years, thereby giving expanding our capacity to offer consumers fibres manufactured from a natural, renewable resource rather than from fossil fuels.
Global quarantine measures in 2020 negatively impacted textile and apparel markets, with our DP sales falling 18% year-on-year. However, Hawkins Wright1 expect global textile markets to have recovered fully by 2022. This is partly due to the fact that while demand for office and formal wear remains subdued, many retailers are reporting strong demand growth for casual clothing and leisure wear, items that typically comprise a higher proportion of wood-based textile fibre than in the office wear segment.
How this issue links to other aspects of our business
Our global priority SDGs
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Our top ten risks
- 3 Evolving technologies and consumer preferences
- 4 Liquidity
- 6 Project implementation and execution
Our strategic fundamentals
- Grow our business
- Sustain our financial health
- Drive operational excellence
The global forces shaping our Thrive25 strategy
- Changing consumer and employee profiles
- Growing populations with increasing rates of urbanisation
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OUR 2025 TARGET |
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RETURN ON CAPITAL EMPLOYED (ROCE) |
As a responsible business operating in many locations around the world, this broad goal aligns with our focus on being a responsible corporate citizen and providing a safe working environment in which our employees can reach their full potential.
1 Hawkins Wright: The outlook for dissolving pulp: Demand, supply, costs and prices, September 2020
Our approach
We are confident about our strategy of investing in DP. The absorbency, breathability and superior feel of viscose and lyocel for which the bulk of our DP is used, will, we believe, continue to meet the needs of a growing population, particularly in affluent Asian markets.
Key developments in 2020
We continued with our ZAR7.7 billion Vulindlela expansion project at Saiccor Mill in KwaZulu-Natal in the first six months of FY2020. However, because of the coronavirus outbreak and nationwide lockdown, we declared force majeure at the end of March, at which stage the project was 65% complete. Work on the expansion recommenced fully in July and completion is now anticipated in Q3 FY2021.
In a related development: In 2020, in view of our decarbonisation plans (discussed in the
Planet section), the decision was made to switch to magnesium sulphite technology, which is significantly more environmentally friendly than the calcium sulphite process currently in place at Saiccor Mill. As the current calcium sulphite pulp line is the source of lignin raw material, this switch will result in the permanent closure of LignoTech South Africa (SA), a joint venture between Borregaard and Sappi. Following the conversion, the pulping chemicals will be recovered and re-used resulting in a more efficient and environmentally friendly plant. The conversion of the pulp line will be completed mid-2021. In the interim, the calcium sulphite pulp line will be operated to some extent, resulting in limited production of liquid lignin by LignoTech SA until the permanent closure comes into effect – this will take place when the conversion of the calcium line is
completed.
WHAT IS DP?
DP is a highly purified form of cellulose extracted from sustainably grown and responsibly managed trees using unique cellulose chemistry technology. The majority of DP is used to make textiles, such as viscose and lyocell, where DP is converted to viscose and lyocell staple fibres. From there, the fibres are spun into yarns and ultimately textiles, providing naturally soft, smooth and breathable fabrics.
DP can also be processed into products used in food and beverages, health and hygiene, wrapping and packaging, pharmaceuticals and many other applications that touch our daily lives.
Fibre properties and applications
| Cellulose fibres | Cotton | Polyester | ||||||||||
| Applications |  |
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| Function and feel | Durability | ✗ | ✔ | ✔✔ | ||||||||
| Absorbency | ✔ | ✔ | ✗ | |||||||||
| Breathability | ✔ | ✔ | ✗ | |||||||||
| Softness | ✔ | ✔ | ✔ | |||||||||
| Drape | ✔ | ✗ | ✗ | |||||||||
| Appearance | Dyeability | ✔✔ | ✔ | ✔✔ | ||||||||
| Brightness/Lustre | ✔✔ | ✔ | ✔ | |||||||||
| Sustainability | Renewable and biodegradable |
✔✔ | ✔✔ | ✗ | ||||||||
| Resource efficiency | ✔✔ | ✗ | ✗ | |||||||||
| Overall value proposition | Natural and attractive, 'greener' alternative to cotton |
Natural, functional and well established |
Cheap, durable and versatile |
Source: IHS Global, RISI, Hawkins Wright
Cloquet Mill's Higg sustainability self-assessment results exceed expectations
Cloquet Mill recently completed the Higg FEM sustainability self-assessment for Verve, our DP brand, with the results exceeding internal expectations. The results position the mill as a leader in sustainable practices, evidenced by a low environmental footprint.
The Higg FEM self-assessment tool is part of the Higg Index suite of tools that was developed by the Sustainable Apparel Coalition (SAC) to allow the apparel industry to measure their sustainability performance and drive supply chain transparency and decision-making. The Higg Index enables suppliers, manufacturers, brands, and retailers to evaluate materials, products, facilities, and processes based on environmental performance, social labour practices, and product design choices.
Sappi joined the SAC in February 2019 and remains a committed member of the organisation, participating in many of the SAC events and engaging in ongoing discussions on how to enhance the tools on offer.