JANE MOLONY EXECUTIVE DIRECTOR PAMSA
PARLIAMENTARY COLLOQIUM ON BENEFICIATION 2 SEPTEMBER 2014
Outline • • • •
What is PAMSA? Role of IPAP Products and Process Production inputs and costs (energy, labour, material, transport) • Downstream beneficiation • Facilitating local beneficiation • Improving global competitiveness
About PAMSA • Formed in 1992 • Promotes interests and efforts of South African pulp and paper industry • Members – Kimberly-Clark, Mondi, Mpact, Nampak and Sappi. PAMSA representation is 97% on turnover, 98% on production, 99% on forex. • PRASA part of PAMSA – MOU with SATMA • Common platform for development and presentation on pre-competitive industry issues – energy, environment, recycling, education, research etc
Role of IPAP to date • First step to beneficiation is to plant trees – they are a crop not a naturally occurring resource. • Role of IPAP to be commended – long recognised blockages to doing this. • IDC – R20m for EIAs* for small growers in E/Cape. • Right focus but need to move on from here. *Environmental impact assessments
Traditional “paper” products Printing /writing
Traditional “paper” products Packaging
Tissue
Lesser known uses for wood fibre Lignin
Cellulose carbon black
binders
dust control
gypsum boards
cement
fertilisers
Total sales value in Rands since 2003 20 000 18 000
Total sales value (R millions) by segment
PULP
16 000 PAPER
14 000 12 000
PRINTING AND WRITING GRADES
10 000 8 000
PACKAGING PAPERS
6 000 4 000
TISSUE PAPERS
2 000 0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
% rand value growth per year • Pulp = 33.2% • Paper = 5.2% – Printing and writing = 1.9% – Packaging paper = 8.0% – Tissue paper = 8.9%
• Growth in packaging and tissue consequence of socio economic growth – sustainable.
Value-add of industry • Food security and preservation – Export products – Goods in transit
• Social
– Marketing, advertising, correspondence – Travel and tourism
• Educational value-add
– Education and learning – Increase literacy
Stages of manufacturing
Source: Sappi
Considering the impact of cost drivers. What can industry exert control over? Estimated industry cost structure
Fibre
13.6%
Chemicals 34.3% 11.0%
Utilities - all People costs
15.1%
Variable selling (includes transport) 12.7% 13.2%
Maintenance & other
Increasing cost of energy
Will drive unemployment and impact on SA’s exports and balance of payments
TODAY
TOMORROW
Eskom’s tariff application will lower SA’s primary and secondary sectors’ ability to compete internationally. Source EIUG January 2013
How will SA compare?
Cogeneration & renewable energy • Combined heat and power • 40 to 60 % less carbon intense • Low hanging fruit – waiting since 2012 for Cogen programme • Improve ability to sell power to 3rd parties, not only to Eskom • Encourage projects through tax breaks against clear energy self-sufficiency targets
Challenges to sector competitiveness • Fibre supply • Administered pricing – Freight rail, port, fuel, water use, property rates, and electricity to name some
• Cost of legislation
• 100,000 hectares – BBBEE transformation charter. • Foreign subsidy for tree growing – Chile, NZ, Brazil, Australia and China cheap fibre AND new pulp on line internationally commodity price pressure job losses (170 000 150 000) • Recovered Fibre under stress Collected 1.2 million tonnes, 62% BUT exports increasing, request for export tax
Critical factors for local beneficiation • • • •
Competitive cost position for manufacturing Creation of local or export market for products Access to skilled people Secure and stable inputs (energy, raw materials, chemicals) – Fibre – Recovered fibre
• Enabling environment from legislation
– fast track exemptions & exclusions – Welcome streamlining of EIA process – Not exclude sector from incentives (eg MCEP)
• Partnership business labour government
Improving global competitiveness • Infrastructure • Utilities • Other i. Avoid Additional taxes: e.g. Carbon tax – cost and role, municipal rate increases, waste water discharge charge system ii.Land claims: delayed settlements iii.Less red tape not more.
Improving global competitiveness Tariff regime in competing countries Tariff heading 480256
Australia
Brazil
China
India
Malaysia
5%
16%
5%
10%
25%
Based on FOB valuation: ± 5,8%
± 18,4%
± 5,8%
± 11,5%
± 28,8%
• Other major countries (e.g. Australia, Brazil, China, India and Malaysia apply much higher tariffs than South Africa)
Improving global competitiveness Research and development Shrinking markets - digital. High energy costs. Sourcing raw materials. Climate change. Innovation. Partner with DST – Sector Innovation funding – await finalisation. Process Research Unit • Chemical engineering university graduates. • Three years. 22 students. 21 MSc research projects.
Extracting full benefit of the tree.
Research PAMSA has supported 21 MSc research projects since 2010
• Use of mill sludge • Fibre fractionation • Fresh water use reduction • Production of bio-oil from pyrolysis • Biomass gasification
• Fibre sludge to ethanol • Lignin to bio-material • Sugar extraction and use • Char characterisation
Innovative uses for fibre Bio-renewable chemicals
Bio-fuels Char
Isoprene
Bio-oil
Iso-butanol
Summary • • • • • • • • •
Forest product sector – good for ‘SA inc.’ Timber and paper – both strategic resources Value add – paper products are an enabler Carbon benefit/sequestration – carbon tax liability Give back to communities – settled land claims Train entrepreneurs – 3000 paper recycling Circular economy Assist security of power supply Develop new products & uses for fibre
Let’s work together on beneficiating our fibre for a sustainable industry.
Thank you
