SAPPI, the R30bn a year paper and pulp giant, has sold its Cape Town-based Cape Kraft recycled packaging mill to Golden Era Group, it was announced recently. The sale follows hard on the heels of Sappi’s recent decision to sell off its Enstra Mill and recycled packaging business. The sale follows Sappi initiating a closed tender process in March this year after receiving “many expressions of interest” to buy the mill. It is expected that the transaction will close in September 2015.
Sappi Southern Africa CEO Alex Thiel said the sale of the Cape Kraft and Enstra mills and the recycled packaging paper business is in line with Sappi Southern Africa’s strategy to unlock value from non-core assets. He said this strategy would free up resources for investment in dissolving wood pulp, virgin containerboard and other new business as well as strengthen Sappi’s balance sheet to focus on high-growth opportunities.
While the Cape Kraft operations are minuscule in the sprawling Sappi structure, these Cape Town-based assets could make a valuable contribution to a smaller entity’s bottom line. So it will be most interesting to watch Golden Era’s plans for Cape Kraft. Gauteng-based Golden Era has been in operation since the early 1940, but has grown rapidly in recent years by making smart acquisitions – including successful ‘coastal’ forays like EH Waltons (Port Elizabeth.)
And it’s not like Golden Era is a small operation either. The company is now recognised as the third largest printing and packaging company in Southern Africa after Nampak and Mondipak. Golden Era Group CEO Kishor Chhita said he was very pleased to be able to acquire a top quality asset from Sappi.
“It will strengthen our position in the market as a service-oriented company that offers packaging solutions and will further help us to achieve our goal of creating lasting team-based partnerships with our customers.”
The Cape Kraft Mill uses approximately 67,000 tons per year of waste paper to produce 60,000 tons of paper per year. According to Sappi’s website, the fact that the mill’s product is produced from 100% recycled paper provides a competitive edge in markets which are becoming increasingly environmentally aware.
Sappi said another competitive edge is the flexibility offered by the offline coater, which can coat papers from as light as 46g/m² to as heavy as 350g/m². The coater offers corrugators, carton and bag/sack manufacturers a selection of barrier and clay-coated papers.