Sappi may close Switzerland mill on rising costs

South African paper maker Sappi said on Thursday it may close its Biberist mill in Switzerland due to tough market conditions, coupled with rising input costs.

Sappi, the world’s largest maker of fine paper used in glossy magazines such as Vogue, said it has not proved possible to recover the sharply increased costs of raw material and energy over recent years due to continued overcapacity in the European coated and uncoated paper markets.

“Despite our best efforts to curb costs and gain better margins, Biberist Mill has been unable to generate acceptable returns,” the company said in a statement.

Sappi said it has started a consultation process with Biberist mill employees and social partners to identify the best ways of improving profitability, which may include a full closure of the mill.

The company also said if the closure of Biberist mill was to happen, it would reduce its coated fine paper capacity by 435 000 tonnes and its uncoated fine paper capacity by 65 000 tonnes.

Sappi added that should production at the mill cease, customers for the coated fine paper products would be offered comparable products and services from other Sappi sites in Europe and no supply interruption would be anticipated.

Approximately 550 employees would be affected by the closure, Sappi said.

Sappi shares were trading 0,94% higher at R35.55 rand on Thursday morning, compared with a 0,32% fall in Johannesburg’s All-share Index.—Reuters