2008 Annual report - Sappi

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33. Environmental matters
We are subject to a wide range of environmental laws and regulations in the various jurisdictions in which we operate, and
these laws and regulations have tended to become more stringent over time. Violations of environmental laws could lead to
substantial costs and liabilities, including civil and criminal fines and penalties. Environmental compliance is an increasingly
important consideration in our businesses, and we expect to continue to incur significant capital expenditures and operational
and maintenance costs for environmental compliance, including costs related to reductions in air emissions including carbon
dioxide and other greenhouse gases (GHG), waste water discharges and waste management. We closely monitor the
potential for changes in pollution control laws and take actions with respect to our operations accordingly. Sappi spent
approximately US$15 million in the financial year ended September 2008 (September 2007: US$15 million) on capital projects
that control air or water emissions or otherwise create an environmental benefit.
Sappi Fine Paper North America is subject to stringent environmental laws in the United States. These laws include the
Federal Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act and their respective state counterparts and implementing regulations. The State
of Maine has ordered a hearing, scheduled for later this year, to determine whether it will require Sappi Fine Paper North
America to install a fishway at its Cumberland Mills dam on the Presumpscot River. A fishway on the Cumberland Mills dam
would trigger the obligation to install fishways at Sappi Fine Paper North America’s dams upstream of the Cumberland Mills
dam, to allow natural fish migration and thus promote the restoration of native species to the river. The total cost of these
projects, if required, is estimated to be approximately US$18 million. Previous settlement discussions with government
agencies and environmental groups regarding the removal of the Cumberland Mills dam were not successful.
Although the United States has not ratified the Kyoto Protocol, and has not yet adopted a federal programme for controlling
GHG emissions, there are various state and regional initiatives regarding GHG regulation and Congress is considering a
number of legislative proposals regarding climate change. Accordingly, we closely monitor state, regional and federal GHG
initiatives in anticipation of any potential effects on our operations.
Our European facilities are subject to extensive environmental regulation in the various countries in which we operate.
For example:
• The Integrated Pollution Prevention and Control directive regulates air emissions, water discharges and defines permit
requirements and best available techniques for pollution control.
• The national European laws regulate the waste disposal framework and place restrictions on landfilling materials in order
to reduce contaminated leachate and methane emissions. Prevention, re-use and recycling (material or thermal) are the
preferred waste management methods. In Austria, Germany and The Netherlands only inert ash or slag from thermal
recycling and incineration processes may be placed in landfills.
• In The Netherlands we, together with other paper manufacturers, have signed an agreement with the national government
to improve environmental management and further limit emissions.
The countries within which we operate in Europe have all ratified the Kyoto Protocol and we have developed a GHG strategy
to comply with applicable GHG restrictions and to manage emission reductions cost effectively. Our expenditures related to
GHG compliance in Europe are not expected to be material.
In South Africa, requirements under the National Water Act, National Environmental Management Act and the Air Quality Bill
may result in additional expenditures and/or operational constraints. South Africa is also a signatory of the Kyoto Protocol
and Sappi is currently identifying and initiating Clean Development Mechanism projects at a number of our South African mills.
Although we are uncertain as to the ultimate effect on our South African operations, our current assessment of the legislation
is that any compliance expenditures or operational constraints will not be material to our financial condition.
// 2008 Annual report
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