Our performance in 2009 - Sappi

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Review of operations | Sappi Forest Products continued
Sappi Forests has some 527,000 hectares of land under direct and indirect management,
of which 380,000 hectares are forested. More than 34 million tons of timber stands on
this land. Sappi’s owned plantations provide 70% of the wood needs of our Southern
African businesses. All wood grown on Sappi-owned land is Forest Stewardship Council
(FSC) and ISO 9000 certified. Sappi’s sawmill, Lomati, produces sawn timber for the
construction industry.
Review
The impact of fires on our plantations reduced substantially after two years of devastating forest
fires which affected us and the whole industry in Southern Africa. We increased our focus on
training our people, building community awareness of the destruction caused by fires, and
upgrading fire detection systems and firefighting equipment.
We have pursued sustainable forestry practices for decades, including focusing on protecting
wetlands by widening the unforested areas around them.
We continue to develop our wood resources through a combination of tree breeding to improve
yield and fibre characteristics, and selective acquisition of plantations close to our major centres
of operations. We recently reached an agreement to acquire 14,000 hectares of softwood
plantations close to our Ngodwana Mill in Mpumalanga Province, South Africa.
We made progress in our feasibility project to create a substantial plantation resource in
Mozambique with very successful trial plantings of Eucalyptus.
The major development in our business last year was the ramp up of production at the expanded
Saiccor Mill, which added 30% production capacity. This will also contribute significantly to the
future sustainability of the business by increasing power self-sufficiency to 70% and boosting the
recovery of energy and chemicals from waste.
Over the past few years forest fires have destroyed around 40% of Usutu Pulp Company’s
plantations in Swaziland. As a result, the Usutu Pulp Mill is no longer sustainable. We intend to
close the pulp mill in January 2010, and are in discussion with labour representatives. We are
exploring ways to beneficiate Usutu’s plantation wood in future, including with third party
investors.
Other actions we have taken to improve our business include the reduction of approximately
300 positions across the operations, partly as a result of the mothballing of a 60,000 ton
containerboard machine at Tugela Mill and of parts of the Ngodwana Pulp Mill which will result in
a small net reduction in its pulp output.
Our Forest Products business continues to work with customers to develop new product and
service solutions, including the design of high-performance packaging and new uses for chemical