Sappi takes on the Chinese market – mills now on four continents

Total cost of the development, which will also include an ancillary power plant and transport infrastructure is estimated at US$487 million. Sappi will own 34 per cent of the venture.

The construction of the mill is well advanced and scheduled to start delivering paper in the first half of 2005. It will be owned and operated by a company called Jiangxi Chenming, to which Sappi will nominate the chief financial officer. The operating company will have no business other than the mill.

Commenting on the transaction, Jonathan Leslie, CEO of Sappi, said, "This is our first manufacturing investment in Asia and we are delighted to be teaming up with high calibre partners."

"There is a good strategic fit with the rest of our coated paper business and this investment extends our manufacturing base from a geographic and product perspective. Sappi will now have coated paper manufacturing capacity on four continents, further reinforcing our position as a leading global coated paper producer.

"We look forward to a close and fruitful relationship with our new partners."

The main partners are Shandong Chenming, which is a leading Chinese paper producer with an annual paper production capacity of 1.4 million tons in China, and Shinmoorim, a leading Korean fine paper manufacturer with an annual paper production capacity of approximately 500,000 tons.

IFC, which is the private sector investment institution of the World Bank Group, will hold 7.5 per cent and is arranging the finances of the project.

Sappi currently has mills offices in the USA, Africa and Europe, as well as an active Trading division covering Asia and Central and South America.