TOTAL P&B OUTPUT: 3.0 million tons

TOTAL PULP OUTPUT: 2.8 million tons

Despite some setbacks, the South African economy performed better than expected last year. Stronger growth in the agricultural sector contributed to an acceleration in the country's overall economic performance. The country reported a growth rate of 1.2% last year compared to just 0.6% in 1998. Forecasts for economic growth are even more favorable for 2000 and 2001 at 3.3% and 3.5%, respectively.

In the paper industry, a number of important events took place in 1999. Sappi Saiccor started up its "Continua 2" unit after a two-year shutdown. The restart has boosted the mill's capacity to 560,000 tons/yr of dissolving pulp. Sappi will upgrade its Stanger PM 1 in 2001, which will increase the machine's capacity by nearly 20,000 tons. This will allow the Stanger mill to produce double coated grades, as well as increase its grammage range with new lightweight 70 g/m= papers and 250-300 g/m= board products.

Mondi purchased Kohler Corrugated Packaging (now Mondipak), which boosted the company's involvement in the paper packaging sector. Mondipak has approximately 30% of the corrugated market in South Africa. Mondi also rebuilt PM 2 at Richards Bay to add an extra 75,000 tons/yr of improved quality liner at the mill. The project increased capacity from 160,000 tons to 235,000 tons/yr. The rebuild also involved the construction of a second recovery boiler with a capacity of 900 tons/day of dry solids.

Apparent demand for A4 paper and coated woodfrees has been particularly strong, and even above expectations, in South Africa. These levels will continue to rise with the introduction of new technology.

Demand for corrugated paper in export markets has seen similar increases and is expected to maintain growth rates in line with world GDP rises. Demand for corrugated paper on the local market has not changed considerably, but is showing signs of improvement in 2000. Prices of these grades have increased around 20% over the last 18 months.

Production of paper and paperboard in 1999 was 3% lower than in 1998, but exports rose by 9%. Pulp production dropped 5% and exports fell 14 % on 1998 levels. The fall in production was a result of maintenance shutdowns and low pulp prices.

The main event on the political front in Algeria last year was the election of a new president in April. Abdelaziz Bouteflika's main political program centers on the restoration of peace and order in the country. By December 1999, the president had also appointed a new cabinet with a strong focus on economic recovery.

Algeria's economy is still rather shaky and the country's debt burden is high. Stronger oil prices last year helped to remedy this situation slightly, but there is still a lot of work to be done on the economic front. For example, the government's efforts to open up the economy to foreign investors have proved unsatisfactory.

The main event in the paper and board sector last year was the reorganization of the industry's major players, Celpap and Enepac. The two companies now operate under the name of Gipec. Their combined capacity is 300,000 tons/yr with an annual turnover of Dinars 6,500 million ($85 million) and over 4,000 employees.

Despite these restructuring measures, local output is stagnating in Algeria. The main reason lies in water and raw material shortages and the mills' outdated equipment. Trade liberalization has also taken the sector by surprise as many mills were not prepared to cope with competition in terms of price or quality. As the state monopoly has been in place for a long time, the mills' industrial equipment has not been renewed. The authorities have been concerned with increasing output rather than maintenance matters.

In general, paper and board consumption is being met by imports of various grades. The growth in imports is being driven by converting, printing and other end-user industries which are largely in the hands of private groups.

On the other hand, local paper production is still mainly dominated by the new public Gipec group. Attempts by private industrialists to set up paper production have not radically altered the paper sector in Algeria as the impact of these private companies is rather limited.

Omar Chabane

Two large projects are making the headlines in the Egyptian paper industry. Edfo's new printing/writing mill started up in January 2000 with a capacity of 60,000 tons/yr and Quena Paper will also bring a newsprint machine on line this year. Startup of the 120,000 ton/yr PM is penciled in for October 2000. Both of the mills are located in Upper Egypt close to sugar mills which supply some of their bagasse raw materials.

There are also plans for two coated duplex board projects in Suez. Startup is estimated to take place in 2001 and the machines will have a capacity of 60,000 tons/yr.

Babil Kuzbari

Despite an improvement in the country's economic performance, the overall consumption of paper and board decreased by 50% last year. The printing/writing and wrapping papers were the only grades which saw a rise in consumption in 1999.

The main reason behind the slump in consumption was the five-month shutdown at the country's only mill. The local products were not competitive compared to imports, due to a new 20% value-added tax and a drop in custom duties. Some goods, especially newsprint and copybooks, were duty free. The main goal for 2000 is to regain 1998 production levels.

JL Razafindrakoto

The economy continued its downward spiral in 1999, fuelled by excessive government spending and increasing evidence of massive corruption. The country also suffered from high inflation rates which rose to 60% at the end of the year. Export attempts were largely hindered by the centrally managed exchange rate, which did not move at all during 1999 or well into 2000 despite the runaway inflation rates. This situation also affected local competitiveness.

CB Thornton

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