SAPPI has been selected as preferred bidder of the Ngodwana energy biomass project in the fourth window of the South African government’s renewable energy independent power producer programme.
The forestry, paper and chemical cellulose maker’s 25MW biomass project will be built at the group’s Ngodwana mill in Mpumalanga, using biomass supplied from local plantations. It will feed electricity into the national grid near Mbombela, formerly Nelspruit.
Sappi said the value added by the project was significantly higher than alternate renewable energy technologies. It said the project value chain included collecting biomass, plant and equipment contracts, and community development benefits through the trusts, as well as general shareholder returns.
Project partners are Sappi Southern Africa, KC Africa and Fusion Energy. There will be broad-based empowerment participation through the Ngodwana Energy Employees Trust and the Ngodwana Energy Community Trust, with each trust holding a 5% stake in the project.
ELB Engineering Services has been appointed as the engineering, procurement and construction contractor.
Sappi Southern Africa CEO Alex Thiel said on Tuesday that Sappi would continue to focus on extracting maximum value from the renewable wood fibre that it grows.
He said the new project built on the group’s earlier R3bn investment at Ngodwana mill to make chemical cellulose, which is widely used in textiles, pharmaceuticals and cigarette filters.
The group has long been diversifying out of globally declining fine coated paper markets as a result of internet publishing.
Globally, Sappi had already developed and constructed five hydro, two gas and 31 steam turbines, which generated about 800MW of renewable power on 14 sites in seven countries.
KC Africa president Ki Kyeong Kim said on Tuesday that the winning bid for the Ngodwana energy biomass project was a "giant step for KC Africa and for our parent company, KC Green Holdings in South Korea".
"It is a mark of our belief and confidence in the project, in all the parties involved and especially in the country and government," he said.