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Sappi Limited Plans Major Investments at Two U.S. Mills

Brussels, Belguim, 11 November 2011 -- Sappi Limited announced today the approval of a USD 170 million capital project to convert the kraft pulp mill in Cloquet, Minnesota, to chemical cellulose used in textile and consumer goods markets. The planned conversion is slated to come online in 2013, and once complete, will allow the production of 330,000 metric tons of chemical cellulose per year.

Approved capital plans also call for a USD 13 million project to upgrade coated paper manufacturing at the Sappi Somerset mill in Skowhegan, Maine. These investments reflect Sappi Limited’s confidence that the North American region can play a significant role in the global chemical cellulose market, complementing already strong market positions in release and fine papers.

“The chemical cellulose conversion project at the Cloquet mill is consistent with our announced strategy to diversify further into this fast growing segment,” said Ralph Boëttger, chief executive officer Sappi Limited. “The globally low cost position of Sappi’s Cloquet pulp mill will provide an attractive platform for growth with our current chemical cellulose customers as well as open up new markets to us.”

Sappi is currently the world’s largest manufacturer of chemical cellulose out of its Saiccor mill in KwaZulu-Natal, South Africa. The Cloquet project, together with the earlier announced expansion at the Sappi Ngodwana mill in South Africa, will bring Sappi’s total chemical cellulose capacity to more than 1.3 million metric tons per year.

“We are excited about the new growth opportunities this investment in chemical cellulose brings to Sappi Fine Paper North America, all of our employees, and the Cloquet community,” said Mark Gardner, president and chief executive officer Sappi Fine Paper North America. “Our planned conversion will allow the continued production of kraft pulp for maximum flexibility to react to changes in global pulp markets. This project, together with the coated paper investment at Somerset mill, ensures that we can grow profitably in both cellulose and fine paper markets for years to come.”

The Cloquet conversion project will not affect the company’s coated paper business at that site. Dry fiber handling systems and improvements to paper machine capabilities approved as part of this project ensure that product quality across all grades will be unaffected.

Currently, the Cloquet pulp mill produces northern bleached hardwood kraft (NBHK) pulp for market sales. Sappi will work closely with its pulp customers to ensure an orderly transition, including, where appropriate, making supplies available from its Somerset mill in Skowhegan, Maine.

The USD 13 million capital project at the Somerset mill includes upgrades to the existing gap former on PM 3, improving its cost structure and allowing the production of a broader range of products on the machine. The PM 3 rebuild project is slated for completion in fall 2012.

Sappi Fine Paper North America, known for innovation and quality, is a preeminent North American producer of coated fine and release papers headquartered in Boston, Massachusetts. Its coated fine papers are used in premium magazines, catalogs, books, and high-end print advertising. The company is also the world’s leading supplier of release or "specialty papers" for the automotive, fashion, and engineered films industries. Sappi’s release papers provide the surface aesthetics for synthetic fabrics used in footwear, clothing, upholstery and accessories, as well as the textures for decorative laminates found in kitchens, baths, flooring, and other decorative surfaces. Sappi Fine Paper North America is a division of Sappi Limited, a global company headquartered in Johannesburg, South Africa, with manufacturing operations on four continents in eight countries, sales offices in 35 countries, and customers in more than 100 countries around the world.


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