Sappi has signed an agreement with the Department of Energy to build a renewable energy plant at its mill in Mpumalanga.
Sappi and consortium partners KC Africa and African Rainbow Energy and Power would spend a combined R1.8bn on a 25MW biomass energy unit at the company’s Ngodwana mill, said Sappi Southern Africa CEO Alex Thiel.
Sappi will have a 30% stake in the facility, which is expected to contribute to the national grid from July 2020.
Construction would probably start in August and project expenditure on black-owned entities would be at least R600m, Thiel said.
The consortium signed an agreement with the Department of Energy on Wednesday as part of the government’s renewable energy programme.
The programme involves 27 projects and R56bn in investments and would add about 2,300MW to the national grid over the next five years, Energy Minister Jeff Radebe said.
Sappi already contributes to the national grid by selling surplus energy from its Ngodwana and Saiccor mills to Eskom.
The company currently sold 10MW to 15MW of power to the grid from its Ngodwana mill, Thiel said. The electricity is generated by burning wood chips, branches and other biomass.
Excluding the new biomass project, Sappi would spend about R1.3bn on its Ngodwana mill in 2018 to expand its dissolving wood pulp production capacity. It also planned to spend R6.2bn to expand its dissolving wood pulp capacity at Saiccor and this would allow it to generate more electricity from that mill, Thiel said.