Rising Demand From Asia and South America Will Sustain the South African Pulp and Paper Market, Says Frost & Sullivan

CAPE TOWN, South Africa, July 19, 2010 - Unlike consumption trends in other mature commodity sectors, paper
consumption shows little sign of decoupling from economic growth. Paper
consumption is projected to grow by about 50 per cent by 2010 compared to its
demand patterns in 2000. A strong demand for pulp and paper commodities is
expected from Asia Pacific and South American countries in particular from
2010 to 2012.

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New analysis from Frost & Sullivan (
www.industrialautomation.frost.com), Production and Investment
Forecasts in the South African Pulp and Paper Market, finds that the market
earned revenues of US$4.73 billion in 2008. The sector invested US$477.0
million on capital projects in 2008, and estimates the capital expenditure to
be lower at US$202.5 million in 2012.

If you are interested in more information on this study, please send an
e-mail to Patrick Cairns, Corporate Communications, at
patrick.cairns@frost.com, with your full name, company name, title, telephone
number, company e-mail address, company website, city, state and country.

"South Africa has an extraordinarily low cost base in terms of fibre
production compared to other pulp and paper producing nations," says Frost &
Sullivan Industry Analyst James Fungai Maposa. "This is due to the speedy
tree growth rate and lower inherent energy costs."

A low-cost base gives South African pulp manufacturers a competitive
advantage over other pulp producers globally. However, the South African pulp
and paper industry is extremely energy intensive and exposed to risks posed
by fluctuating energy prices, including those of fuel and electricity.

"The energy price rise has contributed to higher operational costs,
negatively affecting the overall profitability of the market," explains
Maposa. "Additionally, this has been exacerbated by the weak market prices of
pulp and paper commodities resulting in a few companies incurring losses
during the financial years of 2008 and 2009."

To overcome this setback, pulp and paper producers in South Africa should
adopt strategies that are focused on increasing self-generation capacities as
well as improving energy efficiencies at all production facilities.

"With the anticipated revival of the global economy as well as
improvements in living standards around the world, certain sectors of the
pulp and paper market, particularly chemical cellulose pulp, and coated
graphic paper and tissue, are expected to grow steadily in the long-term,"
concludes Maposa. "This growth in demand is anticipated to contribute towards
greater capacity utilisation from 2010 and 2012 and a higher production
output of the South African pulp and paper industry."

Production and Investment Forecasts in the South African Pulp and Paper
Market is part of the Industrial Automation & Process Control Growth
Partnership Services programme, which also includes research in the following
markets: Production and Investment Forecasts in the South African Cement
Industry and Production and Investment Forecasts in the South African Coal
Industry. All research services included in subscriptions provide detailed
market opportunities and industry trends that have been evaluated following
extensive interviews with market participants.

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    Production and Investment Forecasts in the South African Pulp and Paper
Market
    M50C

    Contact:
    Patrick Cairns
    Corporate Communications - Africa
    P: +27-18-464-2402
    E: patrick.cairns@frost.com
    www.frost.com

Patrick Cairns, Corporate Communications - Africa of Frost & Sullivan, +27-18-464-2402, patrick.cairns at frost.com