Sappi To Convert Minnesota Pulp Mill For Chemical Cellulose Production

South Africa-based Sappi Ltd. — a wood pulp and paper producer with operations in South Africa, the
United States and Europe; a joint venture in China; and sales offices worldwide — is investing $170
million to convert its Sappi Fine Paper North America kraft pulp mill in Cloquet, Minn., for
production of chemical cellulose that will be processed into rayon for textile applications such as
fabrics and disposable nonwoven products. Construction is set to begin this month, and completion
is anticipated in May 2013. Once converted, the mill is expected to produce 330,000 metric tons of
chemical cellulose annually.

Cloquet Mill, established in 1898, underwent a major upgrade in the 1990s. According to Mike
Schultz, project director in charge of the conversion, it is the most modern pulp mill in North
America and produces pulp using batch cooking technology, which is suited for making chemical
cellulose, rather than continuous cooking, another pulp-making technology that is not suitable for
making chemical cellulose. “We will still have the ability to make kraft pulp if we choose to, but
the intent will be to begin producing chemical cellulose as quickly as we can and produce as much
as the market will support,” he said.

The pulp will be shipped primarily to China, Indonesia and India, where it will be processed
into rayon fiber for various textile applications. Schultz said there currently is not a market for
the pulp in the United States, but if domestic opportunities should open up, the company will be
ready to supply that market as well.

Sappi’s Southern Africa division currently is producing chemical cellulose at its Saiccor
Mill in South Africa. With an annual production capacity of 850,000 metric tons, that mill is the
largest producer of chemical cellulose worldwide, according to the company. Conversion of a second
mill in South Africa is underway, and once that conversion, along with the Cloquet Mill conversion,
is completed, the company will be able to produce more than 1.3 million metric tons of chemical
cellulose per year.

The chemicals used in the processing of the pulp will be recovered and reused, Schultz noted.
In addition, byproducts of the process can be used in other products, for example, pickling salt
and sweetener for gum, among other products.

April 10, 2012