Sappi Limited Executive Speech Jonathan Leslie Launch of Production at LignoTech Expansion Umkomaas, KwaZulu Natal

Business Partners, Honoured Guests, Members of the Media, Ladies and Gentlemen,

Today we share in a quietly momentous occasion. A business that began in our search for a solution to an environmental challenge has taken form and is growing into a force to be reckoned with in the world industrial and agricultural additives market.

And so we come together to celebrate as a R330 million expansion goes into production here at LignoTech South Africa, making this plant the single largest producer of lignosulphonates in the world and accounting for approximately 20% of Borregaard LignoTechs total output. None of us could have imagined, when our journey began six or seven years ago, that the solution to softening Sappi Saiccors environmental footprint would bring us to this point. That it has done so is testimony to the vision and drive of two great companies and to the many people who have worked tirelessly to turn a concept into a viable reality for all parties concerned.

LignoTech South Africa is the quintessential new business development. Here we have been able to generate revenue from a previously-unused component of pulp effluent, solving not only an environmental challenge, but building a business that has made an enormous difference to the local community and is a valuable addition to both the Sappi Limited and Borregaard Industries Limited investment portfolios.

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The use of lignosulphonates world-wide is growing as the search for economical and environmentallysound industrial and agricultural additives picks up pace. And we are indeed proud that 90% of this plants output is exported to countries all over the world, earning important foreign exchange for the country and proving without a doubt that South African products can securely take their place alongside the very best that the world has to offer.

By way of example, we at LignoTech SA are honoured to be part of the supply chain that is providing Borresperse Ca SA to the Taiwan High Speed Rail Corporation, which is using it as a concrete admixture in the construction of one of the worlds most technologically innovative projects, the Taiwan North-South High Speed Rail Project. This is the largest infrastructural development project ever undertaken anywhere in the world and our product is an intrinsic part of it.

The Taiwan North-South High Speed Rail Project is scheduled for completion in 2005 and has a development budget of $11 billion. It will link the north of the island to the south, running from Nankang through 14 stations along the way to Tsoying in the south west. Once complete, this exclusive rail link is expected to carry 300 000 passengers per day at speeds of up to 350 kilometres per hour, approximately half the speed of a jet aircraft. Travelling time from the north to the south of Taiwan will, incredulously, be reduced to a mere 90 minutes.

Engineers working on the project regard Borresperse as a vital component of the construction process, calling it a truly 21st century industrial additive. This is so in every sense of the word. Firstly, it is a natural product that reduces the overall quantity of water required for mixing, making it an environmentally sensitive choice. Secondly, it increases compressive strength and improves workability, both great benefits to a state-of-the art project such as the Taiwan High Speed Railway.

Of course, our focus here at LignoTech also extends beyond product and product applications to our people, their communities and the local environment. The company is part of a broader socioeconomic system and it is our goal to be a good corporate citizen in that context.

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To this end and together with Borregaard - as well as with funding from the Norwegian Agency for Development Co-Operation, NORAD - we have developed both job-specific and vendor-specific training for our staff at all levels. Our goal: to enable them to become the very best that they can be. Training has been done on a consultative and participatory basis, which has born great fruit. Our senior workers now assist in the compilation of manuals and in the training of newcomers, transferring not only formal but also informal knowledge to their colleagues.

As importantly, with a budgeted staff complement of 85, we have added many new jobs to the local job pool. In the same way, our on-going commitment to sub-contracting local entrepreneurs wherever possible continues to have a positive knock-on effect on both economic development in the area and job creation. This expansion alone is expected to result in the creation of approximately 380 new jobs amongst suppliers and buyers.

For shareholders, the projected increase of 300% in revenue once the new expansion reaches full production capacity couldnt represent a better return on investment.

At the end of it all, we shouldnt forget the benefits that this plants lignin extraction processes have had for the marine environment. By incrementally reducing the solids component of Saiccors effluent stream, foam stabilisation on beaches has been significantly reduced and diving visibility vastly improved. We expect a further improvement in visibility of approximately 20% on the Aliwal Shoal one of the worlds Top Ten diving sites as a direct result of the increased lignin extraction that this expansion provides for. As far as air emissions are concerned, we have made significant additional investments in air scrubbers that will enable us to maintain emissions within our original permit guidelines, despite a 300% increase in production. Again, this is something of which were very proud.

In closing, it is my personal belief that we have found a real-life business solution to an environmental challenge and that it has met the diverse needs of a wide range of stakeholders.

For this, I thank our partners, Borregaard Industries, not only for their investment contribution to LignoTech SA, but for providing the technological and marketing expertise that this venture required.

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Thank you too to our own people here at Sappi Saiccor and at LignoTech for bringing to the party their skills, passion and dedication without it this project could never have become what it is today. We also thank the South African government, who is represented here today by the Minister of Trade and Industry, Mr Alec Irwin, for its belief in this venture and for the incentive it awarded us under governments Strategic Initiative Programme. We hope that we have set an example to industry in the country of what can be done with vision and application. From Norway, we thank Mr Kurt Ringstad of the Norwegian Trade Commission, as well as the representatives from the Norwegian Embassy for their on-going support. And last, but certainly not least, we offer our thanks to the Norwegian Agency for Development Co-Operation, NORAD, which has so generously contributed to the training support required by this project.

As we see from the presentation here today, people have come together from opposite poles of the globe to turn LignoTech from an idea into a reality. This is the new way of the world and of business. Great cultures and traditions are sharing knowledge, raw materials and experience that creates a whole which is greater than the sum of its parts. In short, they are co-operating to build what can only be called a brave new world. Here at LignoTech SA, we are pleased to be part of this new world.

Thank you.

ends.

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