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Sappi Presentation to NERSA Public Hearing MIDRAND 2010-01-22

Sappi Presentation to NERSA Public Hearing MIDRAND 2010-01-22. Sappi Presentation. Presentation prepared by, based on 200912-14 submission to NERSA: PAT McGRADY REGIONAL ENGINEERING SERVICES MANAGER SAPPI MANAGEMENT SERVICES, BRAAMFONTEIN

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Sappi Presentation to NERSA Public Hearing MIDRAND 2010-01-22

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  1. Sappi Presentation to NERSA Public HearingMIDRAND2010-01-22

  2. Sappi Presentation • Presentation prepared by, based on 200912-14 submission to NERSA: PAT McGRADY REGIONAL ENGINEERING SERVICES MANAGER SAPPI MANAGEMENT SERVICES, BRAAMFONTEIN - APOLOGISES FOR NOT BEING ABLE TO MAKE THE PRESENTATION • Presented by: DU TOIT GROBLER SENIOR REGIONAL ELECTRICAL ENGINEER SAPPI MANAGEMENT SERVICES, BRAAMFONTEIN

  3. Sappi Background • Global business employing 30,000 employees • South African production capacity greater than local demand – reliant on exports • Previous competitive advantage – low cost energy; fast eroding • 2009 energy costs 11.7% of sales vs 7.6% in 2004 • SA Purchased electricity ~R350m/annum – generation 45% • 35% increase over 3 years → electricity costs to ~R1b

  4. Sappi Background Source – US Energy Information Administration

  5. The Problem • Not that electricity price is increasing • Is the rate at which prices are increasing • Price can only be countered by reduced demand - efficiencies • Energy efficiency improvement can not be achieved by a ‘magic wand’ approach. • Planning and adjusting – behaviour and capital • Significantly behind major competitors - Europe and USA

  6. Way Forward • Consumer • Pay increased electricity prices, but at a slower rate • Drive energy efficiencies • Government • Provide direction - National Integrated Resource Plan • Eskom • Efficiently and cost effectively generate and transmit electricity • Focus on management and planning of electrical power supply • Supplier of last resort – guarantee supply at all times • Electricity costs should exclude special pricing elements – cross subsidising is a government responsibility • Regulator • Benchmark and regularly publish prices worldwideto eliminate speculation • Ensure an enabling environment that allows optimum power generation from all players – co-generation; IPP’s • Ensure unrestricted access to transmission grid for such power

  7. THANK YOU

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