Pawan Singh, Portfolio Manager at Sanlam Investments
Sanlam Investments, one of South Africa’s largest black-owned asset managers in South Africa, reaffirms its commitment to sustainable investing through a new R46 million sustainable infrastructure deal. The Sanlam Investments Sustainable Infrastructure Fund is funding a portion of the joint venture (JV) between Alien Fuel Group and Sappi in Umkomaas, KZN, known as Mkomazi Alienfuel (MAF).
This project will provide crucial baseload renewable energy derived from biomass to Sappi’s dissolving pulp manufacturing plant in Umkomaas, one of the largest of its kind in the Southern Hemisphere, where Sappi currently employs approximately 1,500 employees. Dissolving pulp is derived from cellulose from woodfibre and is used in the manufacturing of textiles, household, industrial and pharmaceutical applications including acetates, washing sponges and non-woven fabrics. The project focuses on converting biomass waste, such as sawdust, knots, and bark left behind in the dissolving pulp manufacturing process, into high-calorific-value wood pellets.
These wood pellets replace fossil fuels (such as paraffin, diesel, and coal) in industrial boilers and burners for the generation of electricity, steam, and heat. The collaboration with Sappi at Saiccor Mill will lead to the establishment of an R80+ million waste-to-energy plant, creating a sustainable source of electricity and steam from wood pellets. Sappi will provide the raw material and has committed to purchasing the wood pellets as part of an initial five-year contract.
The Sustainable Infrastructure Fund was launched in September 2021 with an initial commitment of R500-million from Sanlam and plans to raise a further R5-billion to invest in local projects that foster economic growth, market development, and job creation while delivering inflation-beating returns. The Fund deploys capital across various sectors including renewable energy, conventional energy, transportation, communication, water, and waste-related infrastructure, all while strictly adhering to ESG and Impact criteria.
Pawan Singh, Portfolio Manager for the fund, stated that the funding of Alien Fuel Group’s growth projects is in line with the fund’s objectives, emphasising, “The joint venture with Sappi will create new job opportunities for the community, boost the local economy and promote sustainable business practices.”
A notable positive impact aspect of this project is its contribution to climate change mitigation through the utilisation of feedstock derived from wood shavings and other wood waste typically left over from Saiccor Mill’s manufacturing processes. Typically sent to landfills, this wood waste generates methane – a greenhouse gas with approximately 28 times the global warming potential of carbon dioxide – during decomposition. This joint venture will not only mitigate approximately 57,000 tonnes of annual landfill waste but also avert 322,000 tonnes of CO2 emissions over a 10-year period, by diverting organic waste from landfills. Independent verification of emissions data will be conducted by a carbon consultant to ensure accuracy.
In line with United Nations Sustainable Development Goals (UNSDGs) and the mandate of the Sanlam’s Alternative Funds impact strategy, the project will also create employment and ensure inclusion. It is estimated that this project will create 63 full-time jobs within the local community, with one-third of these jobs is anticipated to be held by female employees. Twenty-five (25) of the employees have already been onboarded. During the project’s construction phase, 72 temporary jobs were created, of which 53 were filled by local community members. These outcomes align directly with Sanlam Investments’ commitment to the United Nations Sustainable Development Goals, particularly SDG 5: Gender Equality, SDG 8: Decent Work and Economic Growth, and SDG 10: Reduced Inequalities.
Mpho Lethoko, Head of Corporate Affairs Sappi Southern Africa, commented, “The joint venture will result in significant cost savings for Sappi in the form of reduced landfill costs. More importantly, it aligns with our commitment to promote renewable energy (SDG7: Modern Energy) and our decarbonisation journey (SDG13: Climate Action) which incorporates approved science-based targets. In addition, it provides more forestry value chain job opportunities that promote a circular economy and boost the local economy.”
Bruce Johnson, Director and Founder of the Alien Fuel Group, said, “The Alien Fuel Group is proud to announce our collaboration with Sappi on a project that perfectly encompasses our key business values. Sanlam and Sappi are great allies who, when it comes to going green and creating job opportunities, genuinely walk the talk. We could not have asked for better partners in rolling out our groundbreaking, South African designed technology. The Sappi Saiccor site has been a great opportunity to prove the efficiency and reliability of our Biomass Burners along with the impressive performance of our Alien Fuel ®. It has been inspiring to see the rapid rate of expansion and massive interest in our scalable environmental and socio driven business model.
“With the backing of Sanlam Investments our Mkomazi Alienfuel joint venture has made huge progress in our commitment towards sustainability, job creation and female empowerment.
We are grateful for this opportunity to “fuel a cleaner future.”