AFTER THE BELL: The contribution of koala bears to the SA paper industry

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The name Cecil John Rhodes is so intrinsically linked to the diamond industry that it’s a little known fact that by the time Rhodes actually got to Kimberly in 1871, there were already around 50,000 people there. How did he, out of those 50,000 people, ...

The short answer is, it didn’t happen overnight; he was deft and creative and an extraordinary mover and shaker. He was also helped by his ice machine. He and his partner Charles Rudd bought an ice machine in London, brought it to Kimberly and sold ice to the miners. They did a roaring trade because Kimberly is searingly hot at the best of times.

What happens is that competition drives down margins in the main business, particularly if it’s very visible and obvious. Yet, precisely because it’s so visible – and often there is an investment mania surrounding the main business – the businesses that supply the main business is where you want to be.SA’s two paper producers, Sappi and Mondi, just released their quarterly and half-yearly results respectively, and they are both absolute blow-outs.

The “picks and shovels” analogy really applies to Mondi, because packaging is to the internet delivery market what shovels were to the gold industryOf course, the paper industry of yore is a declining market, because magazines, newspapers and books are being replaced with digital technologies. But that same digital industry, mainly in the form of Amazon, is adding jet propulsion to Mondi’s packaging products.

Blue gums exude a lot of gum, hence the name – useful if you are making something gummy. I remember asking the Sappi execs why, with SA’s problems with land claims and water scarcity, they didn’t start plantations in Australia? The answer was that because eucalyptus trees are native to Oz, an entire range of species have, over the centuries, adapted to live in them, including, as it happens, koala bears.

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Rhodes having been 'the ears and eyes' of the British empire, just like 'you-know-who' is in occupied Palestine - a recipe for success.

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