The majority of the mills production would be for export to Europe and Asia.
A jointly owned project company, Pulp United Pty, will research the feasibility of building the eucalyptus-based mill at Richards Bay in South Africa.
The output will be labelled as a Sdra Cell product and all sales will be handled by the company.
The project will cost in the region of 155m-233m (RSAr2bn-3bn), and will have a capacity of 300,000 tonnes per annum.
Sdra Cell president Leif Brodn said there had been a fibre flow from the South African region for some 15 years, and the combination of competitive wood and energy costs made the region a viable option.
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