The Guangzhou mill has big plans for the future and now that it can attract investment dollars, the mill intends to tap into new markets

by Jim Kenny

Guangzhou makes the news headlines

Running the Guangzhou Paper Mill in the Guangdong province of China asks more of a mill manager than might be expected in many other countries around the world. As the mill director and general manager, Xie Shu Wen, explains, "Apart from pulp and paper, the mill has its own power station, warehousing, water supply and so on. The services we offer to our employees include the hospital, housing and schools, all on the same area. It means that we're very self-contained, but it also makes it very complicated to run."
This "small city", as Xie Shu Wen describes it, has grown up largely as a result of the attitude of previous Chinese governments. Over the years since the mill started up in 1936, various administrations decreed that the state-owned nature of large production units meant that they should encompass more than just the business of making things.
Although changes in the country's political climate in recent years have given China's managers an imperative to become more profit-oriented, there is little doubt that the Guangzhou Paper mill still accepts its moral and social responsibility to those employed at the mill as well as their dependents. At present, the mill employs 4,700 people, but the figure for those directly or indirectly dependent on Guangzhou stands at well over double that. Change comes slowly, but it is inevitably coming. As Xie Shu Wen clearly states, "Increase the capacity and reduce the people - there is only one way forward for us."

Growing up

Increasing capacity has long been a feature of the papermaking operation at Guangzhou. Since the mill started up in 1936 with 50 tons/day of newsprint capacity, it has seen a great many changes on the way to becoming what will shortly become a 300,000 ton/yr operation. As Xie Shu Wen explains, "The mill began originally producing mechanical pulp and stone groundwood, but now it has a deinking line, chemical pulp line, groundwood, CTMP (chemi-thermomechanical pulp) - just about everything really."
Guangzhou also provides the main market for the output from the mill. As Xie Shu Wen explains, "There are basically three big printing centers in China - Beijing, Shanghai and Guangdong, so it's these areas that provide our market. More than 90% of our output stays in China, with about 50% of that staying in Guangdong because it is such a big market for books, magazines and newspapers."
Exports do form part of the group's business though, and the newsprint output is shipped to a number of destinations, including India, Thailand and Australia.
The mill was originally built well away from the inhabitants of Guangzhou to the southwest of the city on the banks of the Pearl River. But time, population growth and especially the prodigious development witnessed in China over the past decade, have all served to place the paper mill inside what is generally regarded as Guangzhou City.
On the pulp side, the mill's capacity today stands at some 200,000 tons/yr. Newsprint makes up slightly over 160,000 tons/yr of the paper capacity, while corrugating medium adds another 35,000 tons/yr to that total. But with markets and China's business climate changing so rapidly, the mill is now one of the country's new "private" businesses. In 1994, Guangzhou Paper became a joint venture partnership, partly state-owned and partly owned by a Hong Kong company.
"They have brought in much-needed US dollars to the mill so that we could modify the PMs and increase the capacity," says Xie Shu Wen. As a result, the mill is now in the process of installing its latest PM - a machine that is set to take the mill's capacity to 300,000 tons/yr next year.
The new machine, PM 8, is a 130,000 ton/yr second-hand machine shipped over from SCA's Ortviken mill in Sweden and should provide a welcome efficiency boost for the mill. Most of the mill's current capacity is quite dated (Table 1)

Table 1 - The PMs at Guangzhou Paper Mill

New news

The total project cost for the new PM is estimated at RMB 1,200 million ($145 million) as the installation of the new machine has meant boosting the mill's infrastructure considerably. Some 150 tons/day of new BCTMP (bleached chemi-thermomechanical pulp) capacity from Kvaerner Hymac has been added, Ahlstrom has started building a new 250 ton/day deinking line now that the necessary approvals have been secured and extra power capacity has been included in the works. As Xie Shu Wen says, "We're spending a lot of money."
> The mill's old power station will close in stages from next year and will be replaced by two coal-fired turbines generating 100 MW - the first 50 MW unit to start up this year and the second following in 1999. Three boilers will produce 660 tons/hr of steam once the new capacity comes on line. The new wastewater plant will be able to deal with some 20,000 m/day of effluent.
Among the largest parts of the project is the BCTMP line from Kvaerner Hymac. The line involved the construction of two 64" (1,623 mm) refiners, which will use Masson pine from the Guangdong and Guangxi provinces. The units were run continuously for 72 hours in July last year, but the startup was delayed, partly because the building program for the power plant meant that the mill had to buy in expensive power from the grid to run the new plant. The new line is controlled by an ABB DCS.
The construction of the Ahlstrom deinking line in now well under way and when it is complete the line will use 70% old newspapers and 30% old magazines. But the main focus at the moment is being directed toward establishing output from the new PM. The 8.2 m wide PM 8 will run at 960 m/min. The Beloit machine has a Converflo headbox, a Bel Baie II former, a three roll/two-nip combi press, a third press and a 49-cylinder drying section.

Halfway there

By the end of last year, Guangzhou had reached the halfway stage of the project installation, but there is plenty more to be done and Xie Shu Wen is keen to add to the list. Last year, the mill's sulfite pulp production stood at 100 tons/day, the deinking unit managed 80 tons/days and the groundwood unit contributed 300 tons/day, utilizing 16 grinders on two lines. The raft of new equipment will boost these totals considerably in the years to come.
For now, the mill is bringing in 1,000 m of logs each day by boat from the river to keep up its two-month supply of 50,000-60,000 m. "We have to store quite a lot as the supply is not always stable," according to the mill's senior technical engineer, Shi Yongchi. As Xie Shu Wen points out, "We are also working to establish our own plantations to create a stable wood supply. So far, we already have access to some 33,000 ha of forest, and we are planning to expand to 66,000 ha in the future."
Peroxide bleaching was introduced to Guangzhou in 1991 on the basis of customer demand and this takes the groundwood pulp to an ISO brightness of 55-56%.
Along with other types of transportation, the port is also used to bring in wastepaper from Hong Kong. Guangzhou processes a total of 250 tons/day of recovered paper in Andritz and Escher Wyss equipment. Another 150 tons/day of OCC (old corrugated containers) is used to make corrugating medium. Hong Kong sources provide almost all the old news and half of the OCC. However, the mill hopes that the new deinking line will enable Guangzhou to utilize larger quantities of wastepaper and improve the efficiency of the operation by allowing the mill to import more volume from the USA. As Xie Shu Wen explains, "We're going to try to move over to US wastepaper for our deinking, but we need a bigger capacity so that we can buy bigger quantities and make it worthwhile."
In the meantime, the mill's sulfite digesters are helping to generate extra revenue for the mill through the production of a number of by-products, chiefly calcium lignosulfate for export to Japan, Korea and the Middle East. All in all, the RMB 1,200 million project should balance the mill's pulp and paper production at around 320,000 tons/yr in total.

Bad news

Xie Shu Wen hopes that the market will have improved significantly before the new capacity starts up. As he points out, "In China, the market has increased its consumption, but in 1996 and last year a lot of the newsprint came from places like Canada and Korea. That has made for very low prices and made it very difficult for us."
Guangzhou was one the nine main Chinese newsprint mills that was involved in lodging anti-dumping claims against a number of countries last year. Xie Shu Wen argues that they have a valid claim as North American newsprint was being sold at $450/ton at the end of last year - lower than the domestic price of RMB 5,600/ton - and he finds it difficult to believe that selling at this level could be anything but dumping. "There are no profits and it makes it harder to run the mill, " Xie Shu Wen says. "Twice last year we stopped PM 1 and PM 2 because of the market situation - one time for one month to take 6,000 tons out of the market."
Xie Shu Wen estimates that newsprint demand is growing at 6-8%. This is considered relatively slow for China and as a result, his management team are working on plans to install LWC (lightweight coated) paper capacity that the company hopes will prove a sound investment in the future of Guangzhou. "At the moment, LWC has a very small market in China, but it will develop," Xie Shu Wen believes. "The problem for the moment is that a lot of the printing presses in China and Hong Kong will have to be modified to run LWC, but we expect it to be very good for us eventually."

Making moves

The plan for the moment is to switch PM 6 to LWC production next year and market the output in Hong Kong. On the corrugating medium side, as there is already lots of competition in the area among the brown grades, the mill would close down the two corrugating PMs. PM 7 would also be converted to LWC production and in time, the switch should take the mill's LWC capacity to 100,000 tons/yr, with more than 200,000 tons/yr of newsprint capacity.
Xie Shu Wen concedes that he expects there will be little chance of exporting much LWC volume initially, as it will take the mill time to produce an LWC grade with a reasonable quality. But he is convinced that the switch is the way forward for Guangzhou. "LWC growth is very difficult to predict because there is no sizeable market for it at present, but in maybe one, two or three years time, China will develop a strong market and that will expand our market," Xie Shu Wen explains.
Such a move is also likely to boost the mill's current 10,000-15,000 tons/yr of market pulp consumption, as Guangzhou will need high quality fiber from abroad (probably Canada) if it is to make a reasonably good standard LWC grade.
The move illustrates that Guangzhou expects to play a large part in China's rapidly expanding publication papers sector long into the future. And as the market expands, Xie Shu Wen and his team have no shortage of plans to take advantage of the opportunities, even beyond the gates of the Guangzhou mill. As he says, "We have spent lots of money - over RMB 100 million - for wastewater treatment in the past five years. We are constructing a new 20,000 m/day wastewater treatment plant that is costing another RMB 50 million and we have to reach the local government's effluent standards in the next 2-3 years. Basically, because the mill is located here in the city, we have limited room for expansion. If we had a lot of investors, maybe we could set up a new mill outside the city. But that is a long way off at the moment."