By Graeme Rodden, Executive Editor and Mark Rushton, Editor, Pulp and Paper International (PPI)
BRUSSELS,
Jan. 10, 2011
(RISI) -
It may be a sign of improving (or improved) times but PPI's editors had a plethora of companies to consider when looking at which five companies to highlight in this year's list of the ones to watch. We threw out the question to our economists, news editors and engineers as well and they came up with a number of worthy candidates worldwide. This year, winnowing the list down to five was difficult. We could probably have listed double the number. All of these companies chosen and even those not selected are forging ahead with ambitious plans with projects ranging from expansions to greenfield mills to entry into the bioenergy sector.
Although not chosen for the final five, these companies are worthy of mention and all received votes from those we surveyed: AbitibiBowater, Arauco, CMPC, Eldorado Celulose e Papel, Catalyst, Clearwater, Domtar, Fibria, FutureMark, Longview, Nine Dragons, Nippon Paper, Procter & Gamble, Smurfit-Stone.
Suzano
There is good reason why Antonio Maciel Neto was Number 2 on RISI's list of the 50 most influential people in the industry (PPI, July 2010, p.15) as well as being selected as RISI's Latin American CEO of the Year two years running. The company he leads has become one of the most visionary enterprises within the industry. Suzano's new projects recognize the fact that part of its future growth will come from beyond traditional pulp and paper production.
Suzano's biomass project has produced a high level of interest in the trade and the company's forward thinking and commitment to delivering on future trends has impressed analysts. Suzano is the first company in the sector to invest in wood pellet production with an $800 million project. The pellets, destined mainly for the European market, will come from purposely-grown "energetic" forest that will use a special clone that will produce a tree with a high lignin content and more calorific value. In fact, the trees, which can be harvested after two to three years, cannot be used for pulp production. Suzano is looking to produce more than two million tonnes/yr of pellets.
Yet, it has not forgotten the bread and butter of the company with plans for two greenfield pulp mills, Maranhao and Piaui, that will start up in 2013 and 2014 respectively and produce 3 million tonnes/yr of pulp in the medium-term. And, an expansion of the existing Mucuri mill is also in the works. By 2014, the company hopes to produce 5.6 million tonnes/yr of pulp and paper (not including any expansion of the Mucuri unit).
Finally, Suzano has also entered the biotechnology field with the purchase of FutureGene, which has conducted field trial of transgenic eucalyptus in Israel and Brazil as well as a poplar clonal test in China. Suzano believes biotechnology is on the "right side of sustainability". Through biotechnology, Suzano believes benefits such as less land utilization, less water consumption, lower chemical costs and higher carbon sequestration are all possible.
VISY/PRATT
The privately-owned, Australian-based company has become quite a force in the US recently. The success of the greenfield Shreveport, LA, mill, brought its mill manager Luis Henao recognition as Mill Manager of the Year at the PPI Awards 2010 (PPI, December 2010, p. 25). Recently, at its Conyers, GA, mill it successfully started up the first of four "Clean Energy" power boilers (PPI, July 2010, p. 34) planned for its US mills under a $1 billion commitment the company made under former US President Bill Clinton's global initiative. The process gasifies wood waste as well as other contaminants such as plastic that Pratt removes from the secondary fiber it uses to furnish the mill's paperboard machine.
The biofuel boiler allows the mill to eliminate natural gas use, produce its own electricity and reduce the amount of waste sent to landfill. And, it plans to do this four times over.
Pratt's $1 billion, 10-year commitment was made in 2007. Besides the Clean Energy boilers, it includes multiple material recovery facilities and a recycling program.
At about the same time that Pratt started up the Shreveport mill in 2009, it also started up another paperboard machine at its Tumut mill in Australia. The investments have helped Visy/Pratt become a leader in the production of low basis weight packaging materials, which it believes is the future of this sector of the industry. Don't expect the company to stop anytime soon. Reports are that the company is looking at another large investment, in either the western US or Australia.
ASIA PULP & PAPER (APP)
APP is a company more in the news than not, and for some good reasons; it has a well known plan to be the Number 1 pulp and paper company in the world; it operates in one of the "hottest" regions, Indonesia, when it comes to the NGOs focus on deforestation and climate change; it has a strategy of organic growth that includes the installation of the biggest and very best in pulp and paper technology; and a strategy of acquisitive growth that will probably put it firmly in industry headlines even more regularly next year.
With its bold mission to be number 1, APP is going to have yet another tough year in 2011 as it comes under even closer scrutiny regarding its forestry and plantation operations in Indonesia. Indeed 2010 saw a ramping up of NGO activity aimed against the company, particularly from Greenpeace, in which it published a series of reports highlighting alleged environmental transgressions, as well as naming some of the major brands around the world that were buying the company's products. APP in return commissioned a series of independent reports, including one by former Greenpeace founder Dr Patrick Moore, refuting the allegations.
But perhaps the real reason this company is one of our Five to Watch for next year is its seemingly unstoppable progress, with new expansions in both pulp and paper too numerous to mention, including the startup of the world's largest fine paper machine located on Hainan Island, China. One of the main areas of interest is where all the fine paper that APP is producing is going to go as duties have now been imposed in both the US and Europe on fine paper coming in from China. Duties are also now being talked about in Brazil and India as anti-dumping fears in those countries come to the fore.
Another major development on the horizon is APP's aggressive acquisition strategy abroad through its subsidiary Paper Excellence based in Holland which has already seen it buy up four pulp mills, two in France and two in Canada. Could we see APP making an acquisition of a major European or US pulp or paper company in 2011?
Mreal
M-real exited the highly competitive fine paper area business a couple of years ago, and has firmly committed itself instead to the much more opportunistic market of packaging - and it seems that the move is paying off. Financially the company is now reporting a huge turnaround from the edge of bankruptcy to one of the most profitable companies in the sector. RISI analysts report that in fact that M-real has pulled off a move that most other companies in the European region could only dream about - including Stora Enso and UPM - by cutting out the loss making sectors and focusing on what it is best at, folding boxboard (FBB).
Commenting on the latest financial results, which has seen the company move firmly into profit, Mikko Helander, CEO of M-real says: "Our profitability has improved further, and the quality result was the best we have had in years. We have achieved targeted results in price increases and additional deliveries."
Helander predicts that there is buoyant demand for cartonboard going forward and positive developments all round for the company's products going into 2011. The company has recently announced major structural changes to embrace this optimistic outlook and is set to invest Euro 26 million ($34 million) in increasing FBB production at its Simpele mill in Finland by 80,000 tonnes/yr to some 300,000 tonnes/yr as well as increasing its sheeting capacity by around 40,000 tonnes/yr in a project that should see completion by mid 2011. The company is also upgrading the coating section on its 375,000 tonne/yr white-top kraftliner paper machine at its Kemiart Liners mill in Finland. The Euro 16 million ($21 million) investment, which is aimed at improving product quality and focusing on coated grades, will also be completed next year.
Ballarpur Industries (BILT)
India's place as a papermaking force must not be underestimated. It is experiencing growth in paper consumption into double digits, and in some grades growth is as high as 25%, particularly in the case of containerboard. The country has major infrastructure challenges ahead of it, but it also has a raft of pulp and paper companies imbued with a serious entrepreneurial spirit that will undoubtedly see it overcome the challenges to embrace and develop future opportunities.
One of those companies is BILT, is the largest paper producer in India and Malaysia with a production capacity of close to 1 million tonnes per annum, consisting of woodfree coated and uncoated writing and printing paper. But being the biggest doesn't automatically guarantee a place into the Five to Watch - what is really interesting about BILT is its plans for the future.
The company's managing director, RR Vederah, has recently announced that it is to make a first time move into containerboard production by installing a 300,000 tonne/yr machine which should be up and running in the next two years. Vederah also says that much of the machine's output would be exported. Clearly an interesting space to watch.
The company is also taking advantage of another growth area, tissue. Earlier this year it announced that it had struck a deal to purchase Premier Tissues India for Rupee 765.2 million ($16.4 million). The acquisition comprises the two machines at the Bannur site in Karnataka state, which have a combined capacity of around 8,400 tonnes/yr.
Expansion doesn't stop at board and tissue, though. On the pulp front, BILT is also currently installing two bleached hardwood kraft (BHK) pulp lines. One of the lines is being installed at the company's Sewa mill in Orissa state which already houses a 60,000 tonnes BHK line and the other is going in at the Ballarshah mill in the state of Maharashtra which already has a 125,000 tonne/yr BHK line.
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