Plantations, poverty and power: Section 4

6 Feb


By Chris Lang. Published by World Rainforest Movement, December 2008

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Future plans for industrial tree plantation expansion and new pulp mills

As the information in the table below indicates, the pulp industry is planning a massive expansion in the global South. However, given the current crisis facing the world’s financial system, it is impossible to predict which of these projects will go ahead. A world recession would reduce the demand for paper and would mean that many of these projects will not get built – at least not in the time frame proposed by the companies.

The industry is concerned about overcapacity in China. Some mills are already not running at full capacity because of the financial crisis. Annie Zhu, Features Editor at Pulp and Paper International magazine reports that “it has become more and more difficult to secure bank loans or seek funding in the stock market to purchase machines amid the uncertain economy in China and the rest of the world.”[684] Meanwhile, Jennifer Ellson, News Editor at Pulp and Paper International Asia News, describes the Asian pulp and paper industry as “another casualty of the credit crunch, the equities collapse and the global economic slowdown.” Nine Dragons Paper (Holdings) and Lee & Man Paper Manufacturing have postponed previously announced expansion plans in China and Vietnam.[685]

Projects elsewhere have been put on hold. Aracruz’s proposed 1.5 million tons a year pulp mill at Guaiba in Rio Grande do Sul is on hold, while Aracruz tries to save money. The company is likely to lose about US$1 billion as a result of its investment in derivatives.[686]

At the same time, the industry continues to shrink in North America and Europe. Recent announcements of pulp mill closures include the following:

  • Smurfit-Stone is to close its 253,000 tons a year Pontiac pulp mill in Quebec, resulting in 218 jobs lost.[687]
  • Evergreen Pulp Inc. is closing its pulp plant in Samoa, California, “until the pulp market rebounds”. Currently 215 people are employed at the plant.[688]
  • The Port & Talbot pulp mill in Mackenzie, British Columbia decided in October 2008 to remain closed “at least until spring or until economic conditions improve”.[689]
  • Borregaard is to close its 110,000 tons a year pulp mill in Switzerland, resulting in the loss of 450 jobs.[690] The pulp mill is owned by the Norwegian group Orkla.[691]
  • Stora Enso will close part of its 655,000 tons a year Enocell pulp mill in eastern Finland, cutting back production by one-third and cutting 50 jobs.[692]
  • In October 2007, Stora Enso announced that it would cut 1,100 jobs in Finland. In 2008, Stora Enso plans to close pulp and paper mills in Anjalankoski, Hamina, Norrsundet and Kemijärvi in Finland.[693]
  • M-real, a subsidiary of the Metsäliitto Group, is to close its pulp mill in Lielahti, near Tampere and two magazine paper machines at its Kangas mill in Jyväskylä in Finland. About 200 workers will lose their jobs.[694]
  • In May 2006, UPM launched Finland’s largest ever lay-off programme, affecting 2,500 jobs over three years. UPM pulp mills in Kajaani and Tervassari in Finland are to be closed.[695]

UPM’s president and chief executive, Jussi Pesonen recently summed up the situation for the pulp and paper industry in Europe: “With today’s market outlook and the recent cost development, UPM’s paper and pulp production in Finland cannot continue in its current form and extent.”[696]

There is little doubt that the industry is moving from North to South. The most rapid expansion is planned for Brazil. The Brazil Pulp and Paper Association anticipates that Brazil will become the world leader of pulp production by 2012, with an annual production of 18 million tons. This year, Brazil will overtake Sweden (12 million tons) and in 2009 production in Brazil will probably be higher than that in Finland (13 million tons).[697]

Other countries in Latin America, particularly Uruguay, are also facing a huge expansion in pulp capacity. A major expansion of the pulp industry in Russia is planned in the next few years. The impacts on forests in Russia could be devastating. In Asia, new pulp mills are proposed in Indonesia, Laos, China, India, Malaysia and Vietnam. The industry is also looking at expanding in Africa. Apart from South Africa, which already has a large pulp and paper industry, plantations are being established in Mozambique with the aim of providing raw material to the pulp industry and there are plans to build a pulp mill in Angola.

Planned pulp projects:[698]
 

Company Location Country Capacity (t/yr) Cost (US$) Completion
anticipated
Companhia de Celulose e Papel de Angola Ganda Angola
Protavia Penola Australia 735,000 1 billion
Gunns Penola Australia 800,000 – 1.1 million 1.3 billion
Aracruz Rio Grande do Sul Brazil 1.5 million 2.1 billion 2010 – currently postponed
Aracruz Minas Gerais Brazil 1.4 million 2.4 billion 2015
Klabin Brazil 2014
Suzano Bahia Brazil 2.9 million 6.6 billion 2015
VCP Tres Lagoas, Mato Grosso do Sul Brazil 1.3 million 1.5 billion 2009
VCP Rio Grande do Sul Brazil 1.3 million 2013
Veracel Bahia Brazil 900,000 2 billion
Stora Enso Rio Grande do Sul Brazil 1 million 2012-2015
APP China Zhejiang China 250,000 142 million
APRIL Shandong China 1 million
Oji Paper Jiangsu China 800,000 1.95 billion 2014
Zhanjiang Chenming Guangdong China 700,000 1.2 billion 2010
Stora Enso Guangxi China 1 million
Lee & Man Chongqing China 125,000 2008
Abhishek Industries India 125,000 192 million
Century Pulp and Paper Uttaranchal India 150,000 2009
West Coast Paper Mills Karnataka India 230,000 260 million 2009
APRIL Sumatra Indonesia 600,000 2008
APP Sumatra Indonesia 800,000 2008
International Paper Central Kalimantan, West Papua Indonesia, West Papua 1.5 million 4 billion
Kaltim Prima Pulp & Paper East Kalimantan Indonesia 1.2 million 1.5 billion
Korindo Central Kalimantan Indonesia 200,000 450,000 2009
UFS South Kalimantan Indonesia 600,000 1 billion 2010
PT Garuda Kaltim Lestari West Kalimantan Indonesia 1.2 million
Medco Group West Papua West Papua
Aditya Birla Savannakhet Laos 200,000 350,000 million
Shandong Sun Paper Laos 300,000
Sabah Forest Industries Sabah Malaysia 125,000
Portucel Mozambique 1 million
Angara Paper Wood Chemical Plant Yenisey Russia 220,000 1.3 billion 2011
Aspek Group Manturovo Russia 800,000 3.1 billion 2010
Boguchanskiy P&P Mill Boguchansk Russia 730,000 3 billion 2011
Ilim Group / International Paper Arkangelsk Russia 423 million
Larvik Cell Pskov Russia 600,000 563 million 2009
Mondi Syktyvkar Russia 190,000 525 million 2010
Stora Enso Nizhny Novgorod Russia 1 billion
UPM and Sveza Group Vologda Russia 800,000 1 billion 2012
Sappi Saiccor KwaZulu-Natal South Africa 300,000 460 million 2008
Sappi Ngodwana South Africa 225,000
NCT Forestry Cooperative Richards Bay South Africa 140,000
Celulosa Argentina Uruguay 1 million 1 billion 2009
Ence Colonia Uruguay 1 million 930 million 2010
Nippon Paper Uruguay
Portucel Uruguay 1.3 million 4 billion
Stora Enso Uruguay 1 million 1 billion 2012-2015
Venezuela 800 million
Lee & Man 200 km south of HCM City Vietnam 150,000 2008-2009
Tan Mai Company Quang Ngai Vietnam 130,000 199 million 2011
Tan Mai Company Lam Dong Vietnam 200,000 36 million 2010
Tan Mai Company Central Highlands Vietnam 130,000
Incomex Saigon Quang Nam Vietnam 115,000 150 million
Ballapur Industries, Martin Group Tuyen Quang Vietnam 130,000 200 million 2009
Vietnam Paper Corporation (Vinapimex) Bai Bang Vietnam 250,000 300 million 2010

 
Conclusion »





References


[684] Annie Zhu (2008) “Opportunities and challenges in China”, RISI website, 23 September 2008.


[685] Jennifer Ellson (2008) “Rock, Paper, Scissors”, RISI website, 22 October 2008.


[686] Aracruz suspends construction of new pulp mill in Guaiba”, Pulp Inc, 21 October 2008.


[687] Smurfit-Stone to Permanently Close its Pontiac Pulp Mill Due to Weakening Pulp Market”, PR Newswire-FirstCall, 17 October 2008.


[688] Humblodt pulp mill to close amid falling demand”, San Francisco Chronicle, 9 October 2008.


[689] Gordon Hamilton (2008) “Global crisis ends plans for B.C. pulp mill”, Vancouver Sun, 8 October 2008.


[690] Borregaard intends to close pulp mill in Switzerland”, Ad Hoc News, 24 October 2008.


[691] Orkla to close down pulp mill in Switzerland”, Reuters, 29 September 2008.


[692] Stora to close pulp line at Enocell mill -report”, Reuters, 8 September 2008.


[693] “>a href=”http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSL1057830920080117?pageNumber=2&virtualBrandChannel=0&sp=true”>Jobs arise from ashes of Finland forestry”, Reuters, 17 January 2008.


[694] Pertti Jokivuori (2007) “Massive job cuts due to restructuring in paper sector”, European Industrial Relations Observatory On-line (eiroline), 21 December 2007.


[695] Kainuu reeling as paper companies announce closures”, Helsinki Times, 18 September 2008.
Jobs arise from ashes of Finland forestry”, Reuters, 17 January 2008.
Pertti Jokivuori (2007) “Massive job cuts due to restructuring in paper sector”, European Industrial Relations Observatory On-line (eiroline), 21 December 2007.


[696] Strikes hit UPM mills in Finland”, Packaging News, 16 September 2008.


[697] Brazil expected to overtake China in pulp production by 2012”, Macau Hub, 10 September 2008.


[698] In April 2006, I carried out a review of publicly available statements about new pulp mills (largely based on a search on RISI’s website). This was updated and published in the report “Banks, Pulp and People”. This table is an updated version of the information that appeared in Banks, Pulp and People. Some of these projects are expansions of existing pulp mills and others are new pulp mills. The information is intended to be indicative rather than exhaustive. Plans change and many projects are announced which never leave the drawing board. Not all of the projects in the table have received planning permission. No guarantee can be given that the information in this table is complete or (obviously) that all (or any) of these projects actually will go ahead. See my bookmarks on delicious.com for sources.

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