Change#1 Rise of Hardwood as a resource Bleached Hardwood Pulp rose 11.5% 2003-08 Consequence shift to S hemisphere Economies of scale (part 2 of change) Move to enormous single line pulp mills – 1.3 million tonnes a year – Fibria in Brasil next will be 1.5 million tonnes
How do we meet this challenge? Suzanos forest yield increase in 40 years
In South Africa Total increase in production over period: 69.5% Total increase in afforested area over period: 8.3% (Forestry South Africa 2009)
And this one? Go Niche? Go Designer? Bring back batch!!
Other pulp related changes Rise of mechanical pulping in early 1980s BUT cost of energy skyrocketing, water seen as an increasingly rare commodity, losing popularity. Also as HW demand rose, mech pulp shrank 2.9% Semi chemical dropped 6.2%, unbleached kraft 1.6% and bleached SW pulp down 0.6% Globally Sulphite pulping all but disappeared except for dissolving pulp producers
On the other side of the coin Containerboard demand increased by 23.6% Tissue next biggest increase of 19.3% Printing and writing grades grew by 9.4% Newsprint declined by 0.08%
Change #2 Rise of environmentalism and sustainability issues – Carbon footprint, Water footprint, Energy, reduce, re use recycle. Go Green or bust. Comply or face the consequences
Old - writing environmental for the customer New - integrated part of business - HSE Weak regulatory framework and non compliance to beefed up laws and green scorpions. Basic compliance reporting to comprehensive sustainability reports.
Consequence and challenge Compliance levels improve Fines will be a reality. Constantly communicate or operations will close. Eg. On the end product side – go green or bust. Increased demand for chain of custody accountability – FSC forest to end customer
Change # 3 Technology within the industry Speed and quality improvement always the aim. Whether shoe press or new head box technology or automation improvement. On the automation note……………….
Change # 5 Rise of China. Demand recovered paper here and in India influences our price here. Rise of Chinese paper industry was at a cost of some 30 billion US in subsides First time EU in April 2010 – countervailing case against China (Sappi one of Companies )
In March 2010 the United States decided to impose preliminary countervailing (ie, anti- subsidy) duties ranging from 3.92% to 12.83% on imports of coated paper originating in China and Indonesia. US coated paper manufacturers argued that the level of the yuan represented a further subsidy, since it is under-valued against the dollar.
Change # 6 Rise in Governmental intervention and the rise of protectionism What is South Africas response? It has to be more than to hopefully bat our eyelashes at Brazil, Russia, India and China in the hope of being the S in BRIC. ITAC? (International trade administration commission)
Change # 7 External Technology changes Particularly the WAY we communicate, educate our children, purchase goods and generally do business – the internet, mobile phones, I books etc etc Has and will continue to change the types and grades of paper the customers demand. Some will grow – some will shrink – be flexible - innovate.
ICFPAs10 biggest world changes Increasing role of government policy Security of land tenure Competing land use Growing Bio energy Production Climate mitigation policies Forests increasingly protected Go Green
Efficient use of Resources and added value generation crucial Go Integrated Increasing cost of doing business
Acknowledgements Mondi and Sappi for photos FSA and ICFPA - slide Metso – slide Voith – slides from Dr Solingers presentation on sustainable paper production in Asia Risi and Pöyry Peter Calleson – A single Sheet of Paper LHA Management consultants