Presentation on theme: "EXPANSION OF PULP PRODUCTION IN THE THIRD WORLD"— Presentation transcript:
1EXPANSION OF PULP PRODUCTION IN THE THIRD WORLD William LadrachZobel Forestry Associates, Inc.zfaforestry.comAllegheny SAF MeetingRoanoke, West VirginiaFebruary
2WOOD FURNISH FOR PULP MILLS Outside of North America and Eurasia, the great majority of pulp mills use plantation wood as furnish.Common plantation species used for pulp:Eucalyptus grandis, E. urophylla, E. globulusClonal hybrids of UrograndisAcacia mangium, A. crassicarpaPinus radiata, P. taeda, P. caribaea
3FAO 2005 PLANTATION SUMMARY Forest plantations%Asia62Europe17North & Central America9South America6Africa4Oceania2Total100
4Projected world forest plantation area (from STCP, Brazil)yeartropicaltemperatetotalmillions of acres20051732974692010267343610201541039880820206304621,092
5According to PriceWaterhouse Coopers, the world average return on capital employed (ROCE) in forest lands was 4.8% in 2007.In Latin America, industrial forest lands continue to generate income with ROCE’s of 9.3% in 2006 and 7.8% in 2007, according to FAO.
6The US pulp and paper industry is largely composed of widely held companies listed on the stock market and must compete with other sectors (electronics, energy, transportation, pharmaceuticals, etc.) for investors’ dollars.
7The US pulp & paper industry has not been generating favorable returns on capital employed in timberlands and has largely divested itself of its forest lands, selling them to timber investment management organizations (TIMO), real estate investment trusts (REIT) and to a lesser degree to limited liability corporations (LLC) and limited partnerships (LP).Notable exceptions: Weyerhaeuser, (closely held public company), Simpson Timber (privately owned)
8WOOD PULPS & THEIR USESKraft pulp: wood free pulp or free sheet (all lignin removed), used for fine papers, packaging Semi-chemical pulp: some lignin removed, used as corrugated medium Dissolving (sulfite) pulp, used for acetate, film, rayon Goundwood pulp (GW) wood is ground off of logs, used for newsprint Pressure groundwood pulp (PGW) logs ground under pressure & steam, used for newsprint Thermo-mechanical pulp (TMP) chips ground under pressure and superheated steam, used for newsprint, fiber board (hardboard, MDF) Chemi-thermo-mechanical pulp (CTMP), used like TMP (uses chips, superheated steam & some caustic soda)
9New pulp mills in Third World countries: Are predominantly kraft mills, producing wood free (lignin free) pulps.Produce short fiber chlorine-free bleached pulps from tropical plantation treesA few produce long fiber unbleached pulps in temperate regions using plantation pines
14New and planned pulp mills BRAZILNew and planned pulp mills1000 mtMurcuri
15BRAZIL ADVANTAGESFast-growing tree speciesHigh level of forest research to improve tree growth and healthArable land available for more plantations at relatively low costTrained & motivated work forceFavorable wood transport systems
16BRAZIL ADVANTAGESUniversity technical & professional supportClose cooperation among companies, government, universitiesStrong economyNational Bank for Social and Economic Development (BNDES) supplies financing for industrial development
17BRAZILAccording to a report by Jakko Pöyry Oy and BRACELPA, the average yield of Brazilian industrial pulpwood plantations is:40 m³/ha/year (8 cords/a/yr) for eucalypts on a 7-year rotation (double the growth in 1970)30 m³/ha/year (6 cords/a/yr) for pines on a 15-year rotation. (The trees are measured over bark)
18BRAZILTo keep up with growing demands for wood products worldwide, Brazil’s current tree plantation area of 5.6 million ha (13.8 million acres) needs to be increased to 12.8 million ha (31.6 million acres) during the next 20 years for Brazil to maintain its relative market share in wood products sales.
19Harvesters produce 6 m (20’) debarked wood, over 100 trees/hr, 3 shifts/day, 6 days/week
20Pine transport in Parana State (south) BRAZIL WOOD TRANSPORTPine transport in Parana State (south)
22Unloading tri-train at Aracruz mill, Espiritu Santo
23BRAZIL2009Fibria was formed by the merger of Votarantim Celulose e Papel and Aracruz CeluloseCombined annual pulp production capacity is over 6 million tons,Fibria owns more than 1.3 million hectares of forest land
25CHILE 2008 2.14 million ha of tree plantations 1.5 million ha of radiata pine plantations380,000 ha of eucalypt plantations70% of the forest products are exported, represent 13% of national exports and reached US$5 billion in 2007, including US$1.6 billion in pulp and paper.Wood and paper products exports are second only to copper.
26CHILECelulosa Arauco y Constitución (Arauco) has a combined annual pulp capacity of 2.2 million metric tons from its mills, four in Chile and one in Argentina.It owns a total of 850,000 ha of tree plantations in Chile, Argentina, Brazil and Uruguay.Arauco’s largest pulp mill is at Bío-Bío (Region 8), 858,000 tons of bleached long fiber pulp per year.
27CHILE AdvantagesTrained & motivated work forceUniversity technical & professional supportStrong economy
28CHILE ChallengesLands in Regions 8, 9, 10 for radiata pine are occupied and the potential for expansion is limited.Chiloé island requires slower-growing Douglas-fir and cold-hardy N. Am. PinesTopography is rolling to steep, requires specialized harvesting equipmentChile has good forest fire organizations, but radiata pine is highly susceptible to fire damage.Truck haul capacity is limited by topography, roads.
29CHILESpecialized harvester tilts for operating on slopes
30Radiata pine, 22 years old, 100’ tall trees CHILERadiata pine, 22 years old, 100’ tall trees
34URUGUAY Advantages Fast-growing tree species Arable land available for more plantationsWood available from Argentina across Uruguay River bridge at Concordia, through MERCOSUR agreements.NE plantations are adjacent to Brazil, wood could move to Rio Grande do Sul to new pulp mills.
35URUGUAY ChallengesRoad system mediocre. Poor transport from NE across Rio Negro & Lago de Rincon to Montevideo in South.Encroachment of plantations on cattle lands.Strong antagonism by Argentina to construction of Uruguayan mills on Uruguay River
36SOUTH AFRICA National pulp capacity 2.3 million mtyp Sappi mills over 1 million mtyp (ground wood & kraft pulp) at Ngodwana (Transvaal Prov.), Mondi 720,000 mtpy kraft mill at Richards Bay (Natal Prov.)1.5 million ha of plantations, mainly Pinus patula, P. elliottii, P. radiata, Eucalyptus grandis and Acacia mearnsii.Most plantations are in East (Transvaal Prov.), Southeast (Natal Prov.) and South (Eastern Cape).
38SOUTH AFRICASappi owns 464,000 ha of plantations plus 75,000 ha in neighboring Swaziland.Mondi has ha in plantations.200,000 ha of new plantations are planned with additional 565,000 tons pulp capacity.The narrow gauge railroad is used for wood transport, allowing for a larger wood procurement area than with just trucks.
39SOUTH AFRICAWood delivered to Sappi mill at Ngodwana by rail
40SOUTH AFRICAMondi and Sappi are expanding plantations into Swaziland and possibly into Mozambique to the North.Mozambique has plans to establish up to seven million hectares of tree plantations.The increase in pulp capacity in Southern Africa will depend on increasing the tree plantation area.
41INDONESIAInstalled pulp capacity is 5.3 million mtypPlantations are primarily Acacia mangiumMajor mills are in Sumatra, one in BorneoMill startup has been with natural mixed hardwoods as forests are cleared, then the sites planted with acacias.
44INDONESIA ChallengesFinancial difficulties, corruption (Kalimanis Group), national banks holding US$13 billion debt on failed forestry/pulp projects promoted with financial incentivesSocial antagonism to industry takeover and clearing of landsResistance by environmentalist to land clearing and conversion to plantations
45INDONESIA Challenges Lack of trained manpower Lack of professional & technical personnelLack of university technical supportLack of effective cooperation among companies, universities, governmentLack of effective forest researchLack of good transport systems
46INDONESIA ChallengesEffective % plantation area in Timber Estates (HTI) is low due to: Hilly land, organic soils (histosols), swampsDifficulties of adapting mechanized harvesting systems to terrainGrowth rate for acacia plantations is relatively low, 20 m3/ha/yr (4 cords/a/yr)
47INDONESIAFelling short wood with chainsaws, hand debarking, shoulder transport of short wood to the road
48INDONESIA Improperly loaded truck, no binders on load. Labor adjusting wood standing on top of trucks
49INDONESIABi-train 12’ wide, 105 ton GVW on company road in Sumatra
50INDONESIA GVW 105 tons 11 axle bi-train in Sumatra Detail of 5th wheel connection
51CHINAMuch of the additional world pulp capacity is aimed at sales to China.Approx. five million tons of new pulp capacity is planned or under construction in China.Government plans to establish 5.8 million ha of industrial tree plantations by 2015.
55Pulp capacity: 6 ½ million mtpy Paper capacity: 78 million mtyp CHINA2007 FAO statisticsPulp capacity: ½ million mtpyPaper capacity: million mtypPlantations: million ha (2005)(USA 104 million ha in plantations 2005)
56CHINA ChallengesSocial challenges of establishing large industrial tree plantations in areas of high population densityDifficulties and cost for developing infrastructure for efficient plantation management (roads, fire control, mechanized harvesting)Example: APP mill on Hainan Island
57CHINA ChallengesLarge extensions of temperate plantations established with slower growing species like mason pine (Pinus masoniana, similar to N. American red pine (Pinus resinosa), and with cottonwoods.Eucalypts planted in South compete with agriculture for land use
58CHINA ChallengesHilly topography & distance from coastal populations limits efficient industrial plantation development in the SW.The potential for expansion of tropical species to the north is limited in Hunan, Guandong, and Guangxi due to the continental land mass and winter cold blasts from the North.New pulp mill design capacities are generally lower than most world class mills
59CONCLUSIONSNew pulp mill construction is centered in tropical and sub-tropical regions.New pulp mills are primarily bleached kraft short fiber (bleached hardwood freesheet).Expansion of industrial conifer plantations outside of N. America and Europe is limited.Low-cost wood furnish to mills is crucial to the economic success of the forest industry (fast growth, efficient harvesting & transport).
60CONCLUSIONSChina and Japan will continue to be major consumers of wood pulp due to the differential between pulp & paper production capacities.Brazil has a very large potential to expand its plantation wood base and to increase its pulp production capacity, primarily for export.Indonesia has severe limitations to the expansion of its wood pulp industry.
61PREDICTIONSChina will continue to expand its industrial plantations and pulp industry in spite of significant challenges. Increasing internal demand for pulp and paper will overcome logistical obstacles and relatively higher costs to produce pulp.North American long fiber pulp production is not threatened by international competition, but may be limited in the future by limited wood supplies, aging mill infrastructure and an inability to attract investment capital.
62ZOBEL FORESTRY ASSOCIATES, INC. ENDZOBEL FORESTRY ASSOCIATES, INC.bellsouth.net
63Selected sources of data on pulp & paper afandpa.org (Am. forest and paper assn)andi.com (association of pulp and paperindustries)bracelpa.org (Brazilian pulp & paper assn)faostat.org (Food and AgricultureOrganization of the United Nations)icfpa.org (international council of forest &paper associations)pulpmill watch.orgstcp.com.br (Brazilian consulting company)*/some data may vary slightly due to source