Transcript TEAK PLANTATION MANAGEMENT

EXPANSION OF PULP
PRODUCTION IN THE
THIRD WORLD
William Ladrach
Zobel Forestry Associates, Inc.
zfaforestry.com
Allegheny SAF Meeting
Roanoke, West Virginia
February 16-18 2010
WOOD 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. globulus
Clonal hybrids of Urograndis
Acacia mangium, A. crassicarpa
Pinus radiata, P. taeda, P. caribaea
FAO 2005 PLANTATION SUMMARY
Forest plantations
Asia
Europe
North & Central America
South America
Africa
Oceania
Total
%
62
17
9
6
4
2
100
Projected world forest plantation area
(from STCP, Brazil)
year
tropical
temperate
2005
2010
2015
millions of acres
173
297
267
343
410
398
2020
630
462
total
469
610
808
1,092
According 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.
The 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.
The 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)
WOOD PULPS & THEIR USES
Kraft 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)
New 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 trees
A few produce long fiber unbleached pulps
in temperate regions using plantation pines
PULP PRODUCTION BY COUNTRY
FAO statistics, 2007
Country
United States
Canada
Finland
Sweden
Brazil
Japan
Russian Federation
China
Indonesia
Chile
Germany
Pulp
1000 mt
52,277
22,235
12,856
12,588
12,083
10,850
7,010
6,435
5,177
4,675
3,001
Paper &
paper
board
1000 mt
83,826
18,113
14,334
11,902
5,836
28,930
7,559
78,026
7,223
1,344
23,172
Other
countries
Country
South Afrcia
India
Spain
New Zealand
Australia
Thailand
Argentina
Korea
Mexico
Venezuela
Malaysia
World total
Pulp
1000 mt
2,310
2,308
2,065
1,529
1,182
1,025
794
416
333
73
54
176,986
Paper &
paper
board
1000 mt
3,033
4,183
6,714
872
3,192
4,484
1,545
10,932
5,594
610
1,062
383,603
BRAZIL
Existing pulp capacity by state 2009
State
Region
São Paulo
Espirito Santo
Bahia
Paraná
Minas Gerais
Santa Catarina
Rio Grande do Sul
Pará
Maranhão
Pernambuco
Brazil
south
central
north
south
central
south
south
north
north
north
Plants
10
1
2
4
1
5
2
1
1
1
28
Pulp
Production
mtyp
3,981,250
2,330,000
2,308,000
1,396,000
1,200,000
934,100
535,000
430,000
56,000
28,000
13,198,350
BRAZIL
RATIO OF KRAFT PULPS IN BRAZIL 2008
pulp
long fiber
short fiber
Brazil total pulp
unbleached bleached
total
metric tons per year
1,470,000
106,000
1,576,000
567,000 10,046,000
10,613,000
12,189,000
BRAZIL
New and planned pulp mills
Company
Locality
Suzano (Kimberly-Clark)
Suzano (Kimberly-Clark)
Suzano (Kimberly-Clark)
Suzano (Kimberly-Clark) Murcuri
Mercuri
Veracel I (Aracruz & Stora) Eunápolis
Veracel II (Aracruz & Stora) Eunápolis
Cenibra (Nippon, Japan) Belo Oriente
Aracruz
Votorantim
Tres Lagoas
Stora Enso (Finland)
CMPC (Chile)
Guaíba
CMPC (Chile)
Guaíba
Province, State
not specified
Maranhão
Piauí
Bahia
Bahia
Bahia
Minas Gerais
Minas Gerais
Mato Grosso do Sul
Rio Grande do Sul
Rio Grande do Sul
Rio Grande do Sul
Const. Completion
Region Capacity Cost
Date
mtpymt US$
1000
north
1,300 billions
2015
north
1,300
2015
north
1,300
2015
north
400
2015
north
1,100
2005
north
1,400
on hold
central
800
1.60 2013-14
central 1,400
2015
south
1,300
1.50 2009
south
1,000
2012-13
south
450
2009
south
1,350
2011
BRAZIL ADVANTAGES
Fast-growing tree species
High level of forest research to improve tree
growth and health
Arable land available for more plantations
at relatively low cost
Trained & motivated work force
Favorable wood transport systems
BRAZIL ADVANTAGES
University technical & professional support
Close cooperation among companies,
government, universities
Strong economy
National Bank for Social and Economic
Development (BNDES) supplies financing
for industrial development
BRAZIL
According 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 7year 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)
BRAZIL
To 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.
Harvesters produce 6 m (20’) debarked wood,
over 100 trees/hr, 3 shifts/day, 6 days/week
BRAZIL WOOD TRANSPORT
Pine transport in Parana State (south)
BRAZIL WOOD TRANSPORT
Unloading tri-train at Aracruz mill, Espiritu Santo
BRAZIL
2009
Fibria was formed by the merger of
Votarantim Celulose e Papel and
Aracruz Celulose
Combined annual pulp production
capacity is over 6 million tons,
Fibria owns more than 1.3 million
hectares of forest land
CHILE
Region 8
Region 9
Region 10
Chiloé
Island
CHILE 2008
2.14 million ha of tree plantations
1.5 million ha of radiata pine plantations
380,000 ha of eucalypt plantations
70% of the forest products are exported, represent
13% of national exports and reached US$5 billion in
2007, including US$1.6 billion in pulp and paper.
Wood and paper products exports are second only
to copper.
CHILE
Celulosa Arauco y Constitución (Arauco) has a
combined annual pulp capacity of 2.2 million
metric tons from its mills, four in Chile and one in
Argentina.
It owns a total of 850,000 ha of tree plantations in
Chile, Argentina, Brazil and Uruguay.
Arauco’s largest pulp mill is at Bío-Bío (Region 8),
858,000 tons of bleached long fiber pulp per year.
CHILE Advantages
Trained & motivated work force
University technical & professional
support
Strong economy
CHILE Challenges
Lands in Regions 8, 9, 10 for radiata pine are
occupied and the potential for expansion is limited.
Chiloé island requires slower-growing Douglas-fir
and cold-hardy N. Am. Pines
Topography is rolling to steep, requires specialized
harvesting equipment
Chile has good forest fire organizations, but radiata
pine is highly susceptible to fire damage.
Truck haul capacity is limited by topography, roads.
CHILE
Specialized harvester tilts for operating on slopes
CHILE
Radiata pine, 22 years old, 100’ tall trees
URUGUAY
New mills
Company
Locality
UPM (Finland)
ENCE(Spain)
Stora Enso
Fray Bentos
M’Bopicua
not defined
Region
Capacity
mtpymt
1000
southwest
1,000
southwest
1,000
northeast
1,000
Const. Completion
Cost
Date
US$ billions
1.40 2007
0.93 2010
not defined
URUGUAY
Plantations: Eucalyptus globulus,
Eucalyptus dunnii
Plantations are in northeast and in
southwest
URUGUAY
URUGUAY Advantages
Fast-growing tree species
Arable land available for more plantations
Wood 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.
URUGUAY Challenges
Road 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
SOUTH 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).
SOUTH AFRICA
SOUTH AFRICA
Sappi owns 464,000 ha of plantations plus
75,000 ha in neighboring Swaziland.
Mondi has 430.000 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.
SOUTH AFRICA
Wood delivered to Sappi mill at Ngodwana by rail
SOUTH AFRICA
Mondi 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.
INDONESIA
Installed pulp capacity is 5.3 million mtyp
Plantations are primarily Acacia mangium
Major mills are in Sumatra, one in Borneo
Mill startup has been with natural mixed
hardwoods as forests are cleared, then the
sites planted with acacias.
INDONESIA
Operating Mills
PT Riau Andalan Pulp & Paper
PT Riau Andalan Pulp & Paper
PT Riau Andalan Pulp & Paper
PT Indah Kiat Pulp & Paper
PT Indah Kiat Pulp & Paper
PT Kiani Kertas
PT Tanjung Enim Lestari P&P
Others
Total Indonesia
Projected mills
PT Riau Andalan Pulp & Paper
Kaltim Prima P&P
USF
PT Garuda Kaltim Lestari
Total new projections
Group
completion capacity Province
date
mtpy
APRIL
1995
750 Riau
APRIL
1999
100 Riau
APRIL
2007
600 Riau
APP
1998
1,552 Riau
APP
2007
800 Riau
KALIMANIS
1998
525 E Kalimantan
Marubeni (Japan)
1999
450 S. Sumatra
550
5,327
APRIL
Garuda
projected
unspecified
on hold
on hold
1,250
1,200
600
1,200
4,250
Island
Sumatra
Sumatra
Sumatra
Sumatra
Sumatra
Borneo
Sumatra
Riau
Sumatra
EKalimantan Borneo
S Kalimantan Borneo
W Kalimantan Borneo
INDONESIA
INDONESIA Challenges
Financial difficulties, corruption (Kalimanis Group),
national banks holding US$13 billion debt on failed
forestry/pulp projects promoted with financial
incentives
Social antagonism to industry takeover and
clearing of lands
Resistance by environmentalist to land clearing
and conversion to plantations
INDONESIA Challenges
Lack of trained manpower
Lack of professional & technical personnel
Lack of university technical support
Lack of effective cooperation among companies,
universities, government
Lack of effective forest research
Lack of good transport systems
INDONESIA Challenges
Effective % plantation area in Timber Estates (HTI)
is low due to: Hilly land, organic soils (histosols),
swamps
Difficulties of adapting mechanized harvesting
systems to terrain
Growth rate for acacia plantations is relatively low,
20 m3/ha/yr (4 cords/a/yr)
INDONESIA
Felling short wood
with chainsaws,
hand debarking,
shoulder transport
of short wood to
the road
INDONESIA
Improperly loaded truck,
no binders on load.
Labor adjusting
wood standing
on top of trucks
INDONESIA
Bi-train 12’ wide, 105 ton GVW on company road in
Sumatra
INDONESIA
GVW
105 tons
11 axle bi-train in
Sumatra
Detail of 5th wheel
connection
CHINA
Much of the additional world pulp capacity is aimed
at sales to China.
Approx. five million tons of new pulp capacity is
planned or under construction in China.
Government plans to establish 5.8 million ha of
industrial tree plantations by 2015.
CHINA New Pulp Capacity
Company
Locality
APRIL (Indonesia)
APP China (Singapore)
Jiangsu Oji Paper Co. Ltd
APP China (Singapore)
Hunan Juntai
China Metallurgical Group
Shandong Chenming
Lee & Man
Stora Enso (Finland)
APP China (Singapore)
APP China (Singapore)
Rizhao City
Ningbo City
Nantong City
Qinzhou City
Yuanjiang
Zhanjiang
Chongqing
Beihai City
Const. Completion Wood
Province, State
Region Cap. Cost
Date furnish
1000
mtpymt US$
Shandong north 1,000 billions 2008
Zhejiang central 250
0.14 2010? poplar
Jiangsu
central 700
1.20 2009
Guangxi
south 300
2008
Hunan
south 400
0.64 2008 pine
Hunan
south 300
2008
Guangdong south 700
1.20 2009
Guangxi
south 125
2008 bamboo
Guangxi
south 1,000
unspecified
Hainan
island 780
2008
Hainan
island 780
unspecified
CHINA
CHINA
CHINA
2007 FAO statistics
Pulp capacity:
Paper capacity:
Plantations:
6 ½ million mtpy
78 million mtyp
31 million ha (2005)
(USA 104 million ha in plantations 2005)
CHINA
Challenges
Social challenges of establishing large
industrial tree plantations in areas of
high population density
Difficulties and cost for developing
infrastructure for efficient plantation
management (roads, fire control,
mechanized harvesting)
Example: APP mill on Hainan Island
CHINA
Challenges
Large 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
CHINA
Challenges
Hilly 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
CONCLUSIONS
New 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).
CONCLUSIONS
China 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.
PREDICTIONS
China 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.
END
ZOBEL FORESTRY
ASSOCIATES, INC.
zfa @ bellsouth.net
Selected sources of data on pulp & paper
afandpa.org (Am. forest and paper assn)
andi.com (association of pulp and paper
industries)
bracelpa.org (Brazilian pulp & paper assn)
faostat.org (Food and Agriculture
Organization of the United Nations)
icfpa.org (international council of forest &
paper associations)
pulpmill watch.org
stcp.com.br (Brazilian consulting company)
*/some data may vary slightly due to source