The World Bank has awarded China a US$15 million grant from the Global Environment Facility to support reduction of dioxins from its pulp and paper industry.

The World Bank has awarded the People’s Republic of China a US $15 million grant from the Global Environment Facility (GEF) to support reduction of dioxins from its pulp and paper industry, the Asian Scientist Newsroom reports.

The Dioxins Reduction from the Pulp and Paper Industry Project will assist China to implement its national strategy in this sector.

Persistent organic pollutants (POPs) are a group of chemical substances including pesticides, industrial chemicals, and unintentional by-products of industrial processes that persist in the environment. Dioxins are one type of the 21 POPs listed in the Stockholm Convention on POPs which can lead to serious health effects.

Among others, pulp and paper production forms and releases dioxins unintentionally if elemental chlorine bleaching technologies are used.

As a signatory to the Stockholm Convention, China has proposed to adopt a series of measures to control and reduce dioxins release from its pulp and paper industry before 2015.

The World Bank sponsored project will focus on demonstrating best available techniques (BAT) and best environmental practices (BEP) in four existing non-wood mills which typify the most commonly used non-wood fiber material in China: straw, reed, bamboo, and bagasse.

Support will also be provided to strengthen the government’s capacity in monitoring and enforcement of a national dioxin standard issued recently.

Based on the results of the demonstration projects, China will develop a long-term national action plan to scale up efforts and further control the formation and release of UPOPs from both the wood and non-wood pulp sectors.

“China has been very proactive in identifying and tackling its POPs issues since its signing of the Stockholm Convention in 2004,” said World Bank’s Senior Environmental Specialist Jiang Ru and task manager of the project.

“As the first project working on unintentionally produced POPs from its industrial sectors, this project will showcase how industrial sectors can address POPs without compromising their competitiveness,” Jiang added.

Established in 1991, the GEF is today the largest funder of projects to improve the global environment. It provides grants to developing countries and countries in transition for projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, and POPs.

Wood Chip Exports from Latin America Reach Record High in 2011

Global trade of wood chips has gone up substantially the past two years. Hardwood chip export from Chile, Uruguay and Brail was up 43 percent in 2011 compared to 2009. A clear majority of the increase was Eucalyptus chips destined for pulp mills in Japan and Europe.

Wood chip exports from Latin America are on track to reach a record high of almost eight million tons in 2011. This would be an increase of seven percent from last year and of almost 60 percent higher than in 2006, according to a report from Wood Resources International.

The report, Wood Resource Quarterly (WRQ), says Chile is by far the biggest exporter, accounting for two-thirds of the total shipments from the continent, while Brazil and Uruguay both account for about 16 percent each. In 2011, Chile was the world’s second largest supplier of hardwood chips after Vietnam.

Latin America’s hardwood chip export volumes accounted for approximately 50 percent of globally traded wood chips, a share that has grown from 34 percent five years ago.

Historically, between 80-90 percent of the exported wood chips from Latin America have been destined for Japanese pulp mills, but there has been a diversification of consumers over the past few years. Although shipments to Japan have gone up by over 30 percent from 2006, the share of total exports has declined and is currently around 70 percent.

The biggest change from five years ago is that pulp mills in Europe have been buying much more Eucalyptus chip, particularly from Chile and Uruguay. In 2011, total shipments to Europe reached almost 1.7 million tons, which was slightly lower than 2010 but more than a doubling from 2009, according to WRQ. The three major importing countries in Europe are Spain, Portugal and Norway. In addition, there have also been a few shipments to Finnish and Swedish pulp mills the past few years.

New destinations for Eucalyptus chips from Latin America the past five years include Morocco, Turkey and China. There are expectations that Chile will increase its shipments to China in the coming years because of higher demand from new pulp mills in the country, WRQ noted.

COMPANY NEWS

Metso to Supply New Evaporation Plant and Upgrade of Recovery Boiler for Billerud's Skärblacka Mill in Sweden

Metso will supply a new evaporation plant and an upgrade of an existing recovery boiler for Billerud Skärblacka AB's Skärblacka mill outside Norrköping in Sweden. The goal is to strengthen the mill for the future by improving environmental performance and energy efficiency as well as to enable future company expansion. Metso's delivery will contribute to this environmentally-oriented investment. The value of the order will not be disclosed.

Metso's delivery will allow for a substantial increase in production capacity in the future. In addition, the mill's energy efficiency will be improved leading to a significant reduction in consumption of fossil oil and external biofuels.

"This investment is very important for Billerud as the mill's overall energy efficiency and environmental performance will improve significantly," says Johanna Lindén, Director, Scandinavia from Metso.

The project will go through two project phases. The first is to install the new evaporation plant and the second to upgrade the recovery boiler. The entire project is scheduled for completion at the end of 2013.The order is included in Pulp, Paper and Power's first quarter 2012 orders received.

Billerud Skärblacka AB is part of Billerud Group which is a world-leading supplier of packaging paper and packaging solutions to four industries: Food & Beverages, Industrial, Consumer & Luxury goods and Medical & Hygiene. Billerud has an annual net sales of approximately EUR 1 billion and is listed on NASDAQ OMX Stockholm.

UPM Tervasaari Mill Increases Production

UPM Tervasaari mill’s paper machine 8, which produces label release base papers, has been started-up after major renovation. Modifications have been made throughout the paper machine line to increase production speed and further improve paper quality.

PM 8 was built in 1996. It underwent major renovations in 2006. The renewal will increase the capacity of the paper machine by 30,000 metric tons.

UPM Tervasaari mill has three paper machines, two of which produce release base paper (PM 8 and PM 5). In addition, PM 7 produces kraft papers such as envelope, bag and technical papers. The mill is the world’s leading release-base paper producer. The combined annual capacity of these three paper machines is 385,000 metric tons. About 90% of the production is exported. The mill employes about 400 people.

"The investment is UPM's way of meeting the increasing demand for label papers. The company wants to secure its market leader position in label papers and support customer growth," said Pentti Putkinen, general manager of the Tervasaari mill.

“The new technology enables us to produce even thinner high quality papers. The better efficiency of the paper production and material usage also improves the competitiveness of label papers. This strengthens the position of paper-based labelstock in competition with other materials and alternative product decoration techniques in the market,” said Antti Heimola, product manager of UPM Label Paper.

UPM signed a preliminary contract in February 2012 and will sell its packaging paper production to the Swedish company Billerud. The transaction includes two packaging paper machines: PM 7 in Tervasaari, which produces kraft papers (i.e., envelope, bag, and technical papers), and PM 1 in Pietarsaari, which produces kraft paper and sack kraft paper. The aim is to finalize the transaction during the second quarter of 2012.

UPM's products are made of renewable raw materials and are recyclable. UPM consists of three Business Groups: Energy and pulp, Paper, and Engineered materials. The Group employs around 24,000 people and it has production plants in 16 countries. UPM's annual sales exceed EUR 10 billion. UPM's shares are listed on the Helsinki stock exchange. Additional information is available at www.upm.com.

Domtar Negotiates $3-Billion, 15-Year Deal to Supply Paper to Appleton

Appleton and Domtar Corp. have reached a tentative agreement in which Domtar would supply Appleton with most of the uncoated base paper the company needs to produce its thermal, carbonless, and other specialty paper products. The historic 15-year supply deal is valued at more than $3 billion over the life of the agreement. Appleton is one of the world's leading specialty coaters, and while Domtar is the largest integrated manufacturer of uncoated paper in North America.

Integrated is the key word here. Explaining the deal, Mark Richards, Appleton's chairman, president and chief executive officer, said that non-integrated paper mills, those not capable of producing pulp from logs or wood chips, are distinctly disadvantaged and no longer competitive. Worldwide demand for pulp has driven its market price to historic highs.

“Because we buy pulp on the open market, it costs Appleton considerably more to make base paper than it costs a producer like Domtar, which can supply its own pulp. Our proposed operational changes, as difficult as they may be for many of our employees in West Carrollton, are needed for our company to remain competitive," Richards said.

The proposed supply agreement would result in a reduction of approximately 330 jobs at the West Carrollton mill. Assuming the plan is finalized, approximately 100 employees would be retained to continue to operate the thermal paper coating facility. Employment and operations at Appleton's integrated pulp and paper mill in Roaring Spring, Pa., would be unaffected by the agreement.

The agreement is pending discussions with representatives of West Carrollton's Local 266 of the United Steelworkers.

The proposed supply agreement would reduce the company's exposure to unpredictable market costs for pulp and waste paper.

Domtar would gain significant and predictable volume for its base paper business driven by demand in Appleton's growing global thermal paper business.

John D. Williams, Domtar's president and chief executive officer, stated, “This proposed agreement provides us with an opportunity to repurpose and replace high volume communication paper capacity to specialty paper grades, while securing a growing business long-term."

ACQUISITIONS

International Paper Completes $4.5 Billion Acquisition of Temple-Inland

International Paper Company recently announced that it has completed its acquisition of Temple-Inland Inc. through the merger of its wholly owned subsidiary Metal Acquisition Inc. with and into Temple-Inland. Temple-Inland is now a wholly owned subsidiary of International Paper.

The total transaction value is approximately $4.5 billion.

IP and Temple-Inland got conditional approval on Feb. 10 from the Antitrust Division of the U.S. Department of Justice (DOJ). Under the terms of the DOJ's approval, the combined company will undertake the post close divesture of 970,000 tons of containerboard mill capacity within four months, with the possibility of two 30-day extensions.

International Paper Chairman and CEO John Faraci said, "We are very pleased to have completed this compelling transaction. The combination of International Paper and Temple-Inland strengthens our North American packaging business and enhances our ability to generate cash flow while maintaining our strong balance sheet.

International Paper is a global paper and packaging company with manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. Its businesses include uncoated papers and industrial and consumer packaging, complemented by xpedx, the Company's North American distribution company. Headquartered in Memphis, Tennessee, the company employs about 61,000 people in more than 24 countries and serves customers worldwide. 2011 net sales were $26 billion.

Temple-Inland Inc. is a manufacturing company focused on corrugated packaging and building products. The fully integrated corrugated packaging operation consists of 7 mills and 59 converting facilities. The building products operation manufactures a diverse line of building products for new home construction, commercial and repair and remodeling markets.

Neenah Completes Purchase of Premium Brands from Wausau Paper

Neenah Paper announced completion of the purchase of certain premium paper brands and other assets from Wausau Paper Corp.

Key components of the transaction include:

· A cash payment of $21 million to acquire Astrobrights®, Astroparche® and Royal brands.

· Exclusive license rights for a portion of Exact® brand specialty business, including Index, Tag and Vellum Bristol.

· Approximately one month of finished goods inventory.

· Converting equipment for retail grades.

· A supply agreement under which Wausau will manufacture and supply certain products to Neenah Paper during a transition period.

· Annual sales from the purchased brands are estimated to be approximately $100 million and the Company expects to incur one-time costs related to the integration of approximately $10 million.

The purchase was financed through the Company’s existing credit facility and cash on hand. Additional information about the purchase and its impact on 2012 results will be shared in the Company’s Fourth Quarter Earnings Call on February 21, 2012.

EXPANSIONS

Tembec Moves Ahead With $190-Million Specialty Cellulose Upgrade

Tembec has confirmed a $190-million capital investment to upgrade its specialty cellulose manufacturing facility at Temiscaming, Que. This investment will increase annual production of green electricity by up to 40 megawatts, reduce sulfur dioxide emissions by 70%, increase Temiscaming's annual production capacity of specialty cellulose by 5,000 tonnes, and make Temiscaming one of the world's lowest-cost specialty cellulose manufacturing facilities.

Pöyry's Energy business group has been awarded the detail engineering and procurement assistance support contract for the project.

This project is the first phase of a two-phase investment plan for the facility. It will involve the replacement of three old boilers with a new high-pressure boiler designed to burn waste sulfite liquor, a co-product of the specialty cellulose manufacturing process, producing green steam for use at the facility. The project also calls for the installation of a new electricity turbine that will be driven by this steam. The turbine will increase the Temiscaming facility's green electricity production capacity from its current 10 megawatts to, eventually, 60 megawatts. The boiler is scheduled to start up in December 2013, followed by the turbine, in May 2014.

Hydro-Québec will offtake the additional green electricity produced by this turbine under a 25-year contract at $106 MW/hour, indexed with CPI, which will strengthen and stabilize Tembec's revenues through the economic cycle.

Pöyry's assignment, valued at $7.2 million, includes project management and detail engineering design for all disciplines. The project will be executed by Pöyry's office in Montreal.

Once the new equipment is in operation, Tembec expects a four-year return on investment, through new revenues from green electricity, the additional production of 5,000 metric tonnes of specialty cellulose and lower costs.

The new boiler, turbine and emission control equipment will be sized to accommodate Phase 2 of the project, a follow-on investment of $120 million which is currently projected for 2014- 2015. Phase 2 would increase Temiscaming's annual specialty cellulose production capacity by 30,000 metric tonnes, boost green electricity generation by 10 megawatts to attain full turbine capacity, and further reduce operating costs.

Tembec is the world's second leading producer of specialty cellulose.

Double A, Thailand to Build New Paper Machine

To meet increased global demand for Double A copy paper brand, a new paper mill (Paper Mill 3 or PM3) will be added to Double A's Prachinburi mill in Thailand. The new paper mill, with an annual capacity of 250,000 tons of paper, will be the first in Asia to run on 100% short fiber pulp from Double A Paper-Tree, sustaining the recognized unique qualities of Double A paper from customers all over the world and building the sustainable source of income to farmers.

Double A's new paper mill will begin operations in the third quarter of 2012. The new paper mill is ideal for Double A's unique paper from farmed trees (PFFT) pulp, which produces high quality paper for two-sided use, improved paper formation and paper with reduced roughness for both top and bottom.

Thirawit Leetavorn, Double A senior executive vice president, revealed that the capacity expansion is to sustain the growing global demand for Double A paper, especially in new markets in African and Eastern European countries where Double A's quality is gaining much recognition from consumers.

Buckeye Increases Specialty Wood Pulp Capacity at Foley Mill, Florida

Buckeye Technologies Inc. is increasing the high-end specialty wood pulp capacity by 42,000 tons at its Buckeye Florida “Foley” operation (Perry, Florida). The cost of the project is expected to be approximately $79 million with an anticipated rate of return of 15% to 20%. The investment will be funded by cash flow from operations, the company said.

“This specialty expansion project will provide much needed high-purity specialty volume for strategic customers in all of our high-end markets including casings, tire cord, ethers, filtration, micro-crystalline cellulose, and acetate,” said Buckeye’s chairman and CEO John Crowe.

“Additionally, this will improve our overall plant product mix from 42% specialty wood pulp to just over 50% specialty wood pulp while maintaining the Foley plant’s existing total capacity at 465,000 tons per year.”

Engineering and design work is nearly complete, and construction is expected to begin in January 2012 with project startup planned for December 2012, Buckeye said.

Mercer Announces Project to Boost Pulp and Energy Output at Stendal Mill

Mercer International Inc. recently announced a project ("Project Blue Mill") to increase production and efficiency through debottlenecking initiatives including the installation of an additional 40 MW steam turbine at its Stendal mill.

The debottlenecking which, among other things, requires the new turbine in order to enhance and efficiently utilize steam production, is designed to increase the mill's annual pulp production capacity by 30,000 ADMTs to approximately 675,000 ADMTs. The new turbine is also expected to initially produce an additional 109,000 MWh of surplus renewable energy for sale at premium pricing.

"We are very pleased with this project," said Jimmy Lee, President and CEO. "The project allows us to maximize the value from the wood that we process at Stendal, increase production and efficiency, provide a backup generator on the first turbine and reduce energy costs during maintenance periods and expand power generation.

"We currently expect the project, in addition to enhancing mill operating results, to deliver approximately EURO7.5 million (U.S. $9.8 million) of additional annual power revenues."

"The project is in line with our group's overall focus on enhancing revenues from the production of green energy and other by-products at all of our mills. We believe that our generation and sale of surplus renewable energy and by-products give Mercer a competitive energy advantage over less efficient mills and provides us with a stable revenue source unrelated to pulp pricing. Based upon our overall 2011 production and sales, after giving effect to Project Blue Mill, on a consolidated basis, we currently expect Mercer will produce about 760,000 MWh of annual surplus renewable green energy and generate approximately EURO65.5 million (U.S. $84.5 million) of associated revenues therefrom. Since our energy production is a by-product of our pulp production process there are minimal incremental costs and our surplus energy sales are highly profitable."

Project Blue Mill will require approximately EURO40.0 million in capital expenditures over about 21 months. The project is eligible for EURO12.0 million of non-refundable German government grants and the Stendal mill has secured a new EURO17.0 million five year amortizing secured term debt facility, of which 80% will be government guaranteed.

The facility is non-recourse to Mercer.

The balance of the project will be funded through operating cash flow of the Stendal mill and up to an aggregate of EURO8.0 million in pro-rata shareholder loans from Mercer and its minority partner.

Project Blue Mill is currently designed to be completed and start to generate power revenues in or about September, 2013.

The Stendal mill is a state-of-the-art, single-line NBSK pulp mill situated near the town of Stendal, Germany with a current annual pulp production capacity of approximately 645,000 ADMTs.

Mercer International Inc. is a global pulp manufacturing company.

Yazoo Mills to Construct New Facility in Hanover, PA

Yazoo Mills has been approved to build a 45,000 square foot warehousing and manufacturing plant in Hanover, Pennsylvania (USA).

According to the Yazoo, the new facility will be a major expansion for the company and will mark its 110 year anniversary.

The new building is being constructed of precast concrete wall systems, utilizing the most modern building design available in the market place today. Yazoo’s customers will benefit from an expanded level of same day and next day services with this expansion.

The company plans to break ground in April and the project is targeted to be completed by December 2012. When completed, Yazoo will operate 2 facilities totaling 195,000 square feet.

Yazoo Mills is one of America's largest family-owned manufacturers of paper tubes and cores, and specializes in short runs and automated core cutting services. For more information visit: www.yazoomills.com

Aditya Birla Group to invest $500 million in Turkey, Expanding Pulp & Fibre in India

The Aditya Birla Group unveiled its plans to set up a Viscose Staple Fibre (VSF) plant in Turkey's Adana Organised Industrial Zone. The Group, which is the world's No.1 VSF manufacturer, proposes to invest $500 million over the next five years to set up a 180 ktpa fully integrated VSF plant with a captive power plant, CS2 plant and a sulphuric acid plant. The VSF plant will come up in two phases.

"In the Viscose Staple Fibre sector, we are reckoned as a marquee Group with over 21 per cent of the global market share. For us in the Aditya Birla Group, VSF is a core business. Our aspiration is to significantly ramp up our global market share and our capacities by the turn of the decade. Establishing a world-class plant in Turkey is a step in this direction," commented Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group.

Elaborating, Mr. K. K. Maheshwari, Global Director of the VSF Business, said, "Currently, our VSF manufacturing capacity is 750 ktpa. Our ambition is to raise it to 1.1 million tonnes by 2015. We expect to commission our plant in Turkey by early 2015. This capacity in Turkey will primarily cater to the textile industries here. Currently, 100 per cent of VSF used in the textile and non-woven sectors is imported. Turkey, I believe is the 4th largest consumer of VSF in the world. It is expected to become the 2nd largest consumer over the next five years. So setting up the VSF manufacturing facility here makes imminent sense. We have been much encouraged by the Government's proactive industrial policies and the work ethos."

While the plant will cater primarily to the domestic market, the Group will export around 20 per cent of the VSF produced in Turkey to European Union and other neighbouring countries. Mr. Maheshwari added, "It will provide employment to nearly 500 Turkish nationals, besides generating substantial indirect employment through its engagement with the ancillary industries."

Aditya Birla Group's Pulp & Fibre operations span six countries – Canada, Sweden, Thailand, Indonesia, China and India. The Group is on an ambitious expansion trajectory, and is ramping up capacities in other parts of the world as well. A 120 ktpa greenfield project at Vilayat in Gujarat and a 36 ktpa brownfield expansion at Harihar in Karnataka, both in India, are underway at a total investment of $450 million.

McIlvaine Company

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