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Proposed Roadmap for the Paper Industry in Philippines

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Proposed Roadmap for the Paper Industry in Philippines ROADMAP FOR THE PAPER INDUSTRY IN PHILIPPINES (2014-2020) _________________________________________ Ray N. Geganto Exec. Director Philippine Paper Manufacturers Association Inc. (PPMAI) formerly Pulp &Paper Manufacturers Assoc. of the Phils. (PULPAPEL) The Phil. Paper Manufacturers Assoc. Inc. (PPMAI): (formerly Pulp and Paper Assoc. of the Phils.(PULPAPEL) MEMBERS MILLSITE 1. Trust International Paper Corp. (TIPCO) Mabalacat, Pampanga 2. United Pulp and Paper Co. (UPPC) Calumpit, Bulacan 3. Bataan 2020 Inc. Samal, Bataan; Baesa, Q.C. 4. Container Corp. of the Phils. (CCP) Balintawak, Q.C. 5. Noahs Paper Mill, Inc. Marikina 6. Liberty Paper Inc. Valenzuela City 7. Paperland, Inc. Balintawak, Q.C. 8. Fiber Sorting Inc. Pampanga 9. Asia Paper Ind. Corp. Trece Martires, Cavite 10.St. Thomas Paper Corp. Sto. Tomas, Batangas 11. Hansson Paper Phils. Corp. Pasig, NCR 12. Vanson Paper Ind. Corp. Valenzuela, NCR What is Paper and Paperboard? Paper Industry in Phils. -Current State and Background 2001 2010 2012 Historical Est. Trend % p.a. No. of Paper Mills 43 27 24 Industry Capacity, ‘000 Tons 1,580 1,297 1,200 -2.2% Production 1,056 1,038 825 -2% Imports 533 961 1,100 +9.5% Exports 139 165 110 -2% CONSUMPTION 1,450 1,834 1,810 +2.2% Paper &Board per Capita 16 20 19 +2% Consumption Paper Mills remaining in Operation (2012) 1. Trust International Paper Pampanga Newsprint, Printing &Writing 2. United Pulp and Paper Bulacan Containerboards 3. Bataan 2020 Bataan, Q.C. Pr &Wr, Containerboards,Bag paper 4. Container Corp. of Phils. Quezon City Containerboards, Cartonboard 5. Noahs Paper Mill Marikina Pr &Wr, Bag paper 6. Liberty Paper Valenzuela City Containerboards 7. Fiber Sorting Pampanga Cartonboard, Containerboard 8. Asia Paper Ind. Cavite Printing &Writing 9. Paperland / Valley Quezon City Cartonbd, Containerbd, Bagpaper 10. St. Thomas Paper Batangas Containerboard 11. Cascades / Malinta Cavite Containerboards 12. Multipack/Certified Mills Laguna Containerboards, Brown wrapping Paper Mills remaining in Operation (2012) 13. Danao Paper Cebu Containerboards 14. Hansson Pasig Pr &Wr, Brown packaging paper 15. Hansson (Menzi) Bukidnon Packaging 16. Quanta Pampanga Tissue 17. Vanson Valenzuela Pr &Wr, Cartonboard 18. Fedco Laguna Pr &Wr, Cartonboard 19. Alliance Valenzuela City Pr &Wr, Cartonboard, Wrappings 20. Golden Swan Cavite Containerboard 21. Rosario Valenzuela Brown wrapping/packaging paper 22. Globe Paper Malabon Pr &Wr, Brown wrapping/packaging 23. Rural Paper Bulacan Pr &Wr, Brown packaging 24. World Class Paper Pampanga Packaging, Printing &Writing Paper mills Closed /Shutdown – from early 90’s-2011 1. PICOP Resources * Surigao Kraftlinerbd, NP, G’wood printing 2. SCA Hygiene Cavite Tissue and sanitaries 3. Kimberly-Clark Laguna Tissue and sanitaries 4. Paper City Valenzuela Pr &Wr, Cartonboard 5. Aclem Laguna Pri &Wr, Tissue, Brown wrapping 6. Manila Paper Mills Quezon City Pr &Wr, Containerboard, Wrapping 7. Sunrise Bataan Cartonboards, Containerboards 8. Dasmarinas Paper Cavite Cartonboards, Containerboard 9. East Asia Paper Cavite Tissue and Sanitaries 10. Arco Las Pinas Containerboard, Brown wrapping 11. Isopack Laguna Containerboards 12. Worldwide Paranaque,Q.C. Brown wrapping, Cartonboard *Integrated Pulp-Paper Mill PICOP Millsite in Surigao del Sur _____________________________________________ Paper mills Closed /Shutdown – from late 80’s-2011 13. Rustan Packaging * Iligan Cartonboards,Containerboard 14. Phil. Paper Mills Tondo, Manila Cartonboard, Containerboard 15. 3rd Wind Paper Pampanga Tissue and Sanitaries 16. Chanmeco Valenzuela Containerboard, Cartonboard 17. Asgard Novaliches Containerboard, Cartonboard 18. Paramount Valenzuela Printing & Writing, Brown wrapping 19. Fortuna Valenzuela Containerboard, Wrapping, Tissue 19. Prince / Sn Fernando Pampanga Printing &Writing 20. Oxford Paper Laguna Pr &Wr, Containerboard,Wrapping 21. PDM Laguna Specialty Paper *Integrated Pulp-Paper mill Pulp Mills in Philippines In operation as of 2010: Site Capacity Product 1. Canlubang Pulp Laguna 3,600 Tons/yr Abaca Market pulp 2. Alindeco Albay 12,500 Abaca Market pulp 3. Specialty Pulp Manuf Leyte 12,000 Abaca Marketpulp 4. Pulp Specialists Inc. Leyte 5,000 Abaca Market pulp 5. Newtech Pulp Lanao 8,500 Abaca Market pulp CLOSED / Shutdown from 90’s -2010 6. PICOP Resources * Surigao 110,500 T/yr Kraft,Mech’l pulp 7. Cellophil Resources Abra 65,000 Kraft Market pulp 8. Isarog Albay 9,000 Abaca market pulp *Integrated to Paper mill. THE PAPER INDUSTRY ALSO HAS CLOSE LINKAGES TO: • Technical Association of the Pulp and Paper Industry (Tappi-Phils.) • DOST – Forest Products Research and Development Institute • DTI – Bureau of Product Standards • DENR – Environmental Management Bureau • Printing Industries Development Foundation • UPLB College of Forestry and Natural Resources Problems of the Pulp and Paper Industry in Phils. ________________________________________ • RAW MATERIAL – Local wastepaper quality low (poor yield, inefficient operation) – Local wastepaper supply is inadequate (high price) – Imported wastepaper supply getting tight – No local source of pulp. • HIGH COSTS OF ENERGY – Electricity (requires investment for lower-cost power and energy-efficient technologies) – Fuel (requires investment to convert to coal, biomass and fuel- efficient technologies) Paper Industry Fiber Raw Material Demand 2010 2011 Wastepaper, Local-sourced 970,000 854,500 - White/Deinking grades 250,000e - Brown/Packaging grades 604,500 Wastepaper, Imported 120,400 248,000 - White/Deinking grades 200,000e - Brown/Packaging grades 48,000 Wastepaper Totals 1,090,400 1,102,500 Pulp (all imported since 2010) 67,250 49,820 Problems of the Pulp and Paper Industry in Phils. –2 ________________________________________ • MANY PAPERMACHINES OLD AND SMALL – Small mills costlier to operate than bigger mills – Difficult to rehab, maintain, upgrade (frequent breakdown) – Some mills not originally intended to run on 100% wastepaper – Lack equipment to handle low-grade wastepapers. • FLOODING OF DOMESTIC MARKET WITH IMPORTED PAPER – Tariff duties removed/minimized – Misclassification in imports – Low valuation of certain grades paper. Problems of the Pulp and Paper Industry in Phils. –3 ________________________________________ • ENVIRONMENTAL REGULATIONS GETTING MORE STRINGENT – Mills suffering cash flow lack low-ROI funds to install more anti- pollution devices – Mills must invest in cleaner production technologies (expensive) – To improve environmental performance – need highly-technical professionals or training for its personnel. • SKILLED AND PROFESSIONAL MANPOWER DIMINISHING – Overseas jobs pull workers from paper industry – Other industries offering more attractive compensation – Fast turnover / high cost of training – Declining # of engineering graduates going to pulp and paper industry. PROPOSED SOLUTIONS AND LONG-TERM STRATEGIES _____________________________________________ • RAW MATERIAL – Limit export of OCC due to supply is inadequate – Invest on technologies that improve wastepaper utilization – Establish local production of woodpulp (enable existing paper mills to make higher-grade paper &board) – Develop agri-wastes and annual crops as sources of non-wood fibers (supplemental virgin pulp for existing paper mills). Recovery Rate of Selected Countries Selected Countries Recovery Rate as of 2011 USA 66.8% Japan 76.9% World 57.2% Malaysia 54.1% Indonesia 53.5% Philippines 49.9% China 45.0% Source : RISI World Pulp and Recovered Paper Forecast PROPOSED SOLUTIONS AND LONG-TERM STRATEGIES -2 _____________________________________________ • HIGH ENERGY COSTS – Upgrade existing mills to energy-efficient technologies – Encourage investments in co-gen plants – JV with new power projects – Encourage investments in bio-mass and waste- burning power plants or boilers – Support projects based on clean and renewable energy. PROPOSED SOLUTIONS AND LONG-TERM STRATEGIES -3 _____________________________________________ • OLD AND LOW-CAPACITY PAPERMILLS – Projects and programs to improve tonnage and productivity – Retool or replace small machines to shift to higher-value paper products – Make available local virgin pulp to reinforce low- grade recycled fiber and enable production of better-quality paper and board. PROPOSED SOLUTIONS AND LONG-TERM STRATEGIES -4 _____________________________________________ • IMPORTED PAPER FLOODING DOMESTIC MARKET – Set up better controls vs. misdeclaration of imports – Defer further reduction of remaining tariff duties on paper and paperboard – Help existing mills establish capability to make higher-grade paper products. Paper products we should make PROPOSED SOLUTIONS AND LONG-TERM STRATEGIES -5 _____________________________________________ • ENVIRONMENTAL ASPECTS – Incentives for investment in clean technologies – Support for upgrading wastewater treatment plants and new pollution control devices. • MANPOWER ASPECTS – Support for training and manpower development programs, esp. intended at improving process efficiencies and environmental performance. Market Growth by Grades of Paper/Paperboard 2011 Local Imports Total Segment Projected Product- Market Share of Growth ione Market % (2011-2016) Printing &Writing 260,000 196,400 456,400 26% +1% Newsprint 170,000 42,000 212,000 12% -2% Packaging P & B 466,200 403,300 869,500 49% +3.5% Tissue/Sanitaries 30,000 65,000e 95,000 5% +4% Other Paper &Board 24,000 115,800 139,800 8% +2% TOTALS 950,200 822,500 1,772,700* +2.3% *with exports MARKET DRIVERS OF GROWTH -PULP &PAPER INDUSTRY
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