Thi5s laper in p): c;yrcd for t h Bank's internal use and is nxot for plbi,-to, Tho -viexws are Public Disclosure Authorized thoce of thoc awihorcts md ny1wt- nEocc ssnrwly thoc- of thkc 5Bmk.. MTERINATI0N1AtL 2AN.K Fil PLECONGTR.UCT I0J ADAimBIi1' IiJ'- I7AT ToI IL DAV.-I- . ,iT SASOCI&TION ll- L-.L ' -xt Tork}i.g ]Pc . To Public Disclosure Authorized ECOI:4 -'Y ' ('t 'v-v l t tiT)TJ 'TT2 5 .. tb S- a#z ,,' * -*.S *- . :. < I A -. '..- 1 1fC i;ol tK1 0WCr.t- I eJlE-frr "r ) ? '.wett'r, s on .fl--:.. Public Disclosure Authorized of I 1 C:( C e-- f" t;.''. t' t i '' H 4.. C,,^ ".,-'- an.1r aL'tiC t t.O. IC t.KLIra ! -. ::. , t 0 Public Disclosure Authorized TABLE OF COINENTS Page No. INTRODUCTION AND STJI4NARY CHPkPTER - MAR CIARACTERISTICS OF THE INDUSTRY The Market . l.a ae o * e * * e l 1 Yianufac-turing Processes .a e a .. e a. a e 2' - pulp o e * * * oa o * * o* ae a o . a4 .e 2 - Paper . a e . .e . .o . .4 . O * P 5 Integration C O . .O . O . e * . .e e e . 5 RaW aterials, Water and Power . e * o a G 7 Techlology . 6 aG * a e . .s *. a o a e 11 II - ECONOMIECS OF PULP AND PAPER 1%r,,AKIHrG Elemerxbs in Production Costs e . r a. * 17 -:Investment Costs .e . 18 - W1aterials, Water and Pow^Ser a . a o a o 21 - Labor . a o a& * 0 0 * 0e 0 4 0 9 314 E3co10noyrdes of Scal .C .o . 0o c . .o e 0 0 ela C 383 III - ORPLD WYTlS IN eov C)o RODUCTIOW A T,NMDrTFLADE Consumptioni by Regions and Countries . 0 . * . * . 44 - Woodpulp 4 G a e b 9 * e I 0 0 0 .a 0 r 0 c 4 144 - Paper 0 9 0 0 .0 4 * 0 .0 0 6 e 0 a0 o 4 4 C 146 Producrtion by Re i or and Count-rirs 0 *0 . .0 * 4 49 oOCipulp 0 .0 . * * * * S 49 - Papor 0 e a 0 * ao 9 0 e 51 Internationc)1 Trade . I0 0* * * * 0 9o 0 0 52 Per Cl):mit.a Consmption o-Pap3 * * * * G e G O 56 Intoe -tionazl Prices of Pulp and Pap= Prices * e* 9 58 APPEIT)TCI~S A Statistical Tables 68 B Wtorld',iclo PPulp arn P>aper Consuru t;:ion by RCg:Lori, 1 9198-1J. 5 II PoodpzT1pProcudu ctionwil' C1rL1.1,Pt.ionr1 . .* .. 4 II: Papcer P:roxiuciorl L'n .J Coinri uim.it:i; ,on * e o * t * C * v f* C The KiL't, P1l pi.p I.Y4c;cw^o *.* oe4 0 9 0eL * 86$ 836 B1BL1OC2RAPWll.' . 9 Ti- TABLES PaeNo. 6 1. Classification and Yields of Pulping Processes - Physical Inputs Per Air-Dried Metric Ton 2. Kraft Process 8 of Softwood Pulp 9 3. Wood Consumption per ton of Pulp in Selected Countries Average Water Requirements for the Production of Pulp and 4. 10 Paper Products 11 5. Energy Consu;Qption - kIJh per Ton of Pulp Developing Countries Fixed Investment Costs for Mills of 6. 20 25 to 200 Tons Daily Capacity Sample - Investment Costs for Pulp and Paper Mills 7. World-wide 22 of 25 to 750 Tons Daily Capacity Share of Capibal Costs in Total Production Cost for Various 8. 25 TypOs of IL;L1s of 100 Tons Daily Capacity Wood Consvm1-L-pt-iton Per Ton of Pulp ton of dry wood per 9. Pulp 26 ton of 90,5 pulp Average Age of Felling of Mvlain Softwood and HIardvood Species 10 27 Used for Pulping Prices in the United States, by Selected Species, 11. Pulpwood 28 1950-67 Pulpwood Prices, Delivered at Mill, in 1960 U.S.$ 12. Estimated 30 per ton of bone dry wood Average Prices of Major Inputs for the Production 13. Es-timated 32 of Pulp and Paper Products, 1966 14. Share of Matcrials and Power, Steam and Water in Total 33 Production Costs Labor Cost for Into,g-rtlcd and Nond-In,c-ratod Pulp 1. Direct 36 & Paper M4ills -iii TABT2S Page 1To1 45 16. Woodpulp Consumption by Areas, 1954i55 to 1964-65 48 17. Paper Conisumption by Areas, 1954-55 to 1964-65 50 18. Wboodpulp Production by Areas, 1954-55 and 1964-65 52 19. P,. ier Production by Areas 1954-55 and 1964-65 53 20. Comparison of WJorld Production and Ex-port Trade - 1913 to 1965 21. Regional Demand and Supply Balances of IWoodpulp and Paper,p 1954-55 and 1964-65 56 22. Per Capita Consumiption of Paper, 1964-65 from 23. Average Value Per Ton of United States Pulp Iq?pozts Canada, 1953-65 24. Domestic anld Thiport Prices of woodpiilp in the United States 60 and the UniUted KLn;>cii (US$ per iintric ton), 1;Iay-Jun-e 1968 of Q ; 25. United States - Avorage Vholesale Prices Per IMetric Ton 61 Selected Paper Products, 1964-163 CAPHS 23 I. Investment Costs for Various T-ypos of Integrated IYdlls 24. II. Investiment Costs for Various Types of Non-.Integrated hills and Paper I4illsq 50 to 200 Tons Daily Ca.-pacity III. Pulp 41 (Uniit hInestinent Required) IV. Pulp anid Paper Mis. 50 to 200 Tons Daily Capacity (Direct Unit THanu"La-CILw'-in.g Cost s) 42 V. Pulp c'1 Paper lls, 50 to 200 Tcn-is Daily C,ripacity 43 (Total Unit Prlcductio- Costs) iv- GRAPS Page Ndo Per Capita VI. ItRD - Relationship between Paper Consunaption 1965 62 1964-65 anad Gross National Product Per Capita. between VII. NORTH AFMIICA & W1ESTERN EUROPE - Relationship Capita 1964-65 and Gross National Paper Consumption Per 63 Product Per Capitba, 1965 A11HRICA - Relationship between Paper Consumption VIII. LATIN 1965 64 Per Capita 1964- 65 and G-ross lational Product Per Capita, between Paper Consumption Per Capita IX. AFRICA - Relationship 65 1964-65 and Gross National Product Per Capita, 1965 betwyeen Paper ConsumTption Per Capita Y. ASIA Relationsh.ip 66 1964-65 and Gross National Product Per Capita, 1965 XI. 1ORID (Regional Comparison) Relationship between Paper Per Capita 1964-65 and Gross National Product Consumption 67 Per Capita, 1965 -v IDTRODUCTIOIN AhlKD SUM'2'4AR Y 1. The object of this stuady is bo provide background information on the pulp and paper industry to facilitate an understanding of the ecollomic sspects which are relevant to establishment or expansion of the industry in developing counitries. 2. Chapter I review.s the major characteristics of the industry starting wzith a brief discussion of the nature of the demand for paper products followed by a review of the: main manufacturing processes and the importance of integrated mills producing concurrently both pulp and paper products. Chapter I also reviews the physical requiremerits o rcaw materials, water and power as well as techLnological changes in the industry. 3. Production of pulp and pap2rr requires large quantities of wood, chemicals, water and electricituy. Wood requirements represent the Iliaii item in terms -f both quantity and cost. Wood consumption per toni of pulp mlay vary i.-rn 25.ito 6 cubic meters of solid wood wnithout bark, depending on. the type of pulp produced. 4. TeclbnoloCical chair,o in t-he past t,wo decades has progresseda rapidly. Production is bcco-uitn incrc;easingly autonat-ed.-r- ::Ž2trj inl mmutl:lc:ing processes have been concc-ntrated in the use of soA:oo,v wiieb. are the species prodoiriThating in the C.evolopsd countriur- ic.uo:i c; on the ot'hor hand,, wfhichi prelodir nato in the cdr;,.;alopifg countries, are little used in pulpinf-, mainly because of theiLr in-feri.or physical :\L. uh in the prescntD state of the ar-ts., which m.-akes for greater costs co,_pite lower uniti pricCs. 5. Chapter II analyzcs imnv lrti;-e,nt costs, and thce omporti;ecf economies of scale., witht special referenrce to developing countlses. Production of pulp and paper has one of the highest capital-output ratios found in the industriael sector. Investm.,.nt costs per unit of ouLitpib are therefore high and they are also quite vuriable. Total investment per daily ton 1/ for a new 400 tons per day bIleached softwood sulphate pulp mill in NoFth Anmerica may va-wZr betwoen $87,500 ca-d $13'7.,500. 2/ Total invcstment, for a similar mill of 600 tons rer d;.ay would be in-the ordcnt' of $775,000 to $116,600 per ton daidL.r Capac:- f. 1/ Totoal invovL;trTic,-nt clof-in;- ao mii-.l Pc:.,;' Lnr,icncc,;i,t durinig conrttruc- tion, stL%rt-1zp CYvpon1.n2o financial Cl.T') L'Lo and worlklng capital. Thve,t.nu por daily ton equals total iaa-t .crt divrided by daily capacityO 2/ Thev total &t'mn:bs ar' ,in$35 *iIL' an-'. "$55 l,Udllion- vi- 6. Regarding integrated operations, total investment (defined as above) for a 400 tons per day linerboard mill could vary betwieen $75,000 and $125,000 per ton daily capacity. An integrated ndill of 100 tons per day of fine papers (wood-free wiriting and printing papers) requires a total in.restment froa $10 millIon to $30 million,, depe-nding upon the degree of integration with pulping facilities. 7. Total fixed investnmnt per daily ton (at 1960 prices) in a 100 tons per day mill operating in a developing country fluctuates between $135,000 for non-integrated unbleached chermical pulp, and $235,o00 -for irtegrated bleached paper. 8. Pulpwood is the principal material used in pulp and paper raw making anid accounts for approximately 80 per cent of total fibrous materials consumption.