Overview of Indian Paper Industry docx

PAPER INDUSTRY AT A GLANCE ¾ Total number of Pulp & Paper Mills 666 Recycled Fiber Based Mills 467 ¾ Pulp & Paper Mills in Operation 568 ¾ Pulp & Paper Mills Closed 98 ¾ Installed Capaci

Presented by

Dr T K Roy

Director, CPPRI

Central Pulp & Paper Research Institute

Saharanpur, U.P., INDIA Overview of Indian Paper Industry

PAPER INDUSTRY AT A GLANCE

¾ Total number of Pulp & Paper Mills 666

Recycled Fiber Based Mills 467

¾ Pulp & Paper Mills in Operation 568

¾ Pulp & Paper Mills Closed 98

¾ Installed Capacity of Mills 6.9 million tonnes

(Paper & Paperboard)

0.7 million tonnes - Newsprint

The industry is fragmented with capacities ranging from 2 to 800 tonnes per day

GROWTH OF PAPER INDUSTRY

¾ In the 1970s excise concessions were given to small agro based mills, which resulted

in a rapid increase of small mills and capacity

¾ In the late 1980s the industry was in a severe oversupply situation, capacity utilisation

rates being around 60 %

¾ In early 1990s the government reversed the policy, making large units more competitive (e.g by removing excise concessions for agro based mills)

¾ First mill in the country was commissioned in 1812 in Serampur (W Bengal)

¾ The initial development & growth of industry in the 19th century was affected by shortage of wood (soft wood) in the country

¾ In 1914 the development of pulp making processes based on bamboo lead to rapid growth of the industry and by the end of the 1950’s installed capacity increased

to 137000 tonnes

GROWTH OF PAPER INDUSTRY … Contd…

Paper capacity and production in India 1950-2005

Million tonnes

Nearly 1.25 million tones of capacity is closed

¾ Technological obsolescence

Reasons for Closed Capacities

Other varities 5%

Industrial paper 55%

Writing &

printing grades 40%

Writing & printing grades Industrial paper Other varities

Total Paper and Paperboard demand in India

CAGR of nearly 5.5%

in the past 3 years.

Year Production Imports Exports Consumption

All figures in Million Tonnes

Paper, Paperboard & Newsprint

RCF Based Mills

Categorization of the Mills Based on Cellulosic

Raw Materials

PER CAPITA CONSUMPTION

The per capita paper consumption in India is 6 kg compared to 324 kg in USA, 25 kg in Indonesia, 250 kg in Japan and 37 kg in China

0 50 100 150 200 250 300 350

IND

ON

ESIA

JA

PAN

Pe r Capita Consum ption

Kg

FIBRE RESOURCES

India is a fibre deficient country Due to lack of wood resources, the paper industry is utilizing a wide verities of raw material for paper making ranging from forest based raw material to annual plant and recovered paper

Forest based Agro based Recycled fiber

TECHNOLOGICAL STATUS

¾ Obsolescence of technology in most cases

¾ Lack of eco friendly state of the art processing technologies

¾ Uneconomic scale of operation

¾ In an international comparison, even the largest machines are medium-size

− The average capacity of paper machines is about 14000 t/a

− Most of Indian paper machines have a trim width from 1.5 to 3.5 m

− There are only 9 paper machines with trim width of 5 m or more

− Only 14 machines have capacities 50000 t/a or more

¾ It is not possible to have very high speed paper machine, i.e >1500 mpm for

type of raw material available in India

¾ Similarly for adoption of new papermaking technology quality of raw material and

mill size are the major limitations

¾ Except the wood based integrated mills and few agro/RCF mills the level of

automation and process control is very low in most of the mills

ENVIRONMENTAL COMPLIANCE - ISSUES

¾ (CREP) for Paper Industry was introduced in the year 2003 by MoEF

¾ (CREP) to be complied by entire industry between 2005 to 2008.

The major environmental issues :

¾ Control of color and AOX discharge

¾ Control of release of Non Condensable Gases (NCG’s).

¾ Disposal of Solid waste viz Lime Sludge/Fly ash

Environmental issues Implementation Schedule (from April

2003)

AOX 1.0 kg/ t paper in 5 years

< 120 m 3 / t paper within 4 years for units installed before 1992

< 100 m 3 / t paper for units installed after 1992 Odor Control by burning the reduced sulfur

emissions in the boiler / lime kiln

Installation of odor control system within 4 years

CREP – LARGE MILLS

Either achieve the discharge Standards

of BOD, COD & AOX by installation of chemical recovery system or utilization

of black liquor with no discharge from pulp mill within 3 years or

shift to waste paper

Up-gradation of ETPs so as to meet

discharge standards

Upgrade the ETP within one year so as to achieve the discharge standards

Utilization of treated effluent for

irrigation

Wherever possible

CREP – SMALL MILLS

ISSUES BEFORE INDIAN PAPER INDUSTRY

High cost of transportation and power

Low capacity utilisation

High capital costs

High costs of raw materials

Issues &

Challenges

Only 20% of the total used paper is recycled

in India compared to a global recycling

DEMAND & SUPPLY SCENARIO

Source - Financial Express,19 Feb 2006

6.24

5.75

0.49

8.33 6.79

Demand Growth @ 6%/annum

Supply Growth @ 3.4%/annum

Source – Jaakko Poyry Report 2002

Projected Demand, Supply and Short fall of Paper & Paperboard

4.9 4.5

0.4

6.7 6.1

0.6

9.1 8.5

0.6

12.2 10.9

1.3 0.0

2.0 4.0 6.0 8.0 10.0 12.0 14.0

2005 2010 2015 2020 Demand Supply Shortfall

Industry Cultural Others

Source - Financial Express, 19 Feb 2006 Source – Jaakko Poyry Report 2002

Paper Million Tonnes

Paper Million Tonnes

Projected Demand & Supply of Various Grades of Paper & Paperboard

0.73 0.89

2.16

0.86 1.30

2.90

1.02 1.88

3.88

1.20 2.68

1.60

1.00 0.60

Demand Supply Shortfall

Source - Financial Express, 19 Feb 2006

INDUSTRIAL WOOD DEMAND SCENARIO

Million tonness of wood

Depends on agro/ waste paper use

The paper industry’s wood demand is expected to grow from 5.9 million tonness to 7.9 million tonness by 2010, and to over 10.6 million tonness by 2015.

~0.6 million hectares and 0.8 million hectares of land will be required by 2010 and 2020 respectively to meet paper industries wood demand.

5.9

7.9

10.6

AVAILABILITY OF AGRICULTURAL RESIDUES

Since 1970 agricultural residues have emerged as significant alternate raw material with total fiber use share being 29%.

The main agricultural residues utilized by the paper industry include bagasse, straws (wheat and rice) and grasses

Availability of agricultural residues is good, but there are many limitations to their use

7 4

RECYCLED FIBRE - RECOVERY & RECYCLING

Million tons

0 2 4 6 8

1995 2000 2003 2010

Recovery Imports Consumption

¾ Import of waste paper is continuously increasing

¾ At present more than 80% of consumption is met through imports

INDIAN PAPER INDUSTRY IN GLOBAL

PERSPECTIVES

India is among the top fifteen global producers

INDIAN PAPER INDUSTRY IN GLOBAL PERSPECTIVES

INDIA

PERCENTAGE OF WORLD PAPER PRODUCTION

¾ World Paper & Board consumption is dominated by three major regional

blocks-North America, Western Europe & Asia

¾ The Paper & Board production in India is nearly 5.5 million tons as against world

paper production of 340 million tons

¾ India consumes nearly 5% of the Asian and 1.6% of the worlds consumption of paper

and paper board

North America, 31.0%

Rest, 9.0%

Europe, 28.0%

India, 1.6% Asia, 30.4%

Indian Paper Industry in Global Perspectives… Contd…

CONSUMPTION OF BASIC INPUTS Indian Paper Industry in Global Perspectives… Contd…

Input Norms

(per tonne basis)

Mills in India (Wood Based)

COMPETITIVENESS OF THE SECTOR

¾ As compared to USA, Europe, the paper industry in India is far below the quality standards of the products.

¾ It is not as competitive as in other Asian countries such as ; Japan, Indonesia, Thailand, Malaysia & China.

¾ The paper industry in India is less competitive as compared to similar sectors such as; cement and capital goods.

¾ The possible reasons which makes paper industry less competitive compared to other similar sectors are –

(i) Availability of good fibrous raw materials;

(ii) Level of technology.

¾ Lack of required infrastructure such as; roads transports, railways, communications and sustained power supply.

¾ Main reason for lack of availability of desired infrastructure is

Scattered location of paper mills

Criteria for selection of site was raw material instead of infrastructure.

¾ Ministry of Urban Development, Ministry of Transport, Ministry of Shipping & Ministry of Power can create the desired infrastructure.

INFRASTRUCTURE FACILITIES

Raw Material Sourcing

Rational long term policy on Duties and Taxes

Technology Up-gradation

Scheme

Policy for Industrial Plantation

Technology Up gradation &

Large Wood Based Mills

¾ There are 22 mills producing 1.9 million tons of paper

¾ At 6% growth rate additional fiber requirement to meet projected demand is 2 million tons of wood

¾ Current plantations are not sufficient to cover the industry needs Any shortfall will have to be met through pulp imports

¾ Major Capacity Expansion – Greenfield

Name of the Mills Capacity

Agro Based Mills

¾ Wheat straw & bagasse will be the mainstay raw material for the sector

¾ By 2010 , agro based fibre requirement to meet the demand would be 7.0 million tons

¾ Availability of surplus bagasse for paper industry is only 10 million tons and difficult to be increased under present operational conditions of sugar mills

¾ Wheat straw availability is sufficient (22 million tons) therefore further expansion should be expected to be based on wheat straw

Raw Material Requirement for Sustainability of the Industry

be met through imports.

Challenges before the Recycled Fiber Based mills

¾ The availability of good quality waste paper at competitive price

¾ There is a need to take immediate measure to organize the existing waste paper recovery system to increase the recovery rate from present 18% to 30% to be sustainable

Raw Material Requirement for Sustainability of the Industry

Technology Improvements Needed

Wood Based Mills

¾ Enhancement in productivity through adoption of advanced production techniques such as RDH/Super Batch

¾ New and efficient pulp washing systems should be adopted

¾ ECF bleaching with ClO2 followed by peroxide is recommended

¾ Enzyme bleaching should be adopted to reduce chemical cost and discharge of chloro organics

¾ Breast roll and blade gap formers improve paper quality and drainage and are important for Indian raw materials

¾ A good press section is important in India because fibers are short Extended nip is the only good solution for Indian slow machines One shoe nip press section would be the best technology

¾ Unsupported web run is normal in Indian dryer section when speed

is higher than 600 meters/min, there should be single tier dryergroups to avoid web flutter and breaks

¾ Soft calendar are highly recommended and they could save bulk and improve opacity, strength and smoothness however this requires good CD profiles

¾ Films coaters and on-line calendars are recommended with good

CD profiles

¾ Soft roll rewinders might be a low cost alternative to improve roll quality of this paper or coated papers

¾ Process automation level must be improved

Technology Improvements Needed

Agro Based Mills

¾ Technology improvement is needed for upgradation of quality of baggase and adoption of efficient washers for straws & bagasse

¾ Installation of chemical recovery to meet environmental compliance

Recycled Fiber Based Mills

¾ Inclusion of high density pulpers

¾ For efficient contaminant removal, introduction of high density cleaners ,

turboseparators, fine slot screens and reverse cleaners in the fiber line

¾ Incorporation of modern deinking cells for production of deinked pulp

¾ Screw press and dispersion system to reduce dirt and specks in DIP

¾ Bleach towers for post bleaching of DIP

Improvements in paper machine area are same as in wood based mills

Technology Improvements Needed

Requirements for Environmental Compliance

¾ Installation of chemical recvcery or alternate option

¾ Improved pulp washing

¾ Oxidative bleaching

¾ Reduced water consumption

¾ Other waste management practices

¾ Up-gradation of ETP & optimal use.

Wood Based Mills

¾ Modified Technology for Pulping & Bleaching

¾ Improved Pulp washing

¾ Efficient use of water , reuse & recycling

¾ Installation of odour control technology

¾ Solid waste management & Disposal of

hazardous waste

¾ Up-gradation of ETP & optimal use

Agro Based Mills

Recycled Fibre Based Mills

¾ Reduced water consumption through closure of water loops.

¾ Waste management

¾ Up-gradation of ETP & optimal use.

Requirements for Environmental Compliance

Newsprint Industry - Issues

¾ Indian raw materials i.e hardwood, reed, bagasse are not suitable for

manufacturing TMP pulp

¾ Raw material and energy costs are high for CMP based newsprint mills

Improvements needed

¾ More use of domestic and imported ONP and OMG for deinking process to

minimise cost of production

¾ Identify better raw materials like Eucalyptus globulus and E grandis for

producing chemi mechanical pulps

¾ There is a need to raise organised plantation of these species

¾ At present the MFN applied rates of Indian pulp & paper products fall with in the range of 0 to 15 percent With 251 lines having 15 percent tariff (or import duties), 18 by 5 percent and 9 with no protection at all.

¾ If Swiss formula with value of coefficient being 15 gets accepted than all those tariff lines whose applied rate at present is 15 percent needs careful scrutiny.

¾ Policy makers may need to insist that any negotiations on market access are acceptable only on a pre-condition that all NTBs be removed under a fast track approach This can be a powerful negotiating stand of India in the ongoing trade negotiations

Implication of WTO

ENVIRONMENTAL CREDENTIALS

European Union label is used in many products In paper industry it is used e.g in copy papers Criteria are related to pulp and paper industry’s emissions to water and air, bleaching methods, energy consumption, etc AOX level should be less than 0.3 kg/ton

of paper Fibre raw material for paper should be waste paper or virgin fibre from sustainable managed forests Many European countries have additionally their own eco-labels

Similar concept could be developed for Indian conditions using overall environmental impact of the mill as criteria The fibre base could be wood, waste paper or agro, as long as the paper is produced with an environmentally acceptable process.

SUGGESTED INITIATIVES

Technology Up-gradation/ Modernization

Modernization Required

Wood Based Mills

¾ By and large modernized through its own resources in order to meet CREP requirement, however the paper machine section need major rebuild up-gradation.

¾ Needs restructuring to 1000t/day capacity.

Agro Based Mills

¾ Immediate attention required for

pulp washing

paper machine

black liquor handling and effluent treatment.

Recycled Fibre Based Mills

¾Need to be modernized by introduction of

deinking cells pulp cleaning slots screening equipment paper machine rebuilds.

ACTION PLAN

9 FDI in plantation programmes (with

no change in land use)

9 Public –private partnerships

9 Allow duty free imports of waste paper

9 Encourage voluntary agreements to increase paper recovery

9 Equal subsidy be made available to paper industry at par with energy subsidy of bagasse

9 Funds for technology development

Industry

9 Cooperation with farmers and State Forest Dept.

9 Search for foreign partners.

9 Public –private partnerships

9 Long term contract with printing/converting waste

9 Global sourcing, foreign partners

9 Sorting of imported mixed waste

9 Fibre fractionation to separate long fibres

9 Restructuring needed due to quality and environmental reasons

9 Develop pulping and papermaking technology based on non-wood fibre