Several years ago, it finally became apparent to many managers that demand for communication grades of paper was going to decline irreversibly for the foreseeable future. At the same time, many of the disposable grades of paper seemed to have reached market saturation, at least in the wealthy countries.
Should anyone doubt that communication paper demand will continue to fall, notice a couple of signs of the times – the recent sale of the Boston Globe for 6% of its 1990 purchase price, and News Corp. splitting into separate print and digital companies because its print publishing arm lost $ 2.1 billion.
The declining demand for pulp, and difficulty of competing with the South American giants, has led to a welcome interest in producing new products in old mills, based on the industry’s forest base and its extensive know-how in wood processing.
The ideas for alternate products to pulp have ranged from straightforward use of wood as fuel, through upgrades to capacity and technology in dissolving pulps to various kinds of bio-refinery to produce exotic chemicals, or just plain old diesel fuel.
Some of these ideas have become substantial investments. Significant projects include Domtar at Plymouth N.C. and Stora Enso in Sunila, Finland investing tens of millions of dollars each in full-scale systems for separation of lignin from black liquor. These projects are both supported economically by the fact that removing some lignin from the feed to the recovery boiler allows increased pulp production. The recovered lignin has a very high calorific value and is free of sodium salts, so it can be used as fuel in a power boiler or lime kiln with relatively minor modifications to the burning systems. This is of particular interest to the modern, energy efficient mills such as UPM in Uruguay, who produce all their steam and electrical power from burning black liquor, yet have to purchase oil to fire the lime kiln.
In both the above projects, the owners plan to develop markets for lignin that will bring much better prices than its fuel value, or the profitability associated with removing thermal load from the mill’s recovery boiler.
Chemists have shown theoretical potential for producing a wide variety of chemicals from lignin that sell at prices far above fuel-value, but the real value of the potential sale of lignin is unknown, so far. The availability of commercial quantities of lignin, produced by routinely operating processes at Stora and Domtar, as well as a 100 kg/day pilot plant at Domtar, Kamloops, should help potential customers run trials to scale laboratory processes for lignin based chemical manufacture up to full scale. Potential uses for lignin include glue for plywood, or other adhesive applications, and as an intermediate in the production of dispersants, emulsifiers, carbon fibers and resins. Some automobile manufacturers are researching lignin as an alternative to petrochemical resins for producing the many lower strength moldings required in cars.
Where lignin is simply used for like kiln fuel in an energy efficient mill, it will allow the owner to demonstrate an extremely low carbon footprint, which will be valuable in some pulp markets, and a threat to pulp producers that still burn fossil fuels.
It is encouraging to see the concept of lignin as a marketable by-product move beyond the laboratory, and I hope these companies succeed. Others have failed in the past. The first industrial scale lignin production I saw in a pulp mill was in the 1960s. However, today’s needs and technology are somewhat different, so I hope the new brains surpass those of my generation.
The only other “alternative” product that I have seen full scale investment in is simply using wood as fuel. This is driven primarily by regulations requiring utilities to use a certain proportion of renewable fuel, so I look on it as a temporary business. At least one experienced forest products company, West Fraser of BC, has stated publicly that they will not invest in projects that rely on selling prices artificially inflated by regulations. Suzano, a major and experienced pulp producer in Brazil, seemed to differ in 2010 when announcing an investment of $800 million dollars in systems and infrastructure to produce wood pellets from virgin timber. This investment was recently suspended, reportedly due to short term cash flow issues.
North American exports of wood pellets have risen rapidly in the past few years, and were reported to be 3.2 million tons in 2012, with a value of $400 million, representing approximately $120/ton. Over a million tons were exported in the first quarter of 2013, with continuing expansion forecast. Thus, it seems likely that we will see approaching 5 million tons of wood pellets shipped this year.
A ton of pellets made from clean wood (which is measured almost bone dry in the pellet business) could produce about half a ton of pulp, which would have a value of around $400, but would of course require a much greater investment in production equipment, and would generate much more employment and business for suppliers.
The UK is a major and fast growing market for wood pellets from BC and the US South. Subsidies for wood pellet users in the UK are now up to about $700/ton pellets for small domestic users, ranging down to about $75/ton for large industrial users. Subsidies are guaranteed for 20 years to people converting to wood pellets. Such a large subsidy relative to the cost of producing and shipping pellets has a major impact on the economics of pellets as fuel. Some users will be prepared to pay very high prices for pellets, when burning them generates such generous subsidies.
Thus, the future of using wood for fuel instead of for making pulp and lumber seems to be quite unpredictable. On the one hand, some pulp mills can perhaps make more money selling their wood as pellets, while other mills may find the cost of chips from sawmill waste, etc. rising as the material is diverted to fuel use.
The third major “alternative” product to pulp-for-paper is dissolving pulp for textile manufacture. This is not really new, but has been rapidly expanded over the past few years. The pulp is used to make rayon and similar cellulose based fibers, mostly competing with cotton. Modern processes to convert dissolving pulp into textile fiber, such as that used to produce Lyocel, have removed many of the environmental problems associated with processes used previously, and the market is growing quite rapidly. China is the largest producer of fibers from pulp, and is a major dissolving pulp importer, as is India. However, recent dissolving pulp capacity has exceeded demand, so it may be some time before this use of pulp replaces the market lost as paper demand declines.
To sum up, we have seen some new markets develop for pulp mills that have been hit by the drop in paper demand, but the three largest ones, (wood pellets, dissolving pulp and lignin as a fuel) are based on evolutionary improvements of established technology.
None of the more exotic proposals, such as diesel from wood, adhesives and replacement of petrochemicals in plastics have been shown (yet???) to be commercially viable on an industrial scale. However, it is encouraging that various research projects, including those mentioned in this column in February, are still developing.