presented by T JOHNSON 1, B JOHNSON 2, K MUKHERJEE 3, A HALL 4 1 Business Director Forest Industries 2 Senior Process Engineer Beca AMEC, Level 4, 5 Queens Road, Melbourne, Victoria 3004, Australia 65th Appita Annual Conference Rotorua 3 Senior Project Manager Beca AMEC, P.O. Box 903, Tauranga 3140, New Zealand 4 Director International Pulp & Paper Development AMEC Americas Ltd, 400 111 Dunsmuir Street, Vancouver BC, Canada The Indian paper industry is poised for continuous and rapid growth in the next decade. Abstract India has major demand drivers that are cause for a very positive outlook in the pulp and paper industry. These include 9.5% GDP growth, increasing literacy, growing consumerism and optimism and a will to expand by industry leaders. India is the fastest growing pulp and paper market in the world with 6% demand growth per annum. Many significant projects have started within the last 5 years, such as a new kraft mill and paper machine in Lalkua which started up in mid-2010. However, there are significant challenges facing the industry, the biggest of which is the lack of raw material. Wood and non-woody fibres are in short supply, with recycled fibre providing a significant volume as recovery and recycling systems are implemented. Government regulations and technical issues pose other significant obstacles for the industry. However, the Indian paper industry is poised for continuous and rapid growth in the next decade to satisfy rapidly expanding domestic demand for all paper grades. The aim of this paper is to give some firsthand insights into the industry based on our forays and projects undertaken in this market. INDIAN PULP AND PAPER INDUSTRY India is the 2nd most populous country in the world with an estimated 1.2 billion people and an average annual population growth of 1.9%. The GDP growth rate for 2011 is estimated at 9.5% and is supported by government initiatives in infrastructure, education and employment (National Rural Employment Act, Education for All). Infrastructure spending is significant, however, roads are congested, transportation of goods is costly and cargo handling at ports and connectivity need improvement. Our travel to mill sites is testimony to this. The Indian economy is strong and assisted by a stable political environment, robust financial sector, proactive monetary policy, and 17% yearon-year growth in foreign direct investment. Beca AMEC 2011
The Indian paper industry ranks 15th globally in terms of size, but accounts for only 2% of the world s production. Paper consumption in India has reached 9 million tonnes per annum (m tpa) making India a market poised for major growth. 95% of the pulp and paper mills in India have a capacity of less than 50,000 tpa. India is the fastest growing pulp and paper market in the world with 6% demand growth. However, the industry is highly fragmented with a wide capacity range from 2 to 800 tonnes per day (tpd). 508 33 165 The Indian industry is unique because of its large agro-based furnish. India is one of the largest users of non-wood fibres such as bagasse and wheat straw, which represents about 30% of the resource. Recycled fibre (36%) and hardwood species such as eucalyptus, poplar and casuarina (30%) are also used. Paper production in 2008-09 was 8 million tonnes, of which 42% was packaging grades, 35% printing and writing, and 19% newsprint (Fig 3). This is a significantly different market structure when compared to China and the EU, namely more graphic paper, less packaging and significantly less tissue and specialties. Tissue production is currently around 1-2% but is expected to increase at rates of 20% pa. Increased literacy is pushing demand for printing and writing grades which is currently around 3 m tpa and expected to increase to 4 m tpa by 2013. GROWTH DRIVERS AND CHALLENGES Wood Based Agro Based RCF Based Figure 1. Indian industry: number of paper mills (Kumar, 2009) RCF Based 39% Agro Based 31% Wood Based 30% Paper consumption in India is expected to grow to 14m tpa by 2015 (Thapar 2009). The major growth sectors will be in container board (to 3.9m tpa), uncoated wood-free grades (to 3.6m tpa), cartonboard (to 2.8m tpa) and newsprint (to 3m tpa). Demand for packaging will be driven by the growth in the retail sector, currently growing at 20% pa, higher disposable incomes, and the increasing demand for consumer durables and processed foods. Increased literacy rates will drive the demand for newsprint and printing and writing grades. To meet this demand increased capacity addition is planned with investments of US$3 billion announced. Figure 2. Indian industry: 2008-09 production of 8 m tonnes, by furnish (Kumar, 2009) Industrial 42% Kraft liner Medium, fluting Cartonboard Tissue 1% Newsprint 19% Writing & Printing 35% Coated Woodfree Un-Coated Woodfree Copier Creamwove Others 3% Figure 3. Indian paper production by grade (Thapar 2009) Melbourne Auckland Tauranga Jakarta 2
Communication Papers - in the last 5 years, imports of newsprint have been steady and most of the growth has been in coated wood free and packaging grades. Around 55% of the printing and writing market is low quality grades. Some shift is occurring from 2nd tier to top tier grades. Total demand predicted at 4m tpa by 2013. Packaging Boards containerboard demand is 2.4 m tpa and is based entirely on domestic production which is very fragmented and small scale. Carton board demand is 1.6m tpa with 3% imports, and largely recycle-based. Increasing consumerism and demand for better quality packaging will lead to growth predicted to raise production to 3.4m tpa for container board and 2.4m tpa for carton board, by 2013. There are 3 main challenges facing the Indian industry: Fibre source, Figure 4. Fibre consumption forecast, million tonnes, (RISI, 2009) Government regulations, and Technical challenges. The availability of wood, non-wood and recycled fibre for existing capacity and the increasing demand is the biggest challenge. Natural forests in India are protected, and controlled felling is only allowed for ecological conservation. The fibre consumption is forecast to increase to 11m tonnes by 2013 (Fig. 4). The paper industry has to compete with other wood uses such as a building material and domestic fuel. Pulp and paper consumption of forest-based raw material is 3 to 4% compared with sawn wood/ply wood of 6 7% and fuel of 90%. Mills rely on the supply of raw materials from farmers and multiple owners. Forestry policy needs to be changed to allow industrial plantations on degraded land. Wood costs are high by international standards and represents 40-50% of variable cost of sales (Fig. 5). The industry has launched a massive social / agro forestry scheme which increased planted area from 19,000 ha planted in 2001 to 250,000 ha in 2009. The industry will need 1.2 1.5 m ha of plantable area in the future. Non-wood fibre is an important raw material which is also used for power generation and cattle feed. Recycled fibre is an important fibre source but recovery is poor (23% recovery rate) and a mechanism for collecting and sorting waste paper is required to meet the increasing demand. 60% of the recycled fibre is imported. The use of imported fibre is expected to increase in the future because of the scarcity of raw material. Figure 5. Cost of wood, USD/m 3 (RISI, 2009) The Indian government regards the paper industry as one of the 25 high priority industries in the country. However, tax reform is required for imported and domestic production to reduce taxes/excise duty and better align the paper industry with such industries as petrochemicals. The industry faces considerable technical challenges. Machinery in some mills is more than 50 years old and modern process automation is lacking. The average size of a wood-based pulp mill in India is 100,000 tpa (10 x smaller than China). Recycling and waste paper collection and sorting is poor and there are no organised retailing and packaging standards. Water availability and usage levels are critical and many mills make extensive use of groundwater. There are also challenges of meeting ever-stricter environmental discharge limits with ageing technology. Small, inefficient producers will exit as the industry consolidates, increases capacity and modernises and a wider range of grades are produced. Vancouver Santiago Atlanta Shanghai 3
MILLS In the following section the manufacturing facilities and products of two pulp and paper mills, are discussed. The mills are among several visited by Beca AMEC to assess the status of the Indian Pulp and Paper industry and identify opportunities to participate in this fast-growing market. Mill A is a relatively small producer of low quality printing and writing papers, and Mill B produces 750 tpd of printing and writing grades and has just added a new 500 tpd fibreline and linerboard machine. MILL A Mill A was founded in 1936 and has developed to its present day configuration of a 250 tpd kraft mill and four paper machines producing low quality education papers for domestic use. The mill employs 800 people in the wood yard, kraft mill and paper machines. It is considered to be a small to medium scale mill in India. Fibre Source Mill A has two sources of fibre - veneer wood chips trucked in from local plants and chips made from their own wood yard, which processes relatively small diameter (30-100mm) wood. The veneer chips contain 2 3% bark which is difficult to remove and bleach and poses a major quality issue. The chips produced on site are screened for length but not thickness. This wide variation in raw material makes consistent production of high quality products difficult. Pulp Mill Both bleached and unbleached pulp is produced. The mill has 6 standard batch digesters with indirect heaters, two blow tanks and a blow heat recovery system. There are two brownstock washing lines. Line 1 processes eucalyptus pulp and includes two vibratory knotters, 4 drum washers and a primary pressure screen. Two-stage oxygen delignification has been retrofitted and is followed by two stages of washing and a twin roll press. Bleaching is carried out in 4-stages with a C(EOP)HH sequence and average conditions as in Table 1. Conventional 1960s drum washers are used for all washing stages and hoods have no ventilation. Considerable corrosion was evident. Control of dilution to the repulpers was via limited pneumatic instrumentation and a motor control panel. Cleaners were used for the bleached pulp with the decker feeding the paper machine high density tower. Line 2 is a brownstock line processing veneer chips and has hot-stock washing using a Combi screen and 4 brownstock washers. Recently, a Metso Delta Combi-screen (0.25mm slotted screen) has been installed to remove bark and improve the final product quality. However, the mill is basically a very manual operation with 1960s technology and a low level of maintenance and housekeeping. Table 1. Mill A bleaching conditions for C(EOP)HH sequence. Stage Charge % Temp. oc ph C 4.5 (active chlorine) E 3.5 65 10 O 0.5 P 1.2 H1 3.5 (active chlorine) 45 8.5 H2 1 (active chlorine) 45 8.5 Environmental The mill runs on bore water. Mill effluent, which is considered to be of good quality, is disposed of by land irrigation. Effluent quality meets state regulations, with the average parameters as in Table 2. Table 2. Average effluent parameters of Mill A. Parameter Suspended solids < 100 mg/l COD < 200 kg/ton BOD < 30 kg/ton AOX < 1 kg/ton Issues for Mill A Mill A is considered to be a smaller mill by global standards. Conventional commercial equipment does not cater well for such lower capacity mills when upgrades are considered. These smaller mills require support from equipment installation to commissioning to be successful. Mill A is considering installation of a new 150,000 tpa paper machine, which is a common survival strategy of mediumsized Indian mills. Possible future projects identified by the mill include: Expansion to 350 tpd with a new machine Improved power utilisation and generation with a 21 MW TG identified. Deink pulp line Improve final product cleanliness Melbourne Auckland Tauranga Jakarta 4
MILL B Mill B produces 750 tpd of pulp and paper and has recently installed a new 500 tpd Metso fibreline and Voith board machine, with associated new recovery and energy island. The driver is growth in the Indian board market and off-shore. Future projects include improving plant efficiency, particularly the recovery boilers, utilities and energy island. Mill B is also interested in diversifying its product base. Introduction Mill B employs 5,000 direct employees on its large industrial site. The mill is very labour intensive with runners, sweepers, extensive security, drivers and many other employees that are not seen in modern mills. Table 3 outlines the mill s development. Table 3. Major projects undertaken at Mill B Year Process Design capacity Current capacity 1984 Dissolving pulp 75 tpd 105 tpd mill using prehydrolysed kraft 1984 Wood waste 75 tpd 115 tpd (veneer chips) line 1994 Bagasse pulping 221 tpd 240 tpd line 2007 Recycling waste 250 tpd paper 2009 Metso tissue machine 100 tpd Pulp and Paper Project A new Metso SuperBatch line of 500 tpd capacity is being added to process eucalyptus. This will be followed by oxygen delignification and an ECF bleach plant with sequence D(EOP)D which will produce 450 tpd of bleached pulp. A new Voith board machine has been added of 500 tpd capacity. It will produce 180-550 gsm board using a 4-ply former. The recovery circuit consists of: 240 tds/d evaporator set, Mass and Andritz 1,200 tds/d recovery boiler, FL Smidth recausticising line producing 400 tpd of white liquor, FL Smidth 180 tpd lime kiln, and 43 MW turbo generator. One of the two existing recovery boilers will be closed. Total recovery capacity will be 670 tds/d. A new centralised Honeywell DCS system will be installed and replace the 1995 Honeywell system. The bagasse feedstock for the existing mill and the 25% eucalypt in the kraft process does cause issues with silica. The new causticising plant will have a double causticising system aimed at reducing silica levels. The bagasse copy paper is exported to Europe and America and is in strong demand. 25% of total output is exported and this is anticipated to grow. The complete fibre line has been engineered and will be commissioned by Metso, and the board machine supplied, engineered, erected and commissioned by Voith. The balance of plant is by the mill s own project staff. There are approximately 40 engineers in the engineering department and only civil consultants are sourced externally. Environmental The new 500 tpd fibreline operates within the mill s existing water constraints. The mill s intent is to reuse treated effluent and mill trials have been undertaken to evaluate this option. The mill currently uses 70m 3 water/tonne. The new fibreline is designed to use 18m 3 water/tonne whereas as the existing dissolving mill uses 110m 3 water/tonne. This is a major challenge. Vancouver Santiago Atlanta Shanghai 5
SUMMARY The Indian is poised for growth and there are clearly good opportunities to participate. This paper has given an insight into the Indian industry with examples of two mills that characterise the medium and large players typical in this market. Beca AMEC has secured a foothold in the market to assist with further development of the industry. The low cost, local engineering resource is capable; however, major projects need systems and disciplined execution strategies to succeed. Beca AMEC, along with parent company AMEC, are positive about participating in this developing market. REFERENCES 1. Kumar, A. The challenge of finding raw material supplies. (RISI Indian Seminar, New Delhi, December 2009). 2. Thapar, G. The increasing importance of India in the global pulp and paper sector, (RISI Indian seminar, New Delhi, December 2009). 3. RISI Indian Seminar, The opportunities and challenges for India in the global, (New Delhi, 3 December 2009). Melbourne Auckland Tauranga Jakarta 6