Soon after the introduction of the IBM PC in 1981, it became common for pundits to predict the paperless office. One of my colleagues, despite being a computer enthusiast, always advised his clients that there would be a paperless revolution in the bathroom before such a revolution in the office. At the time, most paper industry executives thought the same, and carried on expanding and modernising paper mills at the same rapid pace as the previous few decades.
As we all know, offices, and homes, are still far from paperless, but a “less-paper” revolution commenced about the turn of the century, at least for all kinds of printing paper, including newsprint. This seems likely to continue for the foreseeable future. Newsprint demand continues to decline disastrously, while uncoated freesheet demand seems to be declining at about 4% per year.
Actually, the “paper industry,” as we are known to most of the public, is moving toward being “less-paper.” We have written in past columns about the boom in converting paper-grade kraft pulp mills to produce dissolving grades for textile manufacture. Although the rate of conversion has recently slowed, a significant proportion of kraft pulp is now becoming T-shirts instead of feeding photocopiers. With the increasing standards of living of the huge populations of India, China and Brazil, buying ever more smart phones and clothes, this seems a good move.
Some of the “less-paper” is due to obsolete, mostly small, mills closing down, but much is due to a healthy move toward products that differ from traditional paper.
Domtar, based in Canada but operating more mills in the US than at home, is the dominant North American producer of uncoated freesheet. The company has depended largely on this grade for the past few years, after effectively swapping off its packaging grade mills to Weyerhaeuser and acquiring control of freesheet mills. (The actual legal/financial contracts are more complicated than that.)
Over the past several years, Domtar has been aggressively adapting its mills to produce personal care products rather than printing grades of paper, and has also acquired several companies in this field, further expanding in-house demand for Domtar’s kraft pulp. Of course, this has required conversion of some papergrade pulp systems to fluff pulp. Domtar’s John Williams recently announced that 20% of Domtar’s sales are in personal care products, up from zero a few years ago. He also announced that he expects this proportion to increase.
Domtar is also one of the two key developers of the nanocrystalline cellulose industrial scale pilot plant in the Windsor, Quebec kraft pulp mill. This field promises to develop a wide variety of new products based on kraft pulp, as suggested here.
I do not see nanocrystalline cellulose adding greatly to total pulp demand (yet???), but it has the potential to add significantly to profitability, as its unique properties are developed to improve other products, mostly petro-based.
Williams wants Domtar to develop 4-5 innovative products on a “don’t bet the store” scale, to see which one wins. This is pretty much what Microsoft has done successfully for 25 years or so, although Bill Gates may not admit it in public.
One sign that Domtar is on the right track is the healthy performance of the company’s shares, which have been rising much faster than the main stock indices for the past five years, with acceleration over the past six months.
Other companies are also developing “paper-less” uses for kraft pulps, including Weyerhaeuser, which produces the “Pearl” kraft pulps for chemical feedstocks. Other Weyerhaeuser developments are seeing kraft fibers replacing some of the fiberglass and in automotive mouldings. The latest Lincolns are using these fibers, in what is essentially a full scale production trial by Ford. If all goes well, we can expect to see “more-paper” cars leading to some increase of demand for kraft pulp, although a car made of paper is of course impossible.
I just learned of an innovative development in the industry that has been running, somewhat incognito, for nearly 20 years. There is a system at Quesnel River Pulp, in Quesnel, BC where over 3 acres of greenhouses are heated by heat from the CTMP mill’s waste water. To me, this is an interesting “biorefinery” since the mill is producing bio-product from its waste. We discussed this type of biorefinery in the June 2011 issue of PaperMoney, but at that time, I did not know the Quesnel system existed, despite having visited the mill for other reasons. Given that Quesnel has one of the colder winters in the pulp and paper industry, this seems proof that the concept is at least technically feasible.
We will perhaps write more about it next issue.