Friday, March 14, 2008

Pulp Mills, the Chinese and a Pinch of Xenophobia

Posted By on Fri, Mar 14, 2008 at 2:33 PM

pulp-mill.jpg


David Hillman , an independent pulp and paper consultant, wonders if the sale of American pulp mills to foreign investors -- mostly Chinese -- is good or bad. The analysis is published on-line by the Gerson Lehrman Group (GLG), which, according their website, manages the world’s leading network of experts.
The major implication is that major North American assets are coming under the complete control of Asian (mostly Chinese) companies and there is no secret that 100% of these mills' production will be going straight back to China. Current global customers of these mills are already scrambling to find alternative suppliers - and, in a tight market, this is not easy! Will the new Chinese owners be willing to keep the mills updated with new technology and environmental regulations or will they be run into the ground until they literally fall apart ? How many more market pulp mills will China seek to purchase to feed their enormous appetite - estimated this year to be 8.5 million mt of virgin market pulp? Several mills have reported huge losses for 2007 with little remaining cash reserves. Will the Chinese pounce on these mills like hungry vultures - buying them at greatly distressed prices and far below their replacement costs? [Go to the article]
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Japhet Weeks

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