Pulp Mill Midden by Karl
Code Green taken recently of the Long Reach pulp mill site showing rock crush and crushed rocks … More pictures of the site, via Garry Stannus here
Former RPDC Panel member and pulp mill expert Dr Warwick Raverty comments on last week’s Crikey analysis: Andrew Crook, Crikey: Race to find financier as Gunns pulp mill faces uncertain future
An excellent analysis by Andrew Crook of Crikey.
A significant long term change has occurred in markets for bleached hardwood kraft (BHK) pulp of the type Gunns propose for production at Long Reach (not Bell Bay!!).
By far the overwhelming market for this type of pulp is office papers (for photocopy and laser printing) and high quality printing papers (envelopes, credit card statements, books and expensive magazines largely).
Between 1980 and 2001 the global demand for these types of paper (called ‘printing and writing’ in the paper industry) grew year on year by a staggering 6%. In 2001 with the attack on the WTC, followed almost immediately by the scare over anthrax spores being sent in the mail, people stopped sending snail mail, preferring e-mail without the anthrax instead.
The market for envelopes and mailed credit card statements and bills from utility providers collapsed. Between 2002 and 2005 the rate of growth of demand for BHK pulp slowed each year to 2% in 2002, reaching negative 2% in 2005. Between 2005 and 2012 the demand for BHK pulp has dropped year on year at an equally staggering 6% each year. The demand graph looks just like a print of Mt Fujiama – lovely and symmetrical, but not so lovely for pulp producers, which is precisely why the “high-cost BHK producers are looking over the horizon and seeking escape plans” in the words of respected international market analyst, Mr Kurt Schaefer.
So what has happened since 2005 to make this trend irreversible? Firstly the price, screen quality and storage capacity of laptop computers improved dramatically during that period, making the ‘paperless office’ a much more practical option than it was in the early 1980s when first mooted by Wang Computer Co.
The coup de grace came in April 2010, when Apple released the first iPad in the face of earlier failed attempts to gain widespread uptake of tablet computers. Here at last was an electronic device with a touch screen about the same size as a 50 page A4 report that could hold many hundreds of briefcases full of documents and act as a portable wordprocessor, e-mail client and web searching device. The success of the two latter iterations of the iPad is the stuff of marketing legend. Competing tablet computers from LG, Samsung and a host of other players have followed.
Office workers, magazine and book publishers are deserting paper hard copies by their tens of millions and are likely to continue to do so as these devices become cheaper, lighter and offer even more features. School and university students are being encouraged to forget hard copy text books in return for the much cheaper option of renting each years texts electronically for 12 months. The days of the school satchel and brief case weighed down with heavy tomes and paper files has gone for ever.
What about China and India you may ask? Surely demand for office papers will grow as the GDP of those countries increase? Well, there is one certain fact that you can say about the world’s two largest countries – they are both eager adopters of new technology and expert copyists. Neither China, nor India are going to bypass the opportunity of using as many existing tablet computers as possible and of developing their own much less expensive tablets. You only have to look at the drop in prices of LCD flat screen TVs and Computer monitors to gain an inkling of what is around the corner. Apart from corrugated cardboard boxes and tissues (for which eucalypt BHK pulp is pretty much useless), within 10 years paper will become a niche product for people who love the aesthetic qualities of the printed page and for archivists.
All this means that Gunns ‘have missed the boat’ well and truly. Had they been a little less reckless and derelict in 2005 and not unilaterally ruled out their Hampshire option, today they could well be operating a 1.1 million low cost BHK pulp mill profitably south of Burnie and the lives of thousands of people in the Tasmanian, Victorian and South Australian forestry industries and the community in the Sacrifice Zone of the Tamar Valley would have been immeasurably better.
Gunns would be well equipped to compete with the giants of Brazil mentioned at the Shanghai Conference as high cost producers ‘look for escape plans’. But no, the arrogance and intransigence of Gunns Directors in 2005, and people like Les Baker, Paul Lennon, Doug Parkinson, Steve Kons, Bryan Green, Will Hodgman, Linda Hornsey, Peter Garrett, Bob Gordon, David Bartlett and Lara Giddings deserve every piece of opprobrium that the Tasmanian community can throw at them over their collective failure to deliver what they promised in 2004 – a profitable, environmentally friendly, totally chlorine free kraft pulp mill in an appropriate location.
On the bright side, I am confident that there will be many opportunities for adding value to Australian plantation eucalypt biomass in non-traditional areas, such as renewable high value chemical products, rather than just timber and pulp. Unfortunately members of the major political parties, both Federal and State seem to be too entrenched in day to day mud slinging to ever do the homework necessary to find out what the new paradigm of the low carbon economy has to offer Tasmania. Even Professor West missed it, but perhaps it was outside his remit and expertise. I hope that the political situation will change, but I’m not confident.’
