Paper Feasibility

Paper Mill Feasibility Study for the Island of Ireland

WRAP Reference: PAP0024 Phase 1: Development and Assessment of Paper Mill Options Prepared for North South Market Development Group and Waste & Resources Action Programme Written by:

Published by: The Waste & Resources Action Programme The Old Academy, 21 Horse Fair, Banbury, Oxon OX16 0AH Tel: 01295 819900 Fax: 01295 819911 www.wrap.org.uk WRAP Business Helpline: Freephone: 0808 100 2040 Published August 2006 ISBN: 1-84405-287-7

Creating markets for recycled resources

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Contents

GLOSSARY AND ABBREVIATIONS 4

EXECUTIVE SUMMARY 6

1. APPROACH AND METHODOLOGY 16 1.1 Summary 16

1.2 Consumption of Paper Products 16

1.3 Sources, Volumes and Markets for Recovered Paper 17

1.4 Options to Utilise Recovered Paper 17

2. CONSUMPTION OF PAPER PRODUCTS 19 2.1 Summary 19

2.2 Economy and Demographics 20

2.3 Type and quantity of paper/paper products manufactured on the island of Ireland and subsequently consumed there. 20

2.3.1 Primary paper manufacturing ............................................................................................................20 2.3.1 Secondary paper manufacturing ........................................................................................................21 2.4 The type and quantity of paper/paper products imported into the island of Ireland and subsequently

consumed there. 21

2.4.1 ROI.....................................................................................................................................................21 2.4.1 NI .......................................................................................................................................................24 2.5 The origins of paper consumed in IOI including mill location, the mill capacity, mill furnish

requirements 25

2.6 Current consumption in terms of product type, the grade of paper and the end use sector 27

2.7 Future consumption of paper and paper products in the IOI 28

2.7.1 Influencing factors .............................................................................................................................28 2.7.2 The implications for different product sectors ...................................................................................30 2.7.3 Projections for growth........................................................................................................................31 2.8 Data reality check 33

3 ESTIMATION OF THE SOURCES, VOLUMES AND MARKETS FOR RECOVERED PAPER 34

3.1 Summary 34

3.2 The sources, grades and quantity of post consumer paper currently recovered in IOI. 34

3.2.1 Sources, grades and quantities of post consumer waste paper. ROI ..................................................34 3.2.3 Sources, grades and quantities of post consumer paper NI................................................................37 3.2.4 Paper and board arisings in household waste.....................................................................................38 3.2.5 Paper and board recovery and recycling from households ................................................................38 3.2.6 Paper and board arisings in commercial and industrial (C&I) waste.................................................38 3.2.7 Total waste paper arisings..................................................................................................................39 3.2.8 Sources grades and quantities of post consumer paper IOI ...............................................................40 3.3 The current markets into which recovered paper is being sold, the end use and geographical

destination for the recovered paper, by grade. 40

Paper Mill Feasibility Study for the Island of Ireland 3

3.3.1 Exports of recovered paper and board from ROI...............................................................................40 3.3.2 Exports of recovered paper and board from NI .................................................................................42 3.3.3 The price and the volatility of process paper recovered from the island achieves when sold to these

markets...............................................................................................................................................42 3.4 The Projections of RCP supply in IOI 44

3.4.1 OCC ...................................................................................................................................................44 3.4.2 ONP/OMG .........................................................................................................................................46 3.4.3 Mixed .................................................................................................................................................48 3.5 Scenario Development 49

3.5.1 OCC ...................................................................................................................................................49 3.5.2 ONP/OMG .........................................................................................................................................50 3.5.3 Mixed unsorted ..................................................................................................................................52 3.5.4 Conclusions........................................................................................................................................53

4. ASSESSMENT OF THE PAPERMILL OPTIONS TO UTILISE RECOVERED PAPER ON THE ISLAND 54

4.1 Summary 54

4.2 The opportunities for existing paper production facilities in IOI to increase their usage of recovered paper 55

4.3 The Papermill options 56

4.4 Shortlist list of options 65

4.5 Recovered paper supply scenario analysis 67

4.5.1 RCP Prices .........................................................................................................................................68 4.6 Extended Options. 69

4.7 Environmental Aspects 70

4.8 Business Support 70

4.8.1 Northern Ireland.................................................................................................................................71 4.8.2 ROI.....................................................................................................................................................71

APPENDICES 73 Appendix 1. Questionnaire 74

Appendix 2. Sector Listing 80

Appendix 3. Interview Listing 82

Appendix 4. ROI Imports 83

Appendix 5. ROI Exports 97

Appendix 6. IOI Base Year Calculation 100

Appendix 7. Mill Models and Options Assessment 102

Appendix 8. Environmental Considerations. 119

Appendix 9. Support Instruments for Proposed Paper Mill 129

Appendix 10. References 137


Glossary and Abbreviations

Product

Converted Packaging and Paper. The conversion process usually involves taking paper raw material e.g. in the form of reels, then through a manufacturing process involving, for example, sheeting, cutting, laminating, impregnation, printing and packing, to produce product units which are fit for end use. Converting processes include the production of; cardboard boxes and cartons, tissue rolls, sheeted paper (e.g. copier), inkjet papers, plus technical papers. Kraftliner and Kraft Paper. Paper made from wood using the kraft or sulphate chemical pulping process (see below). It may be bleached or unbleached and produces a strong paper which is used for wrapping and packaging. Kraftliner is used specifically in the production of cardboard boxes (called Packaging Containers in this work), acting as the liners (outer layers). When recovered paper is used this paper is called testliner. The rippled material or corrugating acting as filler between the two liners is called fluting. Kraft Pulp. A wood pulp produced by chemical pulping of the wood, also called the sulphate process. This removes the lignin from the wood, leaving cellulose fibre used in high quality paper manufacture. The removed lignin, called black liquor, is used for energy production. Mechanical Pulp. Pulp produced by the physical (as opposed to chemical) treatment of the wood to produce papermaking fibre. The process can be purely through the action of grinding the wood (groundwood), to pretreatments of heat (thermomechanical, TMP) and chemical (chemothermo mechanical pulp, CTMP). The remaining presence of lignin in the pulp causes yellowing through reaction with light. Papers made from this pulp include newsprint and magazines, are termed mechanical papers. Mechanical Paper. Paper, the furnish of which contains a substantial proportion of mechanical pulp. These papers can be coated (coated mechanical) with a thin coating to improve printability, and called lightweight coated papers (LWC), used in magazine papers. Uncoated mechanical paper includes those where the surface is smoothed and prepared across large rollers, called calendars, again to improve printability, termed super calendered papers (SC). These are used in flyers, inserts and magazines. Newsprint. Paper intended for the printing of newspapers. Mainly produced from recovered paper (through the recycling process) and also mechanical pulp. Printing and Writing Paper (P&W). Paper grades which are used for books, commercial printing, copying, business forms, stationary and laser and digital printing. These are often categorised as coated woodfree and uncoated woodfree. Woodfree is a term which refers to papers using chemical (see Kraft) pulps – where woodfree means the lignin is removed. In uncoated form these can be copying paper and letterhead. Coatings refer to surface treatments and additives which enhance printability. These papers are found in advertising, commercial printing. Specialty Papers. A diverse group of products that are sold on their performance, technical or appearance attributes. Examples include: filtration products; security and banknotes; decorative papers; abrasives (e.g. sand paper); letterhead; tracing and greaseproof papers. Testliner. Can be bleached and unbleached. The liner (outer layers) for corrugated container board (cardboard boxes) made principally from recycled fibre furnish. The virgin fibre alternative, kraftliner,


has uses where contact is important, such as food packaging, and purity/cleanliness of the fibre furnish is necessary. Testliner and kraftliner can be bleached and coated for better printability and presentation. Tissue Paper. Soft, lightweight paper, often creped, which is used for hygienic, household, institutional and health purposes. The fibre furnish can be virgin and/or recovered paper. White Lined Chipboard (WLC). Typically a multi-ply structure (for example 5 layers) in which the top and back plies are made from bleached chemical pulp or deinked office waste. The middle ply can be a mixture of recovered paper types. This is used for packaging applications e.g. cereal board, and detergent board. (called Packaging Cartons in this work)

General

Converter. A firm that specialises in converting reels and sheets of paper and board into packaging or finished goods for sale to the public. Consumption – (as defined by FAO – the Food and Agricultural Organisation of the United Nations) equals Production + Imports less Exports. In this work, production is the primary paper and packaging materials produced, imports are these materials brought in across the Republic of Ireland and Northern Ireland borders, and exports the reverse of this. In this work it was also necessary to recognise the secondary paper or that paper and packaging produced, brought in or exported as part of other products, e.g. shoe boxes and white goods packaging. OCC( Old Corrugated Containers) - used printed or unprinted corrugated boxes and solid fibre board boxes. Recovered Paper (RCP) Paper (all types) that has been previously manufactured and/or used and recovered for papermaking. This may involve cleaning and sorting. Total Waste Paper Arisings. Waste paper and board materials derived from household and commercial sources, which are recovered for recycling, landfilled or sent to waste (e.g. tissue).


Abbreviations and Acronyms

ADmt – air dried metric tonne arc21 – name for 11 district councils in the Eastern Region sub-regional area of Northern Ireland CC – County Council C&I – commercial and industrial CEPI – Confederation of European Paper Industries CSO – Central Statistics Office, Ireland EPA – Environmental Protection Agency, Ireland EU – European Union Eur, € - Euro Eurozone – the 12 countries of the original 15 who adopted the Euro FBB – folding boxboard GB – Great Britain used to differentiate UK minus Northern Ireland GDP – Gross Domestic Product GJ - gigajoule GNP – Gross national Product Ha - hectare IOI – Island of Ireland JPC – Jaakko Povry Consulting KLS – Kraft liner substitute km – kilometres M, Mn - million MRF – materials recovery facility MWh – mega watt hour MWe – mega watt electricity MWth – mega watt thermal News and Mags - newspapers and magazines News and Pams – newspapers and magazines NI – Northern Ireland NWRWMG – North West Region Waste Management Group, Northern Ireland OCC – old corrugated containers OECD – Organisation for Economic Co-operation and Development ONP/OMG – old newspapers and magazines pa – per annum P&W. Printing and Writing papers – see glossary RCP – recovered paper ROI – Republic of Ireland RTP – returnable transit packaging SWaMP – Southern Waste Management Partnership, Northern Ireland tpa – tonnes per annum UK – United Kingdom including Northern Ireland WLC – white lined chipboard Currency conversion All prices have been converted to Euro. The following exchange rates were used based on average for March 2005 (Financial Times): $-£ 1.9, €-£ 1.4 Executive Summary

The North South Market Development Group (NSMDG) in conjunction with the Waste and Resources Action Programme (WRAP) have sponsored this project. The objective is to


determine the feasibility of situating a recovered paper based paper mill or mills in the island of Ireland (‘IOI’). The project combines the interests of both Ireland (‘ROI’) and Northern Ireland (‘NI’).

Jaakko Pöyry Consulting (‘JPC’) together with Pira International (‘PIRA’), Circa and Initiative Economic Development (‘IED’) have undertaken this work. This assessment is timely. The Regional Waste Management Plans in ROI and NI contain targets to increase the availability of recovered paper for use in indigenous industry or further export. This work is nominated as Phase 1 and aims to provide the foundation for Phase 2, a possible detailed feasibility study for preferred mill options (s). Phase 1 contains the following key elements: • Review of consumption and demand for paper products • Estimation of the sources, volumes and markets for recovered paper • Assessment of the paper mill options to utilise recovered paper on the IOI. Information obtained is evaluated to determine whether there is supply of recovered fibre and demand for paper products to sustain a new paper mill in the IOI. The assessment of mill options considers a number of factors to identify what type of mills(s) could potentially be viable. The results will be presented at an Industry Briefing Session to determine whether there is sufficient interest in carrying out a full feasibility study.

Methodology To establish demand and supply data, the work has used a top down approach, beginning with high level statistics and progressing to more detailed levels until a robust dataset was achieved. This often involved commencing with government sources (e.g. EPA, Eurostat), then pursuing supply-demand dynamics through face-to-face interviews (22) across industry and involved organisations. These interviews have played a multiple role of; engaging sector participation in the work, on-the-ground interpretation of statistics, and also resolution of data and sector interpretation. The interviews included representation from across the whole supply chain in IOI.

There were data conflicts, sometimes between high level sources. This meant that data had to be verified from additional and root sources or through feedback from questionnaires and interviews. The data consistency was resolved by using:

• Information from face-to-face interviews. • Iterative exploration of data divergences with high level sources • Iterative review with the industry to test for robustness and credibility Where high level sources substantiated their data, this was used, and this reliance on their substantiation noted. In all cases, the integrity of the mill option assessment was paramount, to ensure that while debate continues the option conclusions were robust. It is important to note the sheer scale of world class paper mills and their RCP demand (see section 1.2) relative to the more limited IOI RCP supply. Therefore, imprecision in the RCP supply estimate will not detract from mill option assessment and its viability. Projections of future paper demand and recovered paper (RCP) supply in IOI were prepared. The results were used as key inputs into the paper mill options in terms of RCP availability and local market fit. RCP supply scenarios were also prepared, to test the impact of success (or otherwise) of waste management and IOI RCP promotion programmes on the mill options.

The mill options were subjected to examination using an established toolkit which can model various mill configurations and relative competitiveness with the peer group delivering to a selected market.


In almost all cases, this was London, to test the export robustness of the mill. Mill options were subjected to a feasibility test, with a profitability hurdle of 10% return on capital employed, over the business cycle.

Paper Products Consumption and Paper Arisings The combined IOI population is small (5.6 million) but is economically active. GDP growth rates put IOI in amongst the highest achieving regions. However the small population base, as it relates to absolute paper consumption and the total paper arisings, is at the heart of the challenge to realise world scale paper mill facilities.

The current industry structure comprises 2 primary paper producers and over 180 secondary businesses (e.g. converting, printing, distribution). One major producer (Smurfit) has recently decided to close its production facility, based on an ageing asset. This current work, offers a potential renewal pathway for IOI paper manufacturing capability through installation of world class facilities.

Domestic paper and board production, plus paper and board imports, less exports, combine to give consumption of paper for NI and ROI. NI then exports 73450 tonnes of converted paper product, and ROI, 88374 tonnes. At the same time there are large amounts of secondary and converted paper products e.g. shoe boxes, packaging for white goods etc., arriving. The primary paper consumption plus net imports of these secondary and converted paper products gives total paper consumption. The components of this were analysed individually to produce an assessment for IOI, NI and ROI (see table below). These data establish the total markets available to mill options and also the fibre potential available.


Total Paper Consumption (Tonnes), ROI, NI and IOI. 2003

ROI NI IOI

Production 800 19,000 19,800

Imports 584,301 193,470 777,771

Exports 400 16,150 16,550

Consumption. Primary paper 584,701 196,320 781,021

Net imports of secondary converted paper products

340,538 110,040 450,578

Total paper products 925,239 306,360 1,231,599 Total paper consumption was projected by major grade drawing on the social, economic and technological drivers of paper consumption. The outcome is one of growing paper consumption over the next decade, particularly in printing and writing (P&W – see glossary), which finds end uses in office paper, communication, printed materials and magazines. The largest consumption is found in packaging.

Total paper consumption by grade 2003-2013 (tonnes) in IOI - compared to capacity of world scale mills.

Grade 2003 2005 2008 2013 Mill scale*

P&W: Uncoated mechanical 8,501 8,931 9,618 10,882 400,000

P&W: Uncoated woodfree 83,712 90,542 101,848 123,914 100-160,000

P&W: Coated woodfree 5,960 6,825 8,361 11,726 100-160,000

P&W: Coated mechanical 72,583 78,507 88,310 107,442 400,000

Kraft liner, testliner & oth. packaging 265,049 275,756 292,634 323,092 400,000

Speciality paper 38,355 40,298 43397 49,099 10-50,000

Converted packaging products 315,012 327,945 348,018 384,240 **250,000

Tissue and tissue products 82,548 85,546 90,250 99,642 15-50,000

Newsprint 216,691 221,045 227,743 227,743 400,000

Other paper products 143,188 148,248 157,322 173,695

Total Paper Products 1,231,599

1,283,643

1,367,501

1,511,475

*Mill scale. World scale facility to be competitive. Woodfree options represent current recovered

paper based initiatives. Speciality papers demand would represent many different grades with small consumption levels e.g. labels, security, filters, abrasives, medical etc.

**Packaging for cartons, and also including converting into cardboard boxes The assessment has used world scale mills as the basis for facility design. The difference between mill scale and paper consumption is an indicator of the export required if such a mill was placed in IOI.


Only tissue is well matched to local consumption levels, where a mill with between 15,000 to 50,000 tons per annum capacity has potential to serve a tissue products market of over 80,000 tonnes. The rest show a world scale paper mill must be export oriented. This was used as the basis for feasibility testing – the ability to compete in export markets.

Sources, Volumes and Markets for Recovered Paper The total paper consumption is the underlying source for post consumer waste paper in IOI. This has been estimated at 1,231,599 tonnes comprising 925,239 tonnes from ROI and 306,360 tonnes from NI. Post consumer waste has increased 5-9% from 2001 to 2003 in ROI. The large percentage increase noted for NI data between 2002 and 2003 is due to an improved estimate of 2003 waste paper arisings. Post consumer waste arisings on IOI-2003 (tonnes). Data sourced from EPA and DoE 2005

ROI % change NI % change IOI

2001 804,414 238,994 1,043,408

2002 846,151 5 251,394 5 1,097,545

2003 925,239 9 306,360 22 1,231,599 The majority of recovered paper collected in the ROI and NI is exported. China and India are the fastest growing export destinations. Paper and board capacity in Asia is set to grow from 65 million tonnes (2000) to 120 million tonnes (2015), with China accounting for half of the capacity growth. Exports go from IOI, principally as mixed unsorted grades. The prospects for RCP export from IOI would appear strong, and further supported by IOI initiatives to improve RCP infrastructure. Such demands will clearly impact the prices any potential mill in the IOI will have to pay, to compete for available raw materials. The close proximity of the IOI mill to the RCP supply and the presence of a reliable end use market would be to the advantage of the local mill. Furthermore, exports to Asia have a transport cost differential to meet. Projections by main grade of RCP supply have been generated for ROI and NI. This has been achieved by reviewing the ‘influencing factors’ such as policy, environmental aspirations, paper demand and the waste supply chain. The projections show an almost 50% increase in supply potential over the next 10 years, driven strongly by IOI initiatives. The difference between RCP supply and total arisings is the waste paper sent to landfill, archived or lost e.g. tissue.

Future RCP supply projections by grade for the IOI through to 2015 (tonnes)

Year OCC News& Mags Mixed Total

2005 207,933 59,752 196,773 464,458

2007 222,397 84,913 254,895 562,205

2010 241,319 100,743 279,167 621,229

2015 260,555 105,882 307,426 673,863 Two scenarios were created (high and low cases) to evaluate the impact of under- or over-achieving in RCP supply programmes. These scenarios were then applied to the mill options to expose sensitivities, risk and the impact of failure to achieve IOI RCP targets. The subsequent analysis in


Section 5 (of the main report), shows indeed that the mill options are dependent on achieving targets with the RCP programmes in IOI. Paper Mill Options to Utilise Recovered Paper The option process commenced with a total list of recovered paper based products. This included:

• Packaging containers (cardboard boxes) - unbleached and white surfaced. • Packaging cartons e.g. detergent, cereals cartons • Tissue • Printing and Writing (P&W) – uncoated papers for communication, copy and printing • Newsprint • Magazines – super calendered (SC) papers.

After an initial screening to identify a short list, newsprint and magazines were rejected due to insufficient RCP supply availability, even in the ‘high’ case scenario. The assessment process then moved to mill modelling of the remaining candidates. The criteria applied in mill design were: • World scale. The facility should be recognised as world scale; capacity, process, configuration,

inputs and outputs. • Product and market leadership – the option should focus on growth areas, import replacement

(IOI and GB) or value niches for IOI and where local market leadership can be achieved. The technology should be such that the product specification can compete in export markets.

• Cost competitiveness. The facility should be able to achieve 1st or 2nd quartile cost performance (lower half of all producers) and allow competitive exports to main markets in particular to GB.

• Feasibility – can meet a 10% return on capital employed over the cycle. • Environmental fit – the facility meets regulations and directives.

The summary of this assessment is as follows:


Wood Scale Product and Market

Leadership (2005) Cost Competitiveness Feasibility Conclusion

Packaging - Containers (cardboard boxes)

Output: 200-400,000 t/a was examined. Full scale would require ‘all’ potential OCC collected

IOI market for kraftliner and testliner is 270,000t.

An IOI new facility would go straight to top 10 European producers – big impact on existing capacity

New IOI facility can be in 1st-2nd cost quartile, but would have a large impact on current installed capacity (already in excess), leading to capacity under-utilisation and price erosion

Fits well with local converting but profitability requirement challenged. Potential returns <5%

A new machine in IOI is marginal. A supportive business climate would be required. Not a preferred option.

Packaging - Containers – as above but white surfaced

Output: 120-200,000 t was examined. Full scale would consume virtually all white high quality waste paper in IOI

Total market in Europe around 1 mn tonnes, so a new IOI machine would have high impact – almost all sales would be outside IOI

New IOI facility can be in 1st-2nd cost quartile. Small but growing market – an IOI facility would have a large impact on current installed capacity

Specific but small volume fit with local converting. The new mill would easily take care of IOI consumption. Potential returns <5%

As above.

Tissue Output: 15-50,000 t was examined. RCP supply is sufficient – but would still need all white high quality waste paper in IOI

IOI market is over 80,000 t (tissue and converted product). Mill output could have high IOI market share – would need to displace imported tissue

Competitive in the IOI market as transport cost (imports) for these low weight, high volume products can be prohibitive.

Fits well with local converting and could serve the IOI market. Can potentially achieve profitability targets.

Opportunity is for local producer, connected to local supermarkets, converters and distributors, to replace more costly imports.

Packaging – Cartons Output: 120-250,000 t was examined.

Flexible in terms of furnish grade mix – fibre supply sufficient

An IOI facility would go into top 10 producers in Europe. Imports into UK are around 700,000 t. IOI market is over 300,000 t (total all converted packaging)

New IOI facility can be in 1st-2nd cost quartile, but would have a large impact on current installed capacity.

Fits very well with local converting and would easily take care of IOI consumption. Could achieve around 5-10% return.

IOI could be potentially attractive location. Market is IOI and GB. Would also need a positive business development climate to support investment.

Printing and Writing Papers (e.g. Office, Communication, Printers)

Output: 100-160,000 t was examined. Requirement: Up to 100,000 t/a ONP/OMG/ other white grades

Limited in terms of high quality recovered office paper availability. Difficult option to realise

A new state-of-the-art facility would be amongst the largest in Europe. IOI market is around 90,000 t.

New IOI facility can be in 1st-2nd cost quartile. Better performers would be found in closer proximity to RCP supplies and markets

Can achieve profitability targets, but highly exposed to competitors in export markets who base their business on local market advantages. RCP availability in white and high quality grades problematic.

Potential, but less attractive due to RCP resource and exposure of such a mill scale in European market context.


The feasibility test favours products such as tissue and perhaps packaging cartons. The remainder are less attractive. The ranking is as follows:

• Tissue – only the tissue mill option is well matched with local demand. Exports are potentially

minimal. The other options are required to be export competitive with much of the product sold outside IOI.

• Packaging Cartons. A potential good link to local converters and IOI packaging needs. • Printing and Writing papers. Requires high grade RCP collection. Exposed to existing and

potential mills in GB and the Continent • Packaging Containers. Already large capacity in Europe. • Newsprint. Excluded as insufficient fibre • Magazines. Excluded as insufficient fibre

While the tissue option can stand on its own, the rest would likely require a supportive business climate through which investment and operating challenges can be addressed. The impact of the scenarios (over- and under-performance in RCP supply initiatives in IOI) is presented below. The scenario RCP supply should be compared to the average fibre mix of the mill option. The ‘high’ case, tends to secure the RCP supply allowing both local paper production and export to take place. Even under the ‘high’ scenario there is insufficient RCP to double the paper mill capacity at a later date. However the ‘low’ case of RCP supply under-achievement, leads to 3 options failing with supply difficulties (Packaging Containers, Packaging Cartons and P&W Papers), leaving only tissue. A number require support and development to establish a high quality RCP source – white printer and office RCP. Mill fibre requirement compared to scenarios (low, base, high) of RCP availability, Tonnes.

Supply Scenarios

OCC Supply Low – NA Base – 262,581 High – 289,589

ONP/OMG SupplyLow – 71,576 Base – 100,743 High – 220,572

Mixed Supply Low – 115,905 Base – 318,088 High – 362,199

Other RCP All RCP grades below are at max. possible

Mill Option OCC required ONP/OMG required

Mixed required Other RCP required

Packaging - Containers 237,000 0 196,000 0

Packaging - Cartons 59,000 70,000 98,000 18,000 White

Printer, office

Tissue 0 56,000 0 19,000 as above

P&W Uncoated 0 86,000 0 15,000 as above

Newsprint 0 >400,000 0 0

Magazine 0 >400,000 0 0

Recommendations and Further Actions

• In essence this work is about identifying if a paper mill option exists which can substitute the RCP export opportunity, and thereby keep additional value within IOI (commercial


component). The opportunity is also about creating a focal point for waste management and RCP infrastructural development (strategic component).

• The IOI RCP streams are presently enjoying a growing export market, focusing on demand in places such as China. This is supplied largely in unsorted form, as this activity can be undertaken in the destination country, where lower cost labour is available. These export streams can exist in their own right. The issue therefore becomes, does a new paper mill facility in IOI offer additional advantage and benefit to IOI? The feasibility test shows that some with the characteristics of tissue (good local demand, well connected to converting, and transport cost dependent) have a potential role. Other options, while meeting a number of the feasibility tests, fall short in fully achieving the profitability target.

• The second issue is why locate such a facility in IOI, when in a number of product cases, a better location (RCP supply, market proximity) would be GB or even the Continent? In this case the product match needs to have strong connection to IOI users, for example converters, who subsequently supply the IOI industry with packaging and paper needs. Electronics, food and consumer products are all large users of high value packaging, making Packaging Cartons a possible candidate. In addition, a good fit is obtained with products that have a high transport dependency, for example tissue with a low weight to volume ratio, or products which are required close to customer – design based, small lots, just-in-time (JIT) service, specialised on end-use etc. These again promote tissue and packaging cartons as the lead possibilities.

• Optimisation of site (e.g. multiple site occupation), streamlined and world scale RCP flows, rewards from bio-energy production, can all assist in improving profitability by reducing total costs up to 10-15%. For example, tissue production and another option might be located in close proximity.

• Triggering investment will likely require a supportive business environment which addresses the capital and operating burden, at least in the initial phases. A supportive business environment has allowed the construction of paper sector assets in other parts of Europe. Both ROI and NI have established enterprise organisations and links to support measures at EU and local level.

• After this, other benefits (not quantified here) would flow: the rationalisation of RCP supply streams across IOI, a long term focal point for RCP streams in IOI (whether this is used as mill furnish or subsequently exported from the site) and high profile visibility to encourage increased recycling in IOI. It’s difficult to digest an outcome that for the very long term, the IOI would only export RCP raw material, with little or no local processing (and value capture).


Next Steps

NSMDG to adopt the report.

NSMDG to drive the commitments to RCP supply development in IOI. The scenarios show that a number of mill options are lost if RCP supply initiatives under achieve their fullest potential.

NSMDG to take the essence of the report to respective agencies in IOI, seeking support and creating a project team to ensure ownership. The project team to build a funding package – there is sufficient indication that this can tip the balance in favour of investment.

NSMDG to promote an examination of potential sites and streamlining of planning processes.

NSMDG to promote the communication of the report and exposure to potential investors and industry. Build target list.

NSMDG to support industry and investors in Phase 2 Feasibility Examination. Phase 2 should be with industry and investor participation. Phase 2 would include:

5 RCP supply – micro planning of availability, quality, infrastructure, prices, scenarios 6 Site technical assessments made available – location, suitability, access, utilities 7 Detailed investment models according to specific investor product and market profile 8 Full financial analysis, including 10 year horizons with costs and prices 9 Risk analysis 10 Support and funding package detail


1. Approach and methodology

1.1 Summary To establish demand and supply data for the island of Ireland (IOI), the work used a top down approach, beginning with high level statistics and progressing to more detailed levels until a robust dataset was achieved. High level sources included for IOI; Eurostat and ROI Environment Protection Agency and industry. For Northern Ireland (NI) this included Department of Environment and industry. Northern Ireland data was often incorporated into UK information as a whole.

There were data conflicts, sometimes between high level sources. Those within the sector, like waste operators and paper producers or converters also expressed some concerns from time-to-time about data integrity. The data consistency was resolved by using:

• Information from face-to-face interview • Iterative exploration of data divergences with high level sources • Iterative review with the industry to test for robustness and credibility

During the work, issues and debate arose concerning differences in costs of landfill between NI and ROI, the recent publicity surrounding illegal landfill and shipments, plus debate on data reporting. Substantiation from high level sources was sought. Sources were referenced in this work (see Appendix 10) to provide a data trail. In all cases, the integrity of the mill option assessment was paramount, to ensure that while debate continues the paper mill option conclusions were robust. To assist this, two recovered paper (RCP) supply scenarios were also constructed to show the impact on achieving collection targets (or not) on the possible mill options. From a total list of mill options, a screening process was employed to reduce this to a candidate shortlist based on; RCP supply sufficiency, competitiveness, market opportunity and strategic fit with IOI. The shortlist was then subjected to further examination using an established toolkit which can model various mill configurations and relative competitiveness with the peer group. In almost all products, the mill output would exceed the local IOI market demand, and such projects would be required to compete in the export market. The options were assessed for this.

The total cost (including delivery and capital charge) calculated for the mill models, was compared to market prices in a feasibility test. This shows the return on investment resulting from a new mill facility. The hurdle applied was 10% return on capital employed over the business cycle.

1.2 Consumption of Paper Products Primary and secondary sources of information were used to review consumption of paper products. Information on primary paper manufacturing was obtained from published CEPI statistics, trade journals, and through direct discussion with manufacturers in IOI. Information on companies involved in further paper processing (converting, corrugating, printing and publishing) was obtained through established paper industry directory Birkner which lists industry participants worldwide, and the company directory Kelly’s. These were categorised in a database to describe the supply chain. Further information was requested from each Company by questionnaire (Appendix 1). The Sector listing is provided in Appendix 2 and the interview listing in Appendix 3.


Information on imports of paper products in ROI was obtained from published CEPI statistics, Eurostat and Irish Central Statistics Office, completed questionnaire returns, and direct discussion with companies within ROI. Separate published data for NI paper and board imports are not available since these data are incorporated into the UK as a whole. Primary research from industry was used to provide estimates. The results of this analysis are presented in Section 3 of this report. 1.3 Sources, Volumes and Markets for Recovered Paper The Environmental Protection Agency (EPA) in ROI and Department of Environment (DoE) in NI were the principal sources of headline statistics relating to the sources and volumes of recovered paper (RCP) in the IOI.

Exports of RCP from ROI, by year and country of destination were obtained from Eurostat databases. These data were presented to, and discussed directly with selected waste operators, who together were responsible for handling over 233,300 tonnes of RCP available in ROI in 2004. Strategies to improve collection and end-use -markets for waste paper were discussed with Dublin City Council.

In NI, initiatives through restructuring of councils within partnerships: Arc 21 (see Acronyms); North West Region Waste Management Group and Southern Waste Management Partnership and their Waste Management Plans, were obtained from the web site. Specific information relating to paper collection targets was obtained by interview with arc 21 (This covers 25% of NI and approximately 57% of its population). Information on the collection and sorting methods employed was obtained by discussion with Bryson House. Bryson House were awarded the contract to operate a kerbside collection scheme for dry recyclables and materials recovery facility (MRF) by arc 21. RCP supply scenarios were developed for the principal waste grades, i.e. old corrugated containers (OCC), old newspapers and magazines (ONP/OMG) and mixed unsorted paper. These scenarios considered new policy initiatives, infrastructural changes to waste management and collection, growth rates and grade related factors. The scenarios were used to show impact on potential mill options, for example, how exposed the options were to success in realising policy initiatives. The results of this analysis are presented in Section 4 of this report.

1.4 Options to Utilise Recovered Paper Unlike previous studies undertaken in IOI, this work opens the full range of RCP based paper products to scrutiny. Other studies were limited in this regard, usually focusing on a single product. Options rejected in this work, do not mean that the corresponding RCP supply streams have no value, as the export alternative is well established, and assumed to continue. In essence this work is about identifying if a paper mill option exists which can substitute the export opportunity, and thereby keep additional value within IOI. A mill modelling toolkit was employed to examine each possible product configuration. An optimisation case was also undertaken, through combining products, to get full site utilisation. The starting position for each option has been a ‘world class’ facility, which reflects both the scale and technology regarded as best practice. Mill configurations are based on achieving accepted environmental standards and best practice.


All models are based on JPC research coming from its engineering and consulting experience. These models have been built up over a decade, and revalidated at each application. JPC tracks almost every paper machine in the world, recording the upgrades and changes in configuration as they are announced. Costs are based on local sources. These JPC models are in common use throughout the industry and are used to estimate competitiveness of current and hypothetical new mills. The public sourcing of information means that confidentialities are not broken. In this project the mill models have been applied in various ways:

• To estimate the manufacturing, delivered and total cost (capital charges and profit margin) of new mills located in IOI. To test for robustness, products were assumed delivered to London markets, except for tissue which could be produced for home market consumption.

• To estimate the manufacturing and delivered cost (to market) of competing paper machines, in order to position the IOI opportunities on cost curves.

• To compare total cost (including a 10% return on capital employed) with current prices, to indicate feasibility of the new mill facility. This is a preliminary test to place the investment in context, and allow identification of likely feasible options worthy of detailed examination in a Phase 2.

The RCP raw material supply used in the mill models was that generated through section 2.2 above. This has also been presented as scenarios to indicate how achievement of targets in IOI can influence potential mill configurations. As part of exploring the full potential, the virgin fibre availability in IOI was also examined to determine if an additional paper line might be possible, and also if sufficient raw material for bio-energy exists. Coiltte and the Northern Ireland Forest Service provided data for this. RCP delivered costs (to mill) have been provided by local industry. Usage of other inputs such as energy, chemicals and labour have been determined by the mill model, with local costs applied and confirmed by industry in IOI. Currency exchange rates used in the mill models are those at Q3 2004. The total listing of potential RCP product grades included: packaging papers for containers like cardboard boxes (unbleached and white surfaced); packaging papers for cartons like food and detergents; tissue; magazine grades; newsprint, plus printing and writing papers (this includes copier, office and communication papers). The total list was reduced by screening through the following criteria:

• RCP resource sufficiency – using the supply availability by 2007. • Competitiveness – timing relative to other mill announcements and the impact of a new world

class facility on the current installed manufacturing base. • Market and growth – a market opportunity in IOI, GB and Continent sufficient to absorb the

mill production. • Strategic fit – connectivity with IOI industry, ability to gain high local market share,

attractiveness of an IOI mill for local product buyers. • Summary – Blue print feasibility – whether the option should be carried forward into further

analysis, or rejected. From this screening the resulting candidates are those with the best potential. This does not preclude others, but industrial investors would need to deal with the additional hurdles identified. The results of this analysis are presented in Section 5 of this report.


2. Consumption of paper products

2.1 Summary The overall economic situation for both the ROI and NI is good and is forecasted to continue throughout 2005. The economic situation compares favourably on the global stage shown in Table 1. (Quarterly Economic Review-Department of Enterprise, Trade and Investment-www.detini.gov.uk). GDP growth and projections for 2005, from Economic and Social Research Institute for ROI are also shown for comparison (in brackets).

Table 1: Real annual GDP Growth (%). ESRI data for ROI are shown in ( )

2003 2004 2005

OECD 2.2 3.4 2.8

US 3.0 4.5 3.8

Eurozone 0.5 1.8 2.2

ROI 3.7 (3.7) 5.5 (5.6) 5.5 (5.7)

NI 2.5 3.0 3.0

UK 2.2 3.3 2.8 Source: www.detini.gov.uk and www.esri.ie

The combined population is small (5.6 million) but is economically active. In both countries the market place looks positive for future development. Such prospects provide for a growing consumption and demand for paper products in all the major end uses.

• There are 181 companies listed in trade directories, involved in paper related activities in both the ROI and NI, ranging from corrugating, tissue, labels and printing and finishing operations. There are likely to be a large number of small non listed enterprises as well. Primary paper related manufacturers in IOI are restricted to just two operations both making moulded fibre products

• Total paper and packaging used (including secondary paper which arrives in other forms such as shoe boxes, white goods packaging etc.) in IOI is approximately 1.2 million tonnes, of which almost half is packaging.

• With limited home primary production the majority of consumption is based on imports. The largest grades are; packaging related, newsprint, tissue products plus printing and writing papers used principally in offices and printers.

• Great Britain represents the largest exporter of paper and paper products to the ROI accounting for over 335,000 tonnes in 2003 (57% of the total).

• Future projections estimate 7% growth p.a in coated printing and writing for direct mail and promotional material etc., 4% growth p.a in uncoated printing and writing for direct mail, promotional material and office use, plus 4% p.a in magazine grades. These are driven by growth in GDP which stimulates consumption and in turn such activities as advertising. The growth of the service economy in both ROI and NI will stimulate the demand for office papers.


2.2 Economy and Demographics The ROI has a population of 3.96 million (July 2004 est. - www. worldwide-tax.com/ireland) and NI, a population of 1.7 million (www.dardni.gov.uk). There are 1,288,000 households (2002) in the ROI plus a further 627,000 in NI. 40% of the ROI population live within 97 km of Dublin and 66% of the NI population live within 50 km of Belfast. Few countries in the world can boast the economic achievements that ROI has shown in recent years. The ROI economy is considered to have the most rapid growth of the EU and OECD states. Among the many factors that have contributed to this growth are: the dramatic reduction in Government expenses, collective labour agreements that encourage an increase in the labour force, considerable investment benefits for overseas investors, a dramatic reduction in tax as well as reliance on a young and skilled labour force. The average age of the working population in ROI is 30 compared to the average age of over 40 in the rest of Europe. Unemployment has improved from 12.5% in 1996 to only 4.6% in 2003. The rate of GDP growth over these last years has remained stable, but has been over 8% per annum in the years 1995-2002. The estimated per capita GDP for 2003 was approximately €22,000, a figure similar to that of the European economic giants such as Germany, France and Holland. The industrial sector contributes some 46% to the GDP and 80% to exports although it employs only 28% of the work force. The hi-tech manufacturing industry is particularly notable, mainly computers as well as chemical engineering and textile industries. These are important users of paper packaging materials for product transport and presentation. The NI economy has been continuing to perform well against the backdrop of global recovery with unemployment at the lowest levels since records began. For the period Oct-Dec 2004 seasonally adjusted unemployment stood at 35000, 4.5% of the economically active. (www.dardni.gov.uk) GDP growth in NI was 2.5% in 2003 and expected to increase to 3.0% for 2005. The per capita GDP was around €18800. Manufacturing exports from NI were estimated to be worth €5.9 billion in 2003/4, which represents an increase of 9.4% over the year. The electrical and optical equipment sector accounted for the largest share of exports (23.2%) followed by food, drink and tobacco (16.3%) and transport equipment (15.3%). All these are significant users of paper packaging. In 2000, turnover for ‘paper, pulp and paper products’ (Nace 21) was €800 million euro in ROI, employing 4817 people, and €346 million euro in NI employing 2260 people. In the related ‘printing and production of recorded media’ (Nace 22), ROI turnover was €9,642 million employing 18743, and in NI, turnover was €416 million employing 4647 people (A North/South Analysis of Manufacturing and Growth and Productivity-Dr Eoin O’Malley and Professor Stephen Roper –InterTradeIreland report 2001). 2.3 Type and quantity of paper/paper products manufactured on the island of

Ireland and subsequently consumed there. 2.3.1 Primary paper manufacturing Smurfit’s Clonskeagh Mill closure means a loss of 45,000 tonnes of RCP processing into packaging grades. This means that recycling capacity (processing of recovered paper into a reel of paper or paper product) is now limited to two moulded fibre-manufacturing operations. The RCP earmarked for Clonskeagh will now go to other Smurfit operations in the UK and Spain. This particular closure


should not reflect on this work, as new world class facilities are being considered, and therefore the opportunity for IOI to regenerate its papermaking capability.

The two primary paper manufacturing sites are:

• Huhtamaki-Lurgan, NI - manufactures 19,000 tonnes p.a. of moulded fibre products (mainly egg

boxes) from 19,000 tonnes of recovered paper comprising, 2,850 tonnes-unprinted news, 2,850 tonnes printed news, 10,450 tonnes clean mixed waste and 2,850 tonnes of virgin paper [Andrew Rothwell, Pendle Pace Ltd, personal communication-December 2004]. 85% of moulded pulp product is exported (mainly to GB), with 15% consumed in IOI.

• Erin Moulded Fibre, Birr, ROI – manufactures 800 tonnes p.a. of moulded fibre products (mainly agricultural products e.g. hanging baskets, plant pots) from printed news [Andrew Rothwell personal communication-March 2005].

2.3.1 Secondary paper manufacturing Data from trade directories, Birkner (2005) and Kelly’s (2005), provide information on 107 companies involved in paper converting/printing, corrugating, sack manufacture and paper merchants on the IOI. A further 74 companies (mainly printers) were located through internet search. Of the 181 companies, 75 are located in NI and 106 in ROI. The majority of companies are printers (70) followed by converters (51), paper merchants (43) with two companies involved in corrugating/sack manufacture. These companies, plus direct sales (for example to retailers) form the major route to market for paper consumption in IOI. 2.4 The type and quantity of paper/paper products imported into the

island of Ireland and subsequently consumed there. With only limited primary paper manufacture available in IOI, nearly all paper consumption is met by imports. To establish the type and quantity of paper/paper products imported into IOI, five main sources of published information were consulted:

• CEPI-overall tonnage of paper imported into ROI • Eurostat data for ROI • Trade Statistics-Central Statistics Office-2003 • Information received from questionnaire • Information from face to face interviews.

NI data are included in UK-wide statistics making it difficult to establish the type and quantity of imports. Data were requested from industry during the interview process and have been used to build up a picture of NI imports. 2.4.1 ROI Eurostat data for 2003 indicates that ROI imported 584,301 tonnes of paper and paper products (Table 2). Some paper import is converted (envelopes, wallpaper, exercise books etc. -Trade Statistics Central Statistics Office Ireland 2003) and then exported, equivalent to 15% of imports (88,374 tonnes). Industry information and interview indicates that a significant proportion of imported packaging grades (in the form of reels) are converted in the ROI, but (as in one case) 65-70% is then exported as secondary packaging with the goods. Specific Eurostat information relating to imports by grade, origin and by year are shown in Appendix 4. These data indicate a stable but flat growth for printings and writings grades, a fact echoed by


sales offices for large paper companies based in Dublin. A similar pattern emerges for newsprint and packaging grades. The interviews showed a positive sector, with specific challenges but mostly looking forward to growth. One major packaging converter indicated a marked reduction in demand for virgin-based kraft fibre products with some tonnage loss offset by increased use of recovered paper based liner and fluting. Despite an overall flat market, two paper sack manufacturers experienced strong growth with one company experiencing 100% growth over the last 5 years and forecast a similar rate of increase. Tissue imports recorded 30% growth between 1999 and 2003. New entrants, such as Leicester Paper Company, have established own brands with local supermarkets. The interviews also provided a confirmation and exploration base of paper importation into ROI. The tonnage accounted for through interview was about 25% of the total Tables 2 and 3).

Table 2. ROI - imports (tonnes) by grade 2003 (Imports accounted for by industry interview and questionnaire are shown)

Grade Import (tonnes) Accounted imports

P&W: Uncoated mechanical 6,387

P&W: Uncoated woodfree 62,890

P&W: Coated woodfree 4,377

P&W: Coated mechanical 54,534

Kraft liner, testliner & other packaging paper 154,202 95,600a

5,500b

2,120c

Speciality paper 28,816

Converted packaging products 91,573

Tissue and tissue products 62,014 20,000d

Newsprint 87,116

Other paper products 32,393

Total 584,301 123,220

Table 3. Selected Company Data – Import Confirmation

Company Total imports (tonnes)

Grade mix and tonnage Country of origin

Smurfit a 32,100 7,000

56,500

Brown kraftliner White kraftliner Recycled testliner & Fluting

Sweden Finland, Sweden UK, France

AB Converters b 2,000 3,000

500

Virgin sack kraft Virgin bleached kraft Virgin grease resistant

Brazil Finland UK

JH Walsh Roscreacc 2,000 120

Kraft Paper Greaseproof

UK, Spain, France Belgium

Georgia Pacific d 20,000 Mainly recycled fibre grades UK


ROI-source of imports by country in 2003 Eurostat data indicate that the UK (58%), Sweden (14%) then Germany (7%) were the largest exporters of paper/products to ROI in 2003 (Figure 1). The UK share of exports to ROI was 336,958 tonnes in 2003 - a small increase of almost 5% on 1999. Exports to ROI increased from Germany, Italy and Spain and decreased from France (46%), USA and Finland.

Figure 1. ROI - Source of import by country (%) - 2003 Industry perspective Primary information was sourced from 22 face-to-face interviews with industry and involved organisations. These were supplemented by questionnaire returns; 4 companies responded which yielded information on 6 manufacturing operations. The interviews and questionnaires were used to build understanding and to confirm the high level statistics on consumption and production. At the same time this was an important vehicle to engage the industry in the work. The responses included:

Questionnaire respondents

Respondents to the questionnaire were from packaging converters with defined areas of sales. JR Walsh Roscrea Ltd and AB Converters Ltd manufacture paper sacks and paper bags for retailers using entirely virgin kraft grades (sack kraft, bleached kraft and grease resistant). Smurfit Corrugated Ireland (SCC - part of Jefferson Smurfit Group) operate 14 manufacturing sites in IOI including 4 converting plants. Information was provided on the converting operations at SCC Dublin, Killeen (both in Dublin) and SCC Cork and SCC Lurgan that sell to manufacturing and food and agriculture, using both virgin kraft, and recycled testliner and fluting grade.

Virgin and recycled fibre use

JR Walsh Roscrea and AB Converters had experienced sales increases from between 5 and 20% pa over the past 5 years and forecast similar sales performances over the next 5 years respectively-all based on current virgin fibre sources. Conversely, Smurfit Corrugated Ireland noted a reduced demand for virgin packaging grades (down by between 20 and 26%) with usage expected to fall by between 5 and 20% over the next 10 years. Demand for recycled grades (testliner and fluting) grew by 8% over past 5 years with 4% further growth expected over the next 10 years.

Imports to ROI by country - 2003

3%2%

3%

7%2%

4%

3%

2%

14%58%

2% Canada

Finland

France

Germany

Italy

Netherlands

Norw ay

Spain

Sw eden

UK

USA


2.4.1 NI Published information regarding the type and quantity or source of paper and paper products imported by NI is not available. Eurostat data for ROI were used as the basis of the estimation of the imports of paper and paper products by grade into NI (Table 4). Specific information on imports was obtained from interviews with industry (Table 5).

A key assumption in this estimate is that the import of paper in ROI compared to overall total use is the same in NI. The estimate basis is as follows:

• Eurostat ROI import data by grade (584,301 tonnes in total), divided by; • ROI EPA data for total waste paper arisings (925,239 tonnes, section 4.1.1), multiplied

by; • NI DoE data for total waste paper arisings (306,360 tonnes, section 4.1.2).

On this basis, NI imports are estimated at 193,470 tonnes. Individual grades tonnages were estimated using the same approach but with ROI Eurostat data for each grade.

Discussion with four companies in NI (Appendix 3) provided information that accounted for 89,000 tonnes of paper imports, with the remaining imports used by 71 other companies identified from trade directories (Appendix 2). The industry also indicated that over 60% of their converted production was exported from NI, to either ROI or GB.

Overall, the industry interviewed revealed a growing business based on imported paper products. Delta Print and Packaging Ltd plan to grow from £14 million to £22 million over the next few years. Newcel Paper Convertors also expressed an optimistic outlook experiencing strong growth in 2004 (38%) with higher than expected growth of 10-12% in the next few years.

Table 4. NI- imports (tonnes) by grade 2003. Imports accounted for by industry interview are shown

Grade Import (tonnes) Accounted imports

P&W: Uncoated mechanical 2,114

P&W: Uncoated woodfree 20,823

P&W: Coated woodfree 1,584

P&W: Coated mechanical 18,050 25,000a

Kraft liner, testliner & other packaging paper 50,934 45,000b

Speciality paper 9,540

Converted packaging products 30,321 14,000c

Tissue and tissue products 20,534 5,000d

Newsprint 28,845


Total 193,470 89,000


Table 5. NI Source of imports by country (%) – 2003

Company Total imports (tonnes)

Grade mix and tonnage

Country of origin

SCA Packaging a 45,000 31500 recycled fibre based liner and fluting 13500 virgin fibre grades

UKaa

Sweden

Robert Horne b 25,000 Virtually all virgin fibre grades

UK, Germany, Sweden and Netherlands

Delta Print and Packaging c

14,000 9800 (White lined chip) Austria, Italy, Sweden

Newcel d 5,000 Mainly recycled fibre grades

UK, Europe, Far East, Venezuela, Turkey

aa-liner sourced from Smurfit Townsend Hook; fluting previously sourced from Smurfit Clonskeagh Mill now also likely to be sourced from Smurfit Townsend Hook A significant proportion of converted paper is used in IOI, as follows:

• Delta Print and Packaging exports 20% of products to ROI, with 50% going to GB, and 10% to other European countries. 20% is used within NI. Key markets are fast food (McDonalds, KFC), pharmaceutical, frozen food and retailers

• SCA Warrenpoint exports 85% (38,250 tonnes) to ROI. Dell is the largest customer (25,000 tonnes); others include Baileys, Baxter Healthcase and Tesco

• Robert Horne-all paper imports (25,000 tonnes) are sent to commercial printers-all consumed on IOI

• Newcel-IOI main market. 2.5 The origins of paper consumed in IOI including mill location, the mill capacity, mill

furnish requirements The potential origins of paper consumed in IOI, including mill location, capacity and mill furnish requirement are shown in Table 6. Eurostat data confirm that the UK is by far the largest source of imports into ROI (these data need to be taken with caution since Eurostat data does not differentiate between manufacturing source and final country of dispatch). Paper supply to IOI is supported by sales offices (e.g. M-real, StoraEnso, UPM-Kymmene) and converting operations (Georgia Pacific-Ireland, SCA Warrenpoint and Smurfit), which serve the market using paper raw material produced in company facilities outside IOI (Table 6). While shown as an import, this is more a sales stream within a corporate supply chain. A new facility would need to displace this type of tonnage, plus that imported independently, by offering a competitive local alternative.


Table 6. Origins of key grades by country, mill and furnish

Notes: UPM-United Paper Mills, IP-International Paper AW-Arjo Wiggins, SCA-Svenska Cellulosa Aktiebolaget GP-Georgia Pacific, LPC-Leicester Paper Company RCF-recycled fibre

International players in IOI Significantly, a number of international paper companies, including Smurfit, Georgia Pacific, StoraEnso, M-real and UPM-Kymmene are represented in IOI either as sales or converting operations. Limited data was obtained from these companies regarding the volumes of imports they control and the source of these imports by manufacturing site. However, Eurostat data for imports to ROI by grade and country of origin enabled the identification of most probable mills and recycled furnish content. The key RCF grades that could potentially contain recycled furnish entering ROI amounted to 364,098 tonnes (66% of total imports) based on the following:

• packaging grades - up to 245,975 tonnes-potentially all RCF-based • newsprint – 87,116 tonnes-potentially all can be RCF based • tissue and tissue products – 31,007 tonnes (based on assumed 50% RCF content).

• Virgin fibre-based grades form a significant source of imports (184,203 tonnes) to ROI for

pharmaceutical and food packaging applications and printings and writings.

• Specific import data for NI was gained form direct interview with industry. Based on the spread of businesses within IOI and their activity, it is not expected that the ratio of grades imported into NI will differ widely from ROI.

Country Supplier Mill FurnishUncoated mechanical Sweden Stora Enso Kvarnsveden Virgin

Coated mechanical UK UPM Caledonian VirginGermany UPM Augsberg Virgin 75%, RCF 25%

Uncoated woodfree UK M-real New Thames RCFUK Tullis Russel Markinch VirginUK IP, AW Aberdeenshire Virgin

Germany UPM Nordland Papier VirginCoated woodfree Sweden Stora Enso Grycksbo Virgin

Netherlands Sappi Nijmegen VirginUK M-real Sittingbourne Virgin/RCF grade

Kraftliner, testliner & other packaging UK Smurfit Townsend Hook RCFSweden SCA Munksund Virgin

USA IP Savannah VirginSpecialty paper UK Sappi Nash Virgin

UK Arjo Wiggins Stoneywood VirginConverted packaging products UK DS Smith Various locations RCF

UK SCA Various locations RCF/VirginTissue and tissue products UK GP Llangynwyd Virgin>50%/RCF<50%

UK LPC Leicester RCF/VirginNewsprint UK UPM Shotton RCF

Canada Abitibi Clermont VirginNorway Norske Skog Skogn RCF<30%/Virgin >70%


2.6 Current consumption in terms of product type, the grade of paper and the end use sector

Paper supply chain Industry trade directories estimate that 181 businesses are involved in paper converting, printing, corrugating, sack manufacture and paper sales in IOI (Appendix 2), within which ROI had a turnover of €10442m, and in NI a turnover of €762 million (Table 7).

Table 7. Paper activity supply in IOI as indicated by the number of businesses

Primary manufacturers

Converting Printing Corrugating Corrugating/ sack

Paper merchants

Total

NI 1 16 37 4 0 17 75

ROI 1 35 33 9 2 26 106

Total 2 51 70 13 2 43 181

Primary manufacturing is limited to moulding for egg boxes and agricultural products. Eighty five percent (85%) of the egg boxes are exported to markets in mainland UK with 15% consumed by IOI. Significantly, Huhtamaki Lurgan is the only UK egg box manufacturer and supplies 16,150 tonnes per annum of product to retailers and egg producers based in mainland UK. Consumption Total paper consumption is the sum of domestic paper and board production, paper and board imports minus exports. Paper imported into the IOI is from two sources, a) paper/card for converting into paper products or as a final product, b) packaging around goods imported into the country, know as secondary paper e.g. shoe boxes, packaging for white goods. No data on secondary paper is recorded therefore compositional data from the EPA was used as the baseline for total paper consumed. This data estimated that 925,239 tonnes of paper was either recycled or disposed of in the ROI in 2003 (EPA, 2005). Table 8 illustrates how this total can be divided up into the various paper sources, with secondary paper assumed to be total consumption minus known consumption. These data enable the total markets available to mill options to be estimated and also the potential fibre available for recovery. Total paper may even be slightly higher as the EPA waste data will not include most tissue papers, archived and posted papers. Taking into account the limitations of waste composition analysis results, these figures represent the best available data. ROI production is limited to 800 tonnes at Erin Moulded Fibre. Imports at 584,301 tonnes represent a significant proportion of total consumption, while 400 (estimated) tonnes of Erin Moulded Fibre production is itself exported. ROI consumption is therefore estimated at 584,701. There are 88,374 tonnes (15% of volume of imports) converted into products (envelopes, wallpaper, exercise books etc) and subsequently exported with a value of €205 million (Trade Statistics-Central Statistics Office Ireland-2003). 18,000 tonnes of this is exported to UK (Trade Statistics-Central Statistics Office Ireland-2003) of which (based on population) 513 tonnes is estimated as exported directly to NI. For NI, it is estimated that 193,470 tonnes of paper/paper product are imported, which together with 19,000 tonnes of indigenous production, less exports, give consumption for NI 196,320 tonnes. These elements, plus the net imports of secondary paper products, give the total paper consumption in IOI (Table 8). These data establish the total fibre supply needs of IOI, the markets available to mill options and also the fibre potential available to the mill options (paper that can be collected and recycled). This is the basis for the projection in Section 3.6


Table 8. Total Paper Consumption (Tonnes), ROI, NI and IOI. 2003

ROI NI IOI

Productiona 800 19,000 19,800

Imports 584,301 193,470 777,771

Exportsb 400 16,150 16,550

Consumptionc 584,701 196,320 781,021

Net imports of secondary converted paper productsd 340,538 110,040 450,578

Total paper productse 925,239 306,360 1,231,599

Notes a. Erin Moulded Fibre 800 tonnes; Huhtamaki Lurgan 19,000 tonnes b. ROI exports obtained from Trade Statistics-Central Statistics Office Ireland-2003; NI export data obtained from industry interviews. Primary paper products. c. Consumption (primary paper and board products) = Production + Imports – Exports d. Net imports of secondary converted paper – the residual between total paper and primary paper consumption estimates. e. Total Paper Products. This is consumption of primary paper product plus secondary and converted paper. This also forms the basis for the potential fibre base for the mill options and corresponds to the total paper arisings - the total waste paper and board materials derived from household and commercial sources, which are either recovered for recycling or landfilled (EPA data 2005). Source data was EPA 2005 and NI DoE 2005 .

2.7 Future consumption of paper and paper products in the IOI Using the data obtained from the research, the future consumption for the various paper grades has been estimated for ROI, NI and IOI. In assessing this, a number of factors and drivers likely to influence consumption have been considered. These factors relate to issues surrounding the future consumption patterns for paper products in the key end use areas of printing and packaging. PIRA has undertaken a number of studies examining the issues and drivers that may impact these important sectors and reference has been made to such work in developing the future projections. Reference has also been made to key economic and social factors that relate to both ROI and NI. 2.7.1 Influencing factors Living standards

• The ROI is now in the first level of the wealthiest countries for the first time. It is ranked 4th (source: The Times Business Section Wed Jan 12 2005 p50)

• Real GDP growth of the ROI was 3.5% in 2003; 5.5% in 2004 and expected to be 5.5% in 2005. Forecasts through to 2008 show similar levels (source: www.detini .gov.uk; Social Research Institute figures)

• The UK including NI is now in 11th place of the league of living standards (up from 17th in 1999) (source: The Times Business Section Wed Jan 12 2005 p50).

• Real GDP growth for NI was 2.5% in 2003; 3.0% in 2004 and expected to be 3.0% in 2005


• Such GDP growth compares very favourably with the Eurozone and other global players (see Table 1)

• The improvement in living standards as indicated by such economic measures will improve the overall economic activity in IOI and stimulate new demand and employment. Such demand will filter through to paper related products e.g. increase in office papers, more advertising via direct mail, increased magazine sales etc.

Demographics

• In the developed world there has been an overall growth in older people and a decline in the younger age groups notably the under fifteen year olds. While the UK including NI is following this overall trend, it is not as marked in ROI. Despite this, the number of older people (65+) has increased by third over the period 1971-2000, but only constitute 11.1% of the population. In contrast the number of under fifteen year olds has declined by 12% over the period 1991-2002

• The importance of this changing demographic pattern is that such population shifts will drive changes in marketing, product and pack formats and distribution systems.

Women at work

• Over 49% of women are now employed in the ROI as compared to 30% in 1985 • Data for the UK including NI is similar, at just above 50% • Such increases influence the overall family affluence and create changes in family eating

habits • Women in work have also changed the frequency and mode of shopping to fit a more complex

daily schedule • Women overall are more sophisticated consumers, more health conscious and more

environmentally concerned Changes in families and households

• Statistical data for both the ROI and the UK including NI shows that there are more single

parents and one person households. It has been estimated that by 2016, 2 out of 5 will be a single person.

• Families are smaller and more numerous • There are more dual income families • The changing family unit, pressures on time and an overall more mobile lifestyle has

meant considerable changes in eating styles • These changes in family and household structure have implications for packaging in

particular which is needed to service ‘lifestyle’ changes. This results in volume increases through smaller but more numerous packaging formats

• There will be a rise in home shopping via the Internet or TV as time pressures and convenience factors increase the advantages of this form of shopping for many. Such moves will increase transit related packaging e.g. corrugated

Consumer changes

• There will be increase consumption in convenience based foods • Consumers will become more sophisticated and at the same time retailers will seek to

mass customise products to appeal to such customers • Green consumerism likely to rise which favours paper based products • Good functionality will be a key requirement.


2.7.2 The implications for different product sectors With this rapidly changing world such influences will have implications for the major paper based products used in packaging and printing. Implications for packaging

• The greater consumption of snack food and food-on-the-go will lead to a variety of new packaging formats. Paper based products are favoured in a number of areas and environmentally related issues are particularly driving their use in fast food chains, etc.

• The changing nature of households will see the greater need for single portion packs and smaller packs. This will lead to a disproportionately higher generation of waste.

• Changes in demographics will necessitate new pack formats with, for example, larger print and easier opening formats

• There will be a continuing trend towards lower basis weight and down gauging of paper packaging board in line with trends to reduce costs and to meet legislation related to packaging waste minimisation.

Implications for print

• Paper-print based products will continue to decline as they are displaced by electronic media

• There will be the continual migration of print to non production environments resulting in the continued growth in cut sheet papers

• The volume of print production is strongly linked to advertising expenditure, which in turn often reflects GDP. The projected growth in GDP should provide a good basis for increased consumption of printed related products, for example direct mail, magazines, etc.

• Increases in the service sector in ROI (employee numbers rose 20% over the period 1999-2001) will lead to increases in cut size office papers (predominately A4 uncoated printing and writing grades)

• There will be similar increases expected in Northern Ireland, which will be linked to the growth in the economy and standard of living. Differentials between NI and the rest of the UK are diminishing

Implications for tissue

• The tissue sector can be considered to be more directly related to customer needs and perceptions than other grades

• Demands for the more niche, higher premium products will increase with standards of living and this will increase with the projected growth in GDP

• Cost issues, however, dominate consumer choice and there is a trend towards favouring ‘own brands’, etc.

• The changes in demographic patterns resulting in an increase in an older population will increase the need for disposable products

These implications for the different end uses will influence growth rates for the different paper grades. Therefore growth rates for each of the key paper grades used in these end use sectors were sourced from a range of publications (Future of Corrugated Board Packaging for the European Market (Pira Market Report 2003), Future of Print II (Pira Market Report 2004), Paperloop, CAP Ventures, etc). Each figure was then viewed in light of the local market conditions prevailing and any known


technology changes and a growth figure derived. Such figures are broad brush and do not take into account differences within grades, they do however provide direction for each grade overall. Based on these influences and implications the percentage changes that might be expected for each paper grade are shown in Table 9.

Table 9. Growth assumptions by grade for IOI

Grade Growth % pa

Uncoated mechanical 2.5

Uncoated woodfree 4

Coated woodfree 7

Coated mechanical 4

Kraft, testliner, etc 2

Speciality 2.5

Converted packaging 2

Tissue 1.8 to 2008; 2 to 2013

Newsprint 1 to 2008; 0 to 2013

Other 2

Notes While demand of packaging grades is closely linked to economic growth and consumer expenditure on food, beverages and other packaged items, this is being offset in tonnage terms by progression to lighter weights and down gauging of the fluting in corrugated boxes currently used in many applications. It has been predicted that similar down gauging will eventually occur with the liners. Demand for many of the premium tissue grades is strongly linked with consumer spend. However while economic conditions are favourable for this, much of the tissue purchases are dictated by cost (Tissue Report www.euromonitor.com/disposable_paper_products_in_ Ireland). Grades linked to advertising, promotion etc i.e. magazines; printing and writing, are showing attractive growth rates linked to the good economic pointers in both ROI and NI Printing and writing used primarily as cut sheet for office and business use is growing with a) the growth in businesses and the service economy and b) with the development in inkjet/laser printing technologies

2.7.3 Projections for growth In projecting the likely future consumption by grade, data from the various sources referenced in the study were used. The major source was Eurostat import data for ROI (Table 2) and estimated imports for NI (Table 4). These were adjusted in line with known additions or circumstances. Specifically

• the newsprint value for the ROI of 87,116 tonnes was increased to 162,800 tonnes to take into account imported printed news

• kraftliner etc for ROI was increased to take into account the 45,000 tonnes no longer produced by Smurfit

• converted packaging products was increased to take into account the imports of secondary and converted products

• figures for NI were based on ROI consumption patterns for the each grade, then extrapolated. The projections for future consumption for the ROI, NI and the IOI are shown in Tables 10 to 12 respectively. These projections are based on consumption which includes net imported secondary paper product - for total paper consumption in primary and secondary form.


Table 10. Future consumption, ROI (tonnes)

Grade 2003 2005 2008 2013

P&W: Uncoated mechanical 6,387 6,710 7,226 8,176

P&W: Uncoated woodfree 62,889 68,020 76,514 93,091

P&W: Coated woodfree 4,376 5,011 6,139 8,610

P&W: Coated mechanical 54,533 58,984 66,349 80,724

Kraft liner, testliner & other packaging paper 199,203 207,250 219,935 242,826

Speciality paper 28,815 30,275 32,603 36,887

Converted packaging products 236,612 246,378 261,458 288,671

Tissue and tissue products 62,014 64,266 67,800 74,856

Newsprint 162,801 166,072 171,104 171,104


925,23

9 964,922 1,027,9

37 1,136,1

19

Table 11. Future consumption, NI (tonnes)

Grade 2003 2005 2008 2013









Newsprint 53,890 54,973 56,639 56,639


306,360 318,721 339,564 375,35

6

Table 12: Future consumption, IOI (tonnes)

Grade 2003 2005 2008 2013










Newsprint 216,691 221,045 227,743 227,743


1,231,5

99 1,283,6

43 1,367,5

01 1,511,4

75 2.8 Data reality check The data presented for paper consumption in the ROI and NI has been developed from a number of sources and primary research then aggregated. By way of checking the credibility of the data, per capita consumption of paper for the UK (this figure includes NI) was compared against the per capita consumption for the ROI and the NI per capita value that was calculated in this study (Section 3.5 and demographics - ROI July 2004 est. - www. worldwide-tax.com/Ireland, NI - www.dardni.gov.uk). This is shown in Table 13.

Table 13: Per capita consumption

Total population Per capita consumption, kg

UK 58.74 212.6

ROI 3.96 233.6

NI 1.70 180 On the basis of this comparison it would appear that the overall paper quantities may be overstated in ROI. However, it should also be borne mind that the economy of the ROI as indicated by GDP data is performing better than the UK which may lead to some increase in per capita consumption. Notwithstanding this if we were to apply the UK per capita consumption of paper and board to the ROI and NI population data, the likely level of overstatement for the ROI is 83,343 tonnes or +8.8% (giving ROI paper risings for 2003 at 841,896 tonnes)


3 Estimation of the sources, volumes and markets for recovered paper

3.1 Summary • Recovered paper is derived from the waste stream. The waste paper arisings in IOI are

estimated at 1,231,599 tonnes in 2003 (ROI 925,239 tonnes, NI 306,360 tonnes). At least a third of this is recovered for recycling.

• The majority of recovered paper collected in the ROI and NI is exported for recycling. The three main RCP grades are OCC, ONP/OMG and mixed unsorted.

• China and India are the fastest growing export destinations. Exports go from IOI, principally as mixed unsorted grades.

• UK newsprint mills have established medium to long term contracts for the supply of ONP/OMG in both the ROI and NI. These are relatively small volumes.

• Targets for ROI. Significant increases in the unsorted waste derived from households is expected as a result of the payment scheme introduced into the ROI from January 2005

• Targets for NI. Increases in ONP/OMG derived from households in NI is expected as a result of developing council based waste management schemes e.g. arc 21

• Projections of RCP supply have been generated for ROI and NI, by main grade. This has been achieved by reviewing the ‘influencing factors’ such as policy, environmental aspirations, paper demand and the waste supply chain. The projections show an almost 50% increased in supply potential over the next 10 years.

• 2 Scenarios were created (high and low cases) to evaluate the impact of under- or over-achieving in RCP supply programmes. These scenarios were then applied to the mill options to expose sensitivities, risk and the impact of failure to achieve IOI RCP targets. The analysis in Section 5, shows indeed that the mill options are dependent on success with the RCP programmes in IOI.

3.2 The sources, grades and quantity of post consumer paper currently recovered in

IOI. 3.2.1 Sources, grades and quantities of post consumer waste paper. ROI EPA estimates for post consumer paper present in household and commercial sources in ROI are shown in Table 14. Total waste paper and board arisings increased from 804,417 tonnes (commercial and household) in 2001, to 925,239 tonnes in 2003. Commercial sources account for nearly two thirds of paper, board and packaging materials in ROI. This material stream increased from 502,062 tonnes in 2001 to 575,443 tonnes in 2003. The proportion recovered from the commercial waste stream in 2003 was 50%. The estimated quantity of paper recovered from ROI households increased from 22,229 tonnes in 2001 to 75,723 tonnes in 2003, an estimated 22% of total household paper and board arisings.


Packaging consistently contributed around 46% of total paper and board arisings, with 41% recovered in 2003. Table 14. Sources, fate and arisings of paper & board (Household and Commercial) and

paper packaging (Packaging) materials 2001-2003 (EPA 2005)

2001 2002 2003 Landfilled Recovered Total

arising Landfilled Recovered Total

arising Landfilled Recovered Total

arising Household and commercial

638,109

166,305

804,414

583,431

262,721

846,152

566,361

358,878

925,239

Household 279,833 22,229 302,062 288,087 44,002 332,089 274,072 75,723 349,795 Commercial 358,276 144,076 502,352 295,344 218,719 514,063 292,289 283,154 575,443 Packaging 291,560 88,649 380,209 254,822 132,321 387,143 251,319 175,965 427,284

Estimates of local recycling prepared by EPA and shown in Table 15, indicate that two thirds of recovered paper and board is recycled abroad (238,620 tonnes in 2003). EPA also show over 120,257 tonnes being recycled within ROI in 2003, at the Smurfit Clonskeagh Mill and as a pulp fibre substitute, animal bedding and within composting operations. EPA have internally reviewed the definitions and substantiated these numbers including the local recycling.

Table 15. Quantities of paper and board recycled in ROI or abroad (EPA 2005)

% recycling

in ROI

% recycling abroad

Total recycling in

ROI (tonnes)

Total recycling abroad

(tonnes)

Total paper

recycled (tonnes)

2001 22 78 38,794 134,252 173,046

2002 36 64 93,854 168,867 262,721

2003 34 66 120,257 238,620 358,878

The main companies involved in waste paper collection, handling or are exporters of waste to other countries, are shown in Table 16 (EPA 2005). Bailey Waste and Greyhound Waste made 4 and 3 fold increases respectively in the quantities of waste handled since 2001, largely as a result of export activities to China. (A number of smaller players that are not listed in Table 16, are involved with recovering paper and board packaging and non packaging paper. These account for the difference between 358,878 tonnes of total paper recovered and the 305,845 tonnes collected by 13 main players on ROI).


Table 16. Main waste operators handling recovered paper and board 2001-2003 (EPA

2005)

2001 (tonnes)

2002 (tonnes)

2003 (tonnes)

Smurfit 103,409 114,228 124,321

Bailey Waste 17,990 55,689 80,903

Greyhound Waste Recovery and Recycling (Reduce Reuse Recycle) 10,070 30,916 32,500

JVC ND ND 28,270

JW Hannay 16,487 23,936 14,040

Food Recycling t/s Carno International ND ND 6,333

Carno International 5,900 7,095 ND

Indaver Ireland ND 4,648 5,223

Guy Recycling ND ND 4,240

DGD Papers 3,780 1,178 2,984

Panda Waste ND ND 2,195

Sam Shire ND 1,705 1,992

Barna Waste ND 2,595 1,773

Greenstar ND ND 1,071

Glenamore Cartons 2,424 3,319 ND

Cork Recycling Co Ltd 2,044 2,644 ND

Leech Papers Ltd 2,000 3,580 ND

Padraig Thornton Waste Disposal Ltd 1,792 ND ND

Indaver Island 1,700 ND ND

IPODEC 1,651 10,021 ND

Shabra Recycling Ltd ND 1,340 ND

DM Waste 1,643 ND ND

Glyntown Recycling 1,500 926 ND

Barna Waste 1,324 ND ND

Greenguard Recycling 920 ND ND

Total 174,634 263,820 305,845

% Rise 0 51 16 ND = no data supplied A current breakdown of waste collected by waste operators interviewed in ROI that handle over 65% of paper and board collected in ROI is shown in Table 17. The main grades handled are OCC, news and mags (newspapers and magazines), mixed office waste (MOW) and mixed unsorted waste. UK and China were the principal destinations. UPM’s Shotton Paper Mill in GB, takes news and mags.


All of the waste operators interviewed had experienced growth in tonnage of paper and board materials. The greater reliance on China as an export market was recognised with some players taking advantage of the opportunity and securing traceable fibre supply linkages. One operator observed that China was now such a significant importer of RCP that it was able to manage supply and demand, and prices, within the major economies of Europe and USA.

Table 17. Summary of interview information on ROI waste operators.

Company Grade Tonnage Operation/s Destination Smurfit OCC 60,000 Dublin GB and Spaina

News and mags 12,000 Dublin Data not available

Mixed unsorted waste 10,000 Dublin

Data not available

Shreaded waste 2,500 Dublin Data not available

Other waste eg Printer and converter waste 40,500 Dublin

Data not available

Total Smurfit 125,000 Baileys OCC Dublin China News and mags Dublin China MOW Dublin China Total Baileys 80,000 China

Indaver News and mags 7,500 Dublin & Cork GB UPM Shotton Millb

MOW Small quantity Dublin & Cork

Data not available

Onyx Ireland News and mags 156 Dublin

Smurfit Clonskeagh Millc

John W Hannay OCC 5,200

Dublin & Belfast China

MOW 5,200 Dublin & Belfast GB

Mixed unsorted waste 10,400

Dublin & Belfast China

Total JW Hannay 20,800

Grand Total 233,300

Notes a-OCC originally sent to Smurfit Clonskeagh Mill and UK Smurfit operations; OCC is now exported to Smurfit operations in Spain and UK b-exported as 3-4 ‘loose’ loads per week c-no information on current destination

3.2.3 Sources, grades and quantities of post consumer paper NI A number of published data are available that enable an estimate of the sources, grades and quantities of waste paper in NI. These data are discussed in relation to the waste paper arisings from households and commercial and industrial sources together with information that has been gained


from discussion with waste management companies in NI. DoE NI estimates (based on a population of 1,702,600 and assuming a per capita figure consumption of 180kg per person) that total waste paper arisings are 306,360 tonnes. Data relating to the sources and fate of waste paper arisings and collection are described below. 3.2.4 Paper and board arisings in household waste The Northern Ireland Household Waste Characterisation Study 2000 indicated that ‘Newsprint, magazines and other paper’, contributed 10.6% of household waste, whilst ‘card, packaging and other card’ contributed 6.1% (total paper and card ~16.6%). Applying this characterisation to the household waste generated for NI in 2003 (901,201 tonnes) yields a total of 150,500 tonnes of paper and card from households, 95,527 tonnes of ‘Newsprint, magazines and other paper’ and 54,973 tonnes of ‘card, packaging and other card’. Recent new estimations will likely see slight modification to these and DoE NI consider using 900,000 tonnes and 150,000 tonnes as better reflection of precision, for household waste generation and yields of paper and card, respectively. An annex to the report ‘An All Ireland Approach to Developing Recycling Markets – a strategy for Developing Recycling Markets in Ireland’ (EPA 2002), estimated that the total waste paper/card arisings in NI for 1999/2000 was 238,994 tonnes with 142,069 tonnes generated by households. Assuming growth mirrored ROI then the estimate for 2003 is 168,176 tonnes. These data were considered as indicative only since only limited compositional analysis was carried out at that time. DoE NI therefore consider the value of 150,500 tonnes to be more robust. 3.2.5 Paper and board recovery and recycling from households Data from NI District Councils show that 24,351 tonnes of paper and board were collected for recycling as three main paper and board streams (Table 18); paper (newsprint and magazines), card (mainly packaging waste) and mixed paper and card (mixed newsprint and packaging waste).

Table 18. Paper and board waste (tonnes) recovered for recycling from NI District Councils 2003

Paper Stream Tonnes

Paper 11,560

Card 4,060

Mixed paper and card 8,731

Total 24,351 Based on a total paper arising figure of 150,500 tonnes, this gives a paper recycling rate of just over 16%. 3.2.6 Paper and board arisings in commercial and industrial (C&I) waste The report ‘Industrial and commercial waste production in Northern Ireland 2002: A final report to the Environment and Heritage Service’, identified separate figures for ‘separately collected paper and card’ (57,200 tonnes) and ‘paper and card packaging’ (38,200 tonnes). The survey also identified that 40% of all waste (257,000 tonnes) as ‘mixed’ waste which will include significant quantities of paper so it is reasonable to assume the actual value of total C&I paper and card is more than 95,400 tonnes.


Packaging related paper and board in C&I waste streams in 2000 were estimated at 124,000 tonnes in the arc 21 management plan. (This survey was compiled on behalf of all the NI waste management groups and estimated on the basis of their relative proportions C&I waste streams as indicated in the DEFRA Task Force Report on Packaging Waste in November 2001). However, the total waste paper and board from C&I sources will be higher since non-packaging paper e.g. printings and writings from offices, was not included. The EPA report (see above - EPA 2002) estimated NI C&I to be 96,925 tonnes. Assuming growth has mirrored the ROI, the estimate for 2003 would be 114,737 tonnes. None of these sources are viewed as particularly authoritatively by the DoE who suggest that a better way to estimate C&I paper waste arisings is to estimate total paper waste arisings and subtract household waste. This yields figures in the range of 155,000 to 170,000 tonnes for C&I waste paper. Paper and board recovery and recycling from commercial and industrial waste Official Producer Responsibility Packaging data for 2004 reveal that 41,431 tonnes of paper and card were recycled by the 373 registered obligated companies in NI (obligated companies handle greater than 50 tonnes of packaging material per annum and have a turnover greater that £2 million). Over 60,000 companies, the vast majority of which are SME’s, and that do not need to register, will generate paper and board C&I waste. It is reasonable to assume therefore that the actual level of C&I waste paper recycling will be higher than 41,431 tonnes. 3.2.7 Total waste paper arisings Taken together, DoE make the following estimate of waste paper arisings (Table 19) from household and C&I sources (DoE data 2005).

Table 19. Total Waste Paper Arisings. (DoE data 2005)

Per capita kg/person

Household paper waste (tonnes)

Estimated C&I paper waste

(tonnes)

Total waste paper arising

(tonnes)

180 150,600 155,760 306,360 Details of NI waste operators interviewed are shown in Table 20. The main grades handled are OCC and News and magazines. Huhtamaki Lurgan and GB paper mills are the principal destinations.


Table 20. Summary of interview information on NI waste operators.

Company Grade Tonnage Operation/s Destination

John W Hannay (previously Wilson Waste) OCC 2,600 GB papermills

News and mags 18,200 GB papermills

Kosmos Recycling Ltd News and mags 4,000 Belfast GB Cheshire Recycling Ltd

Huhtamaki Lisburn Ltd News and mags 10,400 Lisburn Huhtamaki Lurgan NI

Bryson House News and mags 10,500 Belfast GB UPM Shotton Mill

OCC 3,500 Data not available

Grand Total 49,200

Notes : Arc 21 expects significant growth in the collection of dry recyclables scheme yielding an estimated 60,000 tonnes for collection and handling by Bryson House from 2008 onwards. The Huhtamaki Lurgan operation occupies a residentially sensitive site but has potential to double capacity through operation of an additional shift operation.

3.2.8 Sources grades and quantities of post consumer paper IOI The quantities of post consumer paper in IOI are estimated at 1,231,599 tonnes comprising 925,239 tonnes from ROI and 306,360 tonnes from NI (Table 21). Post consumer waste has increased from between 5-9% from 2001 to 2003 in ROI. The large percentage increase noted for NI data between 2002 and 2003 is due to an improved estimate of 2003 waste paper arisings. Table 21. Post consumer waste paper arisings on IOI-2003 (tonnes). Data sourced from

EPA and DoE 2005

ROI % change NI % change IOI

2001 804,414 238,994 1,043,408

2002 846,151 5 251,394 5 1,097,545

2003 925,239 9 306,360 22 1,231,599 3.3 The current markets into which recovered paper is being sold, the end use and

geographical destination for the recovered paper, by grade. 3.3.1 Exports of recovered paper and board from ROI The EPA estimates exports of recovered paper at 238,620 tonnes, a figure based on industry information and substantiated by EPA in the work. Eurostat data indicate that 180,460 tonnes of waste paper were exported from ROI. Statistical data published by Eurostat are provided by National Statistical Institutes of Member States. Eurostat acknowledge that it is often difficult to reconcile different statistical sources. EPA was used, based on its substantiation of data. The Netherlands, UK, Spain, India and China were the destination for 93% of the recovered paper exports from ROI with 55 other countries making up the difference (Table 22 and Figure 2). The key


export grades are OCC (Grade 1), ONP/OMG (Grade 3) and unsorted mix (Grade 5) which together account for 92% of exports. Further details are given in Appendix 5. OCC-Grade 1

• Spain is the principal destination with tonnage rising from 8,448 to 30,425 tonnes • Exports to India increased from 1,325 tons to 13,937 tonnes • Exports to UK decreased from 4,131 to 1,923 tonnes.

ONP/OMG-Grade 3

• Exports to Netherlands increased from 4,995 tonnes to 16,455 tonnes • Exports to UK increased from 357 tonnes to 16,013, with 13,747 tonne rise noted

between 2002 and 2003 Unsorted mix-Grade 5

• Exports to India increased from 0 tonnes (2001), to 10,651 (2002) to 15,719 tonnes (2003)

• Exports to China increased from 261tonnes (2001) to 4,296 tonnes (2002) to 30,469 tonnes (2003).

Table 22. Export of recovered paper from ROI in 2003 by grade and country of

destination, Eurostat.

2003 Grade1 (OCC)

Grade2 (P&W)

Grade3 (News &

Mags)

Grade4 (Mech

Pulp not news & Mags)

Grade5 (Unsorted

mix)

Grade6 (Sorted P&B not

OCC)

Total of all

grades

NL 6,812 3,233 16,455 0 10,044 1,307 37,849 GB 1,923 3,621 16,013 0 1,113 4,258 26,928 ES 30,425 335 0 0 0 0 30,761 IN 13,937 478 1,282 0 15,719 250 31,666 CN 6,386 0 3,790 0 30,469 0 40,644 ID 1,318 0 373 0 832 0 2,523 HK 1,562 0 729 9 2,777 24 5,101 TW 0 0 0 0 0 0 0 US 340 0 345 0 208 210 1,103 JP 0 0 0 0 0 0 0

Rest (51) 240 0 570 0 1,965 1,109 3,884

Grand Total

62,943 7,667 39,557 9 63,126 7,158 180,460

Notes NL-Netherlands; UK-United Kingdom; ES-Spain; IN-India; CN-China; ID-Indonesia; HK-Hong Kong; TW-Taiwan; US-United States; JP-Japan OCC-Old corrugated containers P&W-printings and writings P&B-paper and board


Figure 2. Export of recovered paper (%) by destination

3.3.2 Exports of recovered paper and board from NI NI data for the exports of recovered paper are not available as these statistics are included in wider UK figures. Further, internal transfers of recovered paper to GB destinations are not listed in NI statistics. However, through direct discussion with industry and involved parties it is estimated that recovered paper exports are over 35000 tonnes based on the following data and Table 20: • Bryson House collects 14,000 tonnes of paper and card of which 10,500 (75%) is news and pams

and 25% (3,500 tonnes) is card from kerbside collections for 9 of the 11 arc 21 councils and has arranged 8-year contracts (from April 2005) for 10,500 tonnes to be exported to UPM’s Shotton Paper Mill in the UK. Price ranges have been agreed. Arc 21 believes there is potential for further collection to 60,000 tonnes of paper and card. Bryson House is establishing a new materials recovery facility (MRF) to accommodate greater tonnage collected. ROI also participate in such export flows, with Indaver exporting 7,500 tonnes.

• Kosmos Recycling Ltd collects 4000 tonnes of news and pams annually from the 2 remaining councils within arc 21 (Newtonabbey and Ballymena). This material has been exported to Bridgewater Paper Co UK for the past 6 years.

• SCA Warrenpoint-exported all recovered paper to Smurfit Clonskeagh Mill (it is now likely that this waste will now be exported to Smurfit UK operations)

• Waste paper from converting operations at Newcel Converters and Delta Print and Packaging is collected by waste management operators-no further information was made available as to the ultimate country of destination.

3.3.3 The price and the volatility of process paper recovered from the island achieves when sold to these markets As recovered paper is now a traded global commodity, the price and volatility will be subject to global influences. As a generalised trend the underlying movement is upward, in nominal and real terms (Figure 3), plus there is volatility the magnitude of price cycles.

Total Exports 2003 - All grades

NL21%

CN22%

US1%

Rest2%HK

3%

ES17%

IN18%

GB15%

ID1%

Total 180,459t


Figure 3. Average price for recovered paper grades 1990-2003 (Source: Stora Enso)

The demand from Asian mills is now playing a pivotal role in the recovered paper market. Overall the demand over the last 8 months has been steady rather than strong and aggressive. This has kept OCC prices in a moderate band – well above the €85 low of 2003 and below the €130 high of 2002. However, this state is likely to come to an end and the Chinese are expected to start buying in earnest again. 2005 will prove to be a year of very competitive pricing. China is expected to resume large scale OCC buying. In 2004 China added 3.46 M tonnes of capacity and another 5.27 M tonnes is due to come on stream in 2005 – corrugated, boxboard newsprint and printing & writing grades. A further 650,000 tonnes of corrugated capacity is starting up in Germany. The 250,000 tpa Varel machine came on-stream in December and on 11 February the 400,000 tpa machine of Adolf Jass started up at the brownfield mill in Thuringia Fears are being expressed in the UK that the growing overseas market for mixed grades could undermine the primacy of some grades e.g. old kraftliner substitute (KLS), which traditionally has sold at a premium of €15-€25 a ton. Today the price connection between the two is less clear and the incentive for merchants to segregate is diminishing, and with it, the assured quality of raw material. Export Market Forces – local RCP availability Within IOI, medium term arrangements have established strong export markets for RCP

• NI-8 year contracts arranged with Shotton Mill for news and magazine grades. • ROI-dramatic increase in export of mixed unsorted paper to China and India from 2000.

These have been developed through contracts between ROI waste management companies and involved organisations in those countries. In NI, the amalgamation and centralisation of council waste management activity through the formation of arc 21, SWaMP and NWRWMG has provided the economy of scale in resources needed

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to improve the scale of collection and sorting of paper. This infrastructural activity has secured a long term contract between arc 21 and UPM’s Shotton Paper Mill. In ROI, significant unsorted paper is now exported to China and India. These routes are well established and will remain key export markets for ROI for the next 10 years. In 2004 Dublin City Council, working with Hannay’s established a dry recyclables scheme. Collected unsorted paper (Grade 5) is sold to China. The growth in the paper and board industry in China and India are the driving forces for RCP exports. Paper and board capacity in Asia is set to grow from 65 million tonnes (2000) to 120 million tonnes (2015). China is expected to account for half of the capacity growth. Such demands will clearly impact the prices any potential mill in the IOI will have to pay, to compete for available raw materials. The close proximity of the mill to the RCP supply and the presence of a reliable end use market would be to the advantage of the local mill. The IOI mill should be in position to displace export contracts and also consider import from GB as necessary.

3.4 The Projections of RCP supply in IOI The projections are based on the 3 main grades

• OCC (grade 1) • ONP/OMG. Newsprint and magazines (grade 2) • Unsorted (grade5)

The other grades have not been considered as their volumes are small and there is no real evidence that these other grades are being sorted and separated. The starting point for these projections is the data supplied by EPA for ROI (Table 15) and that supplied by the DoE for NI (Table 18 and 19). The assumptions used for the projections of each grade are based on information received through the interviews, PIRA’s own research and other data. The data relates to 2003 and that supplied from the above sources does not always neatly fit the grade definitions. Assumptions have therefore been made for each and then the data sources combined to give a projected 2005 starting point, Table 23. The approach is described in Appendix 6.

Table 23. IOI Base Year Calculation for the supply of recovered paper, 2005, tonnes

OCC ONP/OMG Mixed Total 2003 217,469 51,117 209,286 477,872 2005 226,254 59,752 224,207 510,213

Influencing factors The future availability of the various grades of recovered paper is influenced by various factors, the impact of which is outlined below. 3.4.1 OCC Corrugated cases have been a major component in the distribution supply chain. However the corrugated industry has been under sustained pressure from reusable plastic packaging, returnable transit packaging (RTPs), for more than a decade now mainly on environmental and lifecycle cost


grounds. One of the key battlegrounds has been the European retail sector. To date substitution of corrugated by RTPs has concentrated almost exclusively on fresh produce, chilled foods and some beverages. It should be borne in mind that short shelf-life foods only represent about 15% of the total demand for transit corrugated packaging. Based on PIRA research (Distribution Packaging in Europe Sept 2002) examining distribution packaging in Europe it is estimated that the current global displacement (2005) of corrugated will be around 400,000 tonnes. This is a lower figure than other estimates. On an annual basis, incremental loss of volume due to global usage in RTP is forecast to be less than 20,000 tonnes, which will be more than compensated for by higher levels of business flowing through European retailers in general. Thus despite some in-roads into the market by RTPs, corrugated cases remain as a preferred packaging medium in the medium to long term. This is based on the premise that the product delivers functionality at a cost-effective price. Environmental regulation such as the Packaging and Packaging Waste Directive also impacts on the choice of transit packaging, as do environmental goals such as reduction in air pollution and traffic congestion. Looked at overall, it is not necessarily obvious that environmental considerations favour RTP use. The impact of extra road journeys as a result of less efficient filling and the transport of empty crates, the greater weight of RTPs, and the impact of washing in terms of energy and chemical use, as well as the eventual comparative recyclability of plastic and corrugated all have to be factored in. In addition, two other market related factors have to be considered which favour the use of corrugated. One is the growth of home shopping via telephone, TV and Internet which uses primarily corrugated as the distribution medium. The other is the continuing rise of Chinese imported manufacturing goods throughout Europe, which in the majority of cases are packaged in corrugated. These two issues are linked to the growth in GDP, which will see increased consumerism with increases in GDP. An issue which is likely to see a reduction in the actual tonnage of corrugated is that of lower basis weights and lightweights, which is being driven by a number of factors including:

• companies seeking ways and means of reducing costs within the supply chain • consumer ‘green’ pressure to see less packaging

There are significant investments occurring within Europe that are supporting the move to lightweight materials and a number of papermakers and corrugators are producing such products. It has been estimated (11th International Containerboard conference Oct 2004) that lightweight flutings will take 67% of the market in Europe by 2008. Lightweight liners is further off but will eventually take market share. In addition to these ‘global’ related issues, factors to be considered locally are:

• the closure of the Smurfit mill in Dublin – releasing a further 45,000 t pa on to the market • the potential increase of OCC collected from smaller retailers as a result of improvements in

waste management systems The effect of each of these factors on OCC availability as recovered paper is considered in quantitative terms in Table 24 by year and its overall result in Table 25.


Table 24: Impact of influencing factors

Factor 2005 2007 2010 2015

RTPa vs. corrugated Neutral 0% Neutral 0% Neutral 0% Neutral 0%

China/home shoppingb

+4.7% 05 +5.7% 06

+5.6% 07 +5.7% 08 +5.1% 09

+4.8% 10 assume small annual decline to 15

+4.3%

Lightweightingc 50% fluting 67% fluting 5% liners

67% fluting 10% liners

67% fluting 15% liners

Local factors Dublin mill closure

a – returnable transit packaging b - based on projected economic data for GNP growth c - based on lightweight fluting taking 67% of the corrugated market by 2008 and lightweight liners taking 5% in

2008 growing to 15% by 2015. Fluting will not grow beyond 67% because of performance requirements for certain end uses. Assumes a 10% reduction in weight (lightweight vs normal)

Table 25: OCC availability through to 2015

Year Tonnage

2005 226,254

2007 241,992

2010 262,581

2015 283,512

3.4.2 ONP/OMG There has been concern in the newsprint world for a number of years that the newspaper as a media item will decline in the face of growing competition from other types of media, e.g. the internet, TV etc. Indeed any survey of newspaper demand over the last few years will show the relatively static demand for newspapers (The future of Print 2 – Pira International 2004). The main driver for the survival of the newspaper is advertising and indeed the pagination of newspapers is largely dependent on advertising revenues. Unfortunately for newspapers, while advertising revenues are growing overall, newspapers are losing market share, resulting in only very modest real growth. Taking these factors into consideration, growth in newsprint is likely to be between 0 – 1.5% over the study period. Other factors that will influence the tonnage of newsprint are:

• Page size. There is an overall view that page sizes will decrease, predominately from broadsheet to tabloid (e.g. The Times, Independent in the UK). Other sizes may also reduce.

• Grammage. Grammage has reduced in recent times notably from 48 gsm to 45 gsm and it is likely that this will remain as the most widely used grammage. However cost related pressures and notably increasing mail costs may see further reductions in the medium term. For the basis of the study it was assumed that there will be no further reductions.


The newsprint industry has embraced environmental related issues. Most publishers follow and exceed a voluntary code related to quantity of recovered fibre used in the newspaper. There is a general recognition that newsprint will become an even more recycled product. Magazines overall remain a very successful sector in Europe and there has an increasing growth in ad-hoc specialist-topic additions that have built on brand of a main title. This will be an increasing trend as magazines become increasingly niche with smaller circulations. However the number of titles will increase resulting in an overall increase in circulation. The paper grade most used for magazines is coated mechanical and this has been predicted to grow between 4-5% over the study period (The Future of Print 2 – Pira International 2004). Other factors influencing the quantity of recovered paper:

• Printed page area - This is likely to increase and will further increase in line with economic growth.

• Grammage - No change in grammage is expected at this stage. This however may be dependent on postal charges particularly for subscription based magazines

• Magazines are not as frequently recycled as newspapers. Newsprint mills are often seeking additional supply of magazines to supplement their furnish. (The presence of magazines is required to assist the deinking process)

Local issues

• Although there will be increased in material from households from Dublin with pay for use scheme – all material is collected and mixed. Thus to increase ONP/OMG will require additional sorting. Overall therefore only 1% increase is projected for the ROI component of the figures.

• In NI the formation of the 3 waste management operations, arc 21, SWaMP and NWRWMG will increase the amount collected from households. This will be separated at MRF (Bryson House for arc 21). This will result in sizeable increase in ONP/OMG over the next 2-5 years and will likely level off thereafter without introduction of incentives or punishments to encourage recycling. Thus for period 2010 to 2015 a growth figure of only 1% is projected.

• Restricted access to available tonnage because of long term supply contracts already in place The effect of each of these factors on ONP/PMG availability is considered in quantitative terms in Table 26 by year and its overall result in Table 27.


Table 26: Impact of influencing factors

Factor 2005 2007 2010 2015

Product issues News –ve; mags +ve Overall +1%

news –ve; mags +ve Overall +1%

news –ve: mags +ve Overall +1%

news – ve; mags +ve Overall +1%

Available material

Neutral 0% neutral 0% neutral 0% neutral 0%

Local issues Increased collection NI

Increased collection NI

Collection levels off NI

as for 2010

Table 27: ONP/OMG availability through to 2015

Year Tonnage

2005 59,752

2007 84,913

2010 100,743

2015 105,882

3.4.3 Mixed Mixed constitutes the largest grade of recovered paper. It will contain both OCC and newspapers and magazines from households, together with a range of printing and writing grades derived from office use, direct mail and other promotional based material. Other packaging grades notably folding boxboard and other multi layered structured material e.g. cereal packets, detergent boxes will make up the rest. The overall tonnage of this material will grow as incentives or infrastructure is put into place to increase collection of such material from households. This was highlighted by discussions with both Dublin City Council and representatives of arc 21 in Belfast. The issue in terms of the acceptability of this grade will be the level of contaminants present. This may be an issue particularly in ROI as there is likely to be no separation beyond that of the householder. In Northern Ireland there are plans for newspapers and magazines to be separated out and sold on as a defined grade to UPM’s Shotton Paper mill. In assessing the impact of these changes on future projections:

• an increase in mixed waste of 25% is assumed for the period 2005 to 2006 dropping to 10% for 2006 to 2007 for ROI – based on the implementation of the pay per use scheme. Thereafter an increase of 3% for the period 2007 to 2010 dropping to 2% through to 2015

• NI will increase as per ONP/OMG but with the mixed constituting the 25% of the total paper and board collected.

The impact of these projections on fibre availability is shown in Table 28.


Table 28: Mixed availability through to 2015 (Tonnes)

Year Tonnage

2005 224,207

2007 290,432

2010 318,088

2015 350,287

The overall availability of recovered fibre by year is shown in Table 29.

Table 29: Future projections for the island of Ireland through to 2015 (Tonnes)

Year OCC News& Mags Mixed Total

2005 226,254 59,752 224,207 510,213

2007 241,992 84,913 290,432 617,337

2010 262,581 100,743 318,088 681,412

2015 283,512 105,882 350,287 739,681

3.5 Scenario Development The development and viability of any planned mill will need continuity in recovered paper supply. To provide a view on the future supply of the chosen recovered paper grades, two scenarios were developed around the base case projections. The higher case scenario takes into account all the positive impacts and drivers that will enhance the chosen recovered fibre grade availability. The lower case takes the opposing view and considers all the factors that might lead to a reduction in the selected recovered fibre grade. These are used later in the report to compare with the mill option fibre requirements, and as such indicate how performance in recycling in IOI will impact the viability of the mill options. These have been developed by grade and then combined to give an overall picture. The various factors taken into account in their development and the assumptions made are detailed by grade below for IOI. Regional differences are noted where applicable.

3.5.1 OCC Current - basecase The vast majority of OCC currently collected has a developed supply chain. Large retailers and businesses having OCC as a waste material are serviced by a waste management company or waste merchants. The material in the main is separated at source and requires no further sorting. The quantity collected via this established system represents 70% of the available OCC. Higher case Infrastructure is put in place that permits collection of segregated OCC from smaller retailers, businesses and institutional operations. Such infrastructure collects a further 15% of available OCC to be collected. The infrastructure costs are likely to need a higher price of OCC to be achieved to justify investment. Market pull from Far East might be an influence. It assumes the additional 15% will be collected over the five year period 2005 to 2010. No further growth in available material is expected.


Lower case No lower case has been developed as this would only occur if the OCC price dropped sufficiently that waste merchants felt it was no longer viable to deal in this grade. With the tremendous demand in China and elsewhere this is very unlikely to happen. Applying these assumptions gives the two scenarios, Table 30 and Figure 4.

Table 30. OCC availability, tonnes

Current Higher case

2005 207,933 207,933

2007 222,397 229,508

2010 241,319 266,140

2015 260,555 293,840

Figure 4. OCC scenario

3.5.2 ONP/OMG Current - base case Developments that have been occurring in NI through the waste management strategies which have initiated increased availability of newspapers and magazines from household collection. There is an expectation that this will be fully optimised within a five year timescale. Although the introduction of the payment scheme in the ROI notably Dublin will affect household derived material, the ONP/OMG collected will not be segregated and will be part of a co-mingled dry recyclables collection. It is estimated that the existing systems enable recovery of approximately 25% of available ONP/OMG.

OCC

0

50000

100000

150000

200000

250000

300000

350000

2005 2007 2010 2015

Tonn

es

Current

Higher case


Higher case With the larger population and increased number of households there is an opportunity to increase the quantity of ONP/OMG significantly from the ROI through separation of these at source and the development of a separate collection scheme or by separation at a materials recovery facility (MRF). This would require investment in infrastructure. It has been assumed that the introduction of such a scheme would deliver similar results to that expected by arc-21 over a five time period. As in the case of NI no further increase would be expected beyond the initial 5 year timescale. Lower case The infrastructure developed in NI does not live up to expectations and only half of the expected material is collected in the five period. No infrastructure is put in place in the ROI for the separation of ONP/OMG. Readership in newspapers declines further than expected after 2010 and growth rates are only 0.5% Applying these assumptions results in the following scenarios, Table 31 and Figure 5.

Table 31. ONP/OMG availability, tonnes

Current Higher case Lower case

2005 59,752 59,752 59,752

2007 84,913 132,845 63,038

2010 100,743 220,572 71,576

2015 105,882 231,823 73,383

Figure 5. ONP/OMG scenarios

News & Mags

0

50000

100000

150000

200000

250000

2005 2007 2010 2015

Tonn

es

Current

Higher case

Low er case


3.5.3 Mixed unsorted Current - base case This is collected and sourced by a variety of streams from both household, commercial and industrial premises. Material may be sorted in respect of other raw materials but largely sent as received. Higher case More material is sourced from households in ROI as payment scheme takes effect. Further price increases introduced to encourage people to recycle. This assumes that ONP/OMG are not separated from the stream in the ROI. Expectations of the waste management schemes developed in NI are exceeded, rising from an expected 60,000 tonnes of dry recyclables in 5 years to 90,000 tonnes. Overall growth is 5% Lower case All ONP/OMG are separated from mixed streams in the ROI and this tonnage is not replaced by additional material. The infrastructure developed in NI does not live up to expectations and only half of the expected material is collected in the five period i.e. 30,000 tonnes of dry recyclables. Overall growth is 1% Applying these assumptions, results in the following scenarios, Table 32 and Figure 6.

Table 32. Mixed unsorted availability, tonnes

Current Higher case Lower case

2005 196,773 196,773 196,773

2007 254,895 267,107 158,626

2010 279,167 317,881 101,723

2015 307,426 405,705 106,911

Figure 6. Mixed unsorted scenario

Mixed unsorted

0

50,000

100,000150,000

200,000

250,000

300,000

350,000400,000

450,000

500,000

2005 2007 2010 2015

Tonn

es

Base case

Higher case

Low er case


3.5.4 Conclusions The overall implications for the chosen recovered paper grades are shown in Table 33. Table 33: Potential availability of the selected recovered paper grades (in tonnes) for the

island of Ireland through to 2015

Note: no lower case for OCC

• Achievement of the OCC higher case is achievable but would require infrastructural investment in collection and separation

• Significant increases in news and mags availability will result if the increased paper arising from household collection is separated

• If the higher case scenario for the mixed paper is realised then there would be an impact on the availability of news and mags

• Similarly, realisation of the higher case news and mags scenario will impact the quantity of mixed grade as reflected in the lower case scenario for this grade.

Grade OCC News & Mags MixedCase Base Higher Base Higher Lower Base Higher Lower

2005 226,254 226,254 59,752 59,752 59,752 224,207 224,207 224,2072007 241,992 249,730 84,913 132,845 63,038 290,432 304,347 180,6782010 262,581 289,589 100,743 220,572 71,576 318,088 362,199 115,9052015 283,512 319,730 105,882 231,823 73,383 350,287 462,268 121,816


4. Assessment of the Papermill options to utilise recovered paper on the island

4.1 Summary The option process commenced with a total list of recovered paper based products. This included:

• Packaging containers (for cardboard boxes) – testliner (unbleached and white surfaced) • Packaging cartons – white lined chipboard (WLC) • Tissue • Printing and Writing (for communication and printing) – uncoated • Newsprint • Magazines – supercalendered (SC)

After the initial screening process both newsprint and magazines were rejected largely because scale requirements did not match with RCP availability. The remainder were then taken forward into a more in depth analysis which included a feasibility test, comparing total cost (including a profit margin) with market prices. The cost models were based largely on supplying a London market, to test for export robustness.

The result of this is that tissue appears to offer some opportunity. The best of the rest is Packaging Cartons, because it offers good connection to IOI converters and linkage to local established market positions. However, it like the remainder, requires a supportive business platform in terms of incentives and RCP infrastructure. The assessment points to options that can be profitable, but at levels below the 10 percent return on capital employed target (ROCE), set in this analysis. This does not preclude the option per se, but sends it back for review in a strategic context for IOI.

Tissue and Packaging Cartons are preferred products because they go some way to resolving a major question, which is why should such a plant be situated in IOI when in many cases if would better to build this in GB, or even on the Continent, closer to larger volumes for recovered paper raw materials and also markets. Both these products have a local IOI market, and good connection to local value added (converting), and/or do not travel well (e.g. low weight to volume such as tissue). This offers a strategic justification for locating plant(s) in IOI.

Interest in IOI investment could well come from tissue producers with strategies that tie into close relationship with buyers e.g. supermarkets, including ties through ‘own label’ production. Although a tissue plant would use the least amount of recovered paper out of all the options, it is not an insignificant amount. A tissue mill would benefit from market proximity (i.e. the tissue market would be the IOI) and transport costs would be less than if relying on an export market as well. Any mill would also bring high value jobs to the area, stimulate converting and encourage supply chain efficiencies. A Packaging Carton mill would make a more significant contribution to the establishment of scale in recovered paper streams, which would support building infrastructure. However returns on investment of the modelled configuration are still challenged when using the full capital charge.

There could also well be an interest from current paper and packaging purchasers (e.g. converters) in IOI based production, to secure and even participate in domestic production given that the capital burden is addressed. The government agencies should also be interested in the potential consequences, which include long term utilisation of recovered paper in the IOI, and therefore development of collection, sorting and logistics streams, plus retaining value in IOI through local


production. Government will need to make the choice between long term home use of recovered paper, or export out of IOI.

Experience elsewhere indicates that agglomeration (multiple site occupation) is also important in creating competitiveness. The various RCP grade streams will mean that a system, not single facility, could well result. The paper mill site, should there be one, would be the focal point of recovered paper streams in IOI, with appropriate streams feeding the mill, and the remainder being prepared for export. Economies of scale for the export business could also be achieved in this way. Multiple site occupation could reduce total cost by around 5-10%, which would bring the individual product lines into contention again using the ROCE targets. The use of bio-energy has also been considered, using wood fuel from the IOI forests and sludge from the de-inking process. This would add additional capital cost, but through market based incentives such as Renewable Obligation Certificates (ROCs - which are available in the UK including NI), the net operating cost gain would be positive (depending on the ROC value assumption). ROI does not have a comparable current renewable energy initiative, but is most likely to have some sort of scheme in the future to replace the AER (alternative energy requirement), but there are no timescales to achieving this. There has been an indication that a feed-in tariff arrangement would be considered to replace the contract arrangement under AER. 4.2 The opportunities for existing paper production facilities in IOI to increase their usage of recovered paper This project represents the opportunity to renew the primary paper making base in IOI. In the context of this study, the Smurfit site would not have offered an expansion possibility, even if it had remained operational. The remaining two primary paper producers, Huhtamaki and Erin Moulded Fibre, are recovered paper based businesses. Their scale is such that potential recovered paper consumption increases through their market growth are marginal in the context of the new mill facilities being considered. The secondary paper producers (e.g. converters) indicated through the interviews, a positive growth aspiration, and in some cases, an interest in a new paper production facility. This represents the good platform for new mill options, as a supply source for secondary paper producers e.g. tissue converting and cartons. As a comparison of impact that a new facility can have on RCP based paper production in IOI, the demand by grade and the mill scale are shown below. This highlights key issues and opportunities; that local demand is small relative to outputs from world class facilities, but that such facilities can provide a significant local supply of paper for current and future local converting.


Table 34. Paper Consumption vs Mill Scale. Tonnes

Island of Ireland 2005

Consumption

Mill Scale*

P&W: Uncoated mechanical 8,761 400,000

P&W: Uncoated woodfree 88,816 100-160,000

P&W: Coated woodfree 6,686 100-160,000

P&W: Coated mechanical 77,018 400,000

Kraft liner, testliner & oth. packaging 270,506 **400,000

Speciality paper 39,530 10-50,000

Converted packaging products 321,703 ***250,000

Tissue and tissue products 83,915 15-50,000

Newsprint 216,845 400,000


1,259,919

* Mill scale. World scale facility to be competitive ** Also 200000t in white surfaced testliner (Packaging Containers) was examined *** Packaging cartons. Consumption would also include converting of kraftliner and

testliner into cardboard boxes

No specific mill site(s) were identified in this work. Should the feasibility analysis continue, this work would fall to Enterprise agencies and planning authorities. Existing paper manufacturing and converting sites should be given priority to explore on-site linkages and integration. General site specification and environmental considerations are dealt with in Appendix 8.

4.3 The Papermill options Screening. The RCP based paper mill options were screened to identify a candidate list. The screening characteristics were:

• RCP Resources – are there sufficient resources to feed a world class facility • Competitiveness – can an IOI facility compete in the UK and European market • Market & Growth – is there space in the market (IOI, GB, Continent), through growth or

import replacement • Strategic Fit – does an IOI facility fit with current paper making activities, in particular as a

supply source for converting and value added activities. Can the facility enjoy a local market. • Summary – Blue-print feasibility. Is the option worth pursuing through more detailed analysis.

For example, the RCP supply projections from section 4 are shown in Table 35.


Table 35. RCP Supply Projections (see section 4.3 for details)

Year OCC ONP/OMG Mixed Total

2005 226,254 59,752 224,207 510,213

2007 241,992 84,913 290,432 617,337

2010 262,581 100,743 318,088 681,412

2015 283,512 105,882 350,287 739,681

The paper mill options examined have the following RCP requirement (Table 36). The fibre mix is representative of mills elsewhere, producing to specification. There is some room for variation (e.g. within RCP grades and also introduction of virgin fibre – although more costly), but these fibre mixes should be used as indicators in order to make a competitive product. Except for the last two cases, the potential RCP supply (see above) can meet the mill furnish requirements, although the first case (packaging containers) requires full potential supply. The cases where white and high quality RCP is required create a collection and sorting challenge, as these levels are at maximum or all that might be available in IOI. There is a need for imported virgin fibre pulp in some of these furnishes to meet product specification, which brings an additional cost per tonne (softwood kraft pulp is currently in the order of €480-500 per tonne delivered), compared to recycled fibre prices around €80-100 per tonne (Figure 3). Depending on the grade of recycled fibre a further €50-100 per tonne can be added for processing at the mill. The potential advantage for an IOI facility comes from gaining access to local recovered paper. Use of imported virgin pulp as RCP substitute sends competitiveness in the opposite direction.

Table 36. Mill fibre requirements – average fibre mix by paper product (tonnes)

Product Mill Scale Total Fibre OCC ONP/OMG Mixed Other RCP –

white printer, office

Virgin Pulp

Packaging - Containers 400,000 433,000 237,000 0 196,000 0 0

Packaging - Cartons 250,000 270,000 59,000 70,000 98,000 18,000 25,000

Tissue 50,000 75,000 0 56,000 0 19,000 0

P&W Uncoated 160,000 160,000 0 86,000 0 15,000 58,000

Newsprint 400,000 >400,000 0 >400,000 0 0 0

Magazine SC 400,000 >400,000 0 >400,000 0 0 20-50,000

Overall, the supply potential on current expectation grows to meet the fibre needs of the mill options around 2007 and beyond (comparing Tables 35 and 36). However, aspiring to world scale facilities, means that much of the fibre supply would need directing to the new mill. The options, packaging containers and P&W uncoated would seem to struggle in this regard. The tissue and packaging cartons options appear the most compatible with fibre supply. Some paper grades were eliminated on this basis – for example, newsprint and magazine grades, largely because of the scale these facilities now require, compared to the RCP raw material potentially available in IOI. The screening process is described in Table 37 below, and summarised as ‘green’, ‘yellow’ and ‘red’ condition in terms of strength, weakness and whether in summary the option is worth further


analysis. The basis for the analysis draws on RCP supply potential versus mill scale, the scale impact on existing European capacity and market demand, plus a view of strategic fit with IOI. No candidate option achieved a straight forward approval (‘green light’) through this screening, but a number achieved enough support to warrant further investigation. These included; packaging containers, packaging cartons, tissue and printing and writing - office, communication, printed materials (uncoated paper).


Table 37. Option Screening

Resources Competitiveness Market & Growth Strategic Fit with IOI Blue-print feasibility


Requirement: 430,000 t/a of RCP packaging grades.

Raw material supply in IOI would be challenged. Potentially possible for a world scale mill of testliner and fluting.

Typical scale 400,000 t/a, could be competitive against smaller machines in the home market (since closed), in GB and Central Europe as well.

European market is growing slightly. A new IOI facility would represent a large increase in European capacity, where excess already exists. Exports from IOI necessary

Fits well with local converting and would easily take care of IOI consumption. Would consume virtually all the packaging waste in IOI

A testliner machine in IOI or GB is possible, but a majority of market and RCP supply is in GB, and therefore better served by a GB facility – some of which could be exported to IOI


Requirement: 215,000 t/a total RCP. Size restricted by low availability of high quality white recovered paper.

Recovered paper resources in IOI could feed a smaller scale machine

The competitor base has smaller scale than in unbleached grades (High-end is 200,000 t/a). Even a smaller modern machine could be competitive in the local and European market.

Small market growing at a higher pace than unbleached grades, but volumes small and served by mills in close market proximity. Significant amount of excess capacity exists. A new IOI facility would take approx 15% of the market

Fits well with local converting and would easily take care of IOI consumption. Would consume virtually all white high quality waste paper in IOI. Would rely almost exclusively on exports.

Too much unused existing capacity in the European market. Unlikely in IOI

Tissue Requirement: 75,000 t/a white recovered grades and ONP/OMG.

Recovered paper resources in IOI would be easily sufficitent to supply a tissue line.

A 30-50,000 ton facility could be competitive in home market, replacing imports, which are costly to transport. Quality dependent on high quality recovered paper availability or use of chemical market pulp

Consumption of tissue is growing steadily in IOI and GB, but there is overcapacity in the UK after several investments. GB producers use IOI as export market. IOI market is big enough to support new facility.

Fits well with local converting and could take care of the whole IOI consumption. Depending on the grade, could consume all white high quality waste paper in IOI. Exports not necessary.


Packaging – Cartons Requirement: 245,000 t/a total. Flexible in terms of grade mix.

Recovered paper resources in IOI would be sufficient to supply a WLC line

A competitive concept in Europe. Can be integrated with a diversity of converting operations. Premium prices available in several niches. Very large capital investment and hence low return in the beginning

Market is growing slightly but significant differences between niches. WLC substituting more expensive grades. Would be a huge increase in capacity. UK is importing over 0.5 Mnt. Would take care of IOI consumption.

Fits very well with local converting and would easily take care of IOI consumption. Good option in terms of raw materials as flexible in regard to grade mix.

IOI could be potentially attractive location for a producer of recovered paper based cartonboard. Market is IOI and GB


Resources Competitiveness Market & Growth Strategic Fit with IOI Blue-print feasibility

Magazine, Inserts, Flyers

Requirement: Up to 400,000 t/a ONP/OMG/ other white grades.

Raw material supply in IOI would be very tight for a competitive SC machine.

A new state-of-the-art facility (400,000 t/a) could be competitive. Start-up of a new PM in Sweden by end of year (400,000 t/a), lowering the competitive cost targets.

Market growing at ca 2% per year, price level stable. Few players dominate, no production in GB or IOI, but new machine in Sweden will create overcapacity for a while.

Not a good fit with the local economy as most of the production should be exported and converted abroad.

Not feasible due to lack of raw material. Opportunity more likely addressed by new machine in GB.

Newsprint Requirement: Up to 400,000 t/a ONP/OMG/ other white grades.

Raw material supply in IOI would be very tight for a competitive Newsprint machine.

A new state-of-the-art facility (300,000 t/a) could be competitive

Market growing very slowly, a new line is being built in Spain by Holmen

Not a very good fit with the local economy as most of the production would be exported and printed abroad.

Lack of sufficient amounts of raw material and weak newsprint markets main obstacles. Opportunity more likely addressed by new machine in GB.


Requirement: 100,000 t/a white recovered grades on ONP/OMG.

Recovered paper resources in IOI could feed a small machine. Virgin pulp would also have to be used.

Competitive position of a smallish machine would be at average level. Quality very much dependent on the available high quality recovered paper (bottleneck in IOI) or use of chemical market pulp.

Consumption of recycled fibre based fine papers is growing based on environmental mandate. Fine paper markets are still very weak. RCP fine paper markets served by local producers. Market limited in IOI

Not a good fit with the local economy as most of the production should be exported and converted abroad. Also too limited in terms of high quality recovered office paper availability.

Challenges are; creating sufficient amounts of raw material, weak fine paper markets, and better served by European and GB producers in close proximity to market.


Feasibility testing The assessment process then moved to mill modelling of these remaining candidates. The criteria applied in mill design were:

• World scale. The facility should be recognised as world class in scale, process, configuration, inputs and outputs.

• Product and market leadership – the option should focus on growth areas, import replacement (IOI and GB) or value niches for IOI and where local market leadership can be achieved. The technology should be such that the product specification can compete in export markets.

• Cost competitiveness. The facility should be able to achieve 1st or 2nd quartile cost performance and allow competitive exports to main markets in particular to GB.

• Environmental fit – the facility meets regulations and desirability Mill models (Figure 7) were constructed for the candidate options and analysed through the above criteria. An example mill model for Packaging – Cartons is described below, while the remainder of the mill models can be found in Appendix 7. The mill model shows major flows and configuration, plus key inputs in terms of energy, raw materials, people and capital. Various cases by mill scale are also described. The inputs and flows are modelled through JPC algorithms which provide manufacturing, delivered and total cost (delivered cost to market plus capital charge). The modelling illustrates which mill types are more likely to be profitable in the IOI and factors in:

• A 10% return on capital investment • transport of product to London • private investment only e.g. no financial assistance provided such as provision of capital

grants


Figure 7. Mill Investment Model – Packaging Cartons (White lined chipboard)

JPC has mill models for most of the papermaking facilities in the world. This allows potential IOI facilities to be compared with a peer group who would be competing in a chosen market. The process described in Figure 8 is that used to generate competitiveness assessment

Consumptions - WLCCapacity t/a 120,000 180,000 220,000 250,000Market BHKP t/a 10,000 15,000 20,000 25,000White office waste t/a 11,000 16,000 18,000 18,000ONP/OMG for DIP t/a 33,000 50,000 62,000 70,000OCC t/a 29,000 43,000 52,000 59,000Mixed waste t/a 47,000 71,000 86,000 98,000Kaolin/CaCO3 t/a 14,000 20,000 25,000 28,000Power MWh/a 95,000 143,000 174,000 199,000Power, nominal MW 12 18 22 25Personnel person 260 310 350 370Investment MEUR 360 390 430 450

WLCmachine

Fresh water

Waste paper plant

Available RecoveredPaper

Fuel(Bio-, NG...)

De-inking sludge

Steam & Electricity

Chemicals

Packaging/Post consumerwaste recovery

National Grid

District heating

Power plant/CHP

water, emissions,solid waste

Cartonboardconverters


Figure 8. Cost Competitiveness Toolkit.

In the example below, the new facilities have been competitively ranked using a cost curve comprised of this peer group. Steps in the cost curve represent each machine in this peer group, the accumulated total of which is the potential capacity that could target the chosen market. There are two cost curves (Figure 9); manufacturing which is the mill gate cash cost (excludes delivery and capital charges) and delivered, which includes delivery and handling cost to the target market, in this case London.

Figure 9. Cost Competitiveness Curves for Packaging Cartons

MILL ANALYSIS:mill scaleintegration energy balancemanning

MACHINE ANALYSIS:capacitytechnical agefurnish

REGIONAL ANALYSIS: unit pricesexchange rateslocation and deliveryproductivityinvestment level

STRONG

- Capacity, 1000 t/a -

WEAK

- Technical age, years -min

max

minmax

0

FIM, SEK, DEM, CAD to USD

0

2

4

6

8

2

4

6

8

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997Dec.

SEK

CAD

FIM

DEM

EXCHANGE RATES

TECHNICALANALYSIS

ECONOMICANALYSIS

COST STRUCTUREOF

PM/PULP MILL

CAPITALCHARGES

DELIVERYCOSTS

FIXEDCOSTS

VARIABLECOSTS

- Cost/t -

WoodChemicalsEnergyPersonnelOther manuf. costsDelivery

Competitors

RESULTS, by•Cost category•Function

•Company Functions•Mill Departments





REGIONAL ANALYSIS: unit pricesexchange rateslocation and deliveryproductivityinvestment level

STRONG


WEAK


max

minmax

STRONG


WEAK


max

minmax

0


0

2

4

6

8

2

4

6

8

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997Dec.

SEK

CAD

FIM

DEM

EXCHANGE RATES

0


0

2

4

6

8

2

4

6

8

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997Dec.

SEK

CAD

FIM

DEM

EXCHANGE RATES

TECHNICALANALYSIS

ECONOMICANALYSIS

COST STRUCTUREOF

PM/PULP MILL

CAPITALCHARGES

DELIVERYCOSTS

FIXEDCOSTS

VARIABLECOSTS

CAPITALCHARGES

DELIVERYCOSTS

FIXEDCOSTS

VARIABLECOSTS

CAPITALCHARGES

DELIVERYCOSTS

FIXEDCOSTS

VARIABLECOSTS

- Cost/t -

WoodChemicalsEnergyPersonnelOther manuf. costsDelivery

Competitors

RESULTS, by•Cost category•Function

•Company Functions•Mill Departments

A new WLC machine in the Island of Ireland would be very competitive in the UK market. Most of the capacity in Europe is very old and small in scale. The local converting industry in IOI could consume at least 20-25% of the production.

200

250

300

350

400

450

500

550

600

650

700

750

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

Cost level 2004/III, Exchange rates September 2004 averagesDelivered to London

- EUR/t -

- Allocated capacity to the market, 1000 t/a -

Deliveredcosts

Manufacturingcosts

12

3

1) 250 000 t/a2) 180 000 t/a3) 120 000 t/a

0%

2%

4%

6%

8%

10%

12%

250 000t/a

180 000t/a

120 000t/s

- PM Scale -

- ROCE according to the market-

DublinLondonFrankfurt

Cost level 2004/III

Average


The impact of market location has also been analysed, showing profitability potential by market. In this case, achieving high market share in IOI brings with it with additional percentage points of ROCE. The market opportunity was then analysed using local and UK markets as a lead indicator for scale, competing capacity and import replacement. The European market opportunity was also assessed (see Appendix 8). In this case, a Packaging Carton facility would target local and UK markets but require capability to compete with and replace current imports (Figure 10). A world scale facility would produce over 200,000 tonnes.

Figure 10. UK and Ireland Market Opportunity for Packaging Cartons

The final step in the analysis uses a combination of mill modelling and market prices to judge the potential feasibility (Figure 11). In this case the total cost of the facility is used (delivered cost to market, plus depreciation and a capital charge equal to 10% return on the investment). The total of this (the height of the bar) should fall at or below the price (average over a cycle) to achieve this profit target. Industry will often use a notional 15% return, but actual performance over the cycle can be less. The four cases are shown in this format below (not related to the time-frame on the x-axis), and indicate that new facilities are profitable, but not at levels of average10% return. On-going depreciation will of course decrease the capital charge component, while support measures can often target capital incentives.

0

200

400

600

800

1000

1200

1400

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Capacity Apparent consumption Production

- 1000 tons -

United Kingdom and Ireland

net imports


Figure 11. Feasibility Test for Packaging Cartons While in this case, Packaging Cartons is of potential interest for IOI considering its link to existing converting businesses and the supply of cartons to IOI industries, the financial case is not without challenge. The role of government and development authorities in building the business environment for the local use of RCP is compelling. 4.4 Shortlist list of options The results from the analysis of the shortlisted candidates are summarised below. (Table 38)

0

100

200

300

400

500

600

700

800

900

1000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

- EUR/ ton, 2003 real prices -

FibreChemicalsEnergyPersonnelOther manuf. costsTransportCapital charges

Modelled production costs of a hypothetical new machine in IOI

250kt/a

Delivered costs to the UK Market (London), Cost level 2004/IIICapital charges contain of depreciation and 10% ROCE

220kt/a

180kt/a

120kt/a

0

100

200

300

400

500

600

700

800

900

1000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004




250kt/a


220kt/a

180kt/a

120kt/a


Table 38. Shortlisted options

Wood Scale Product and Market Leadership (2005)

Cost Competitiveness Feasibility Conclusion


Output: 200-400,000 t/a was examined. Full scale would require ‘all’ potential OCC collected

IOI market for kraftliner and testliner is 270,000t.

An IOI new facility would go straight to top 10 European producers – big impact on existing capacity

New IOI facility can be in 1st-2nd cost quartile, but would have a large impact on current installed capacity (already in excess), leading to capacity under-utilisation and price erosion

Fits well with local converting but profitability requirement challenged. Potential returns <5%

A new machine in IOI is marginal. A supportive business climate would be required. Not a preferred option.


Output: 120-200,000 t was examined. Full scale would consume virtually all white high quality waste paper in IOI

Total market in Europe around 1 mn tonnes, so a new IOI machine would have high impact – almost all sales would be outside IOI

New IOI facility can be in 1st-2nd cost quartile. Small but growing market – an IOI facility would have a large impact on current installed capacity

Specific but small volume fit with local converting. The new mill would easily take care of IOI consumption. Potential returns <5%

As above.

Tissue Output: 15-50,000 t was examined. RCP supply is sufficient – but would still need all white high quality waste paper in IOI

IOI market is over 80,000 t (tissue and converted product). Mill output could have high IOI market share – would need to displace imported tissue

Competitive in the IOI market as transport cost (imports) for these low weight, high volume products can be prohibitive.

Fits well with local converting and could serve the IOI market. Can potentially achieve profitability targets.


Packaging – Cartons Output: 120-250,000 t was examined.

Flexible in terms of furnish grade mix – fibre supply sufficient

An IOI facility would go into top 10 producers in Europe. Imports into UK are around 700,000 t. IOI market is over 300,000 t (total all converted packaging)

New IOI facility can be in 1st-2nd cost quartile, but would have a large impact on current installed capacity.

Fits very well with local converting and would easily take care of IOI consumption. Could achieve around 5-10% return.

IOI could be potentially attractive location. Market is IOI and GB. Would also need a positive business development climate to support investment.


Output: 100-160,000 t was examined. Requirement: Up to 100,000 t/a ONP/OMG/ other white grades

Limited in terms of high quality recovered office paper availability. Difficult option to realise

A new state-of-the-art facility would be amongst the largest in Europe. IOI market is around 90,000 .

New IOI facility can be in 1st-2nd cost quartile. Better performers would be found in closer proximity to RCP supplies and markets

Can achieve profitability targets, but highly exposed to competitors in export markets who base their business on local market advantages. RCP availability in white and high quality grades problematic.

Potential, but less attractive due to RCP resource and exposure of such a mill scale in European market context.


The feasibility test favours products such as tissue and perhaps packaging cartons. The remainder are less attractive. The ranking is as follows:

• Tissue – only the tissue mill option is well matched with local consumption. Exports are potentially minimal. The other options are required to be export competitive with much of the product sold outside IOI.

• Packaging Cartons. A potential good link to local converters and IOI packaging needs. • Printing and Writing papers. Requires high grade RCP collection. Exposed to existing

and potential mills in GB and the Continent • Packaging Containers. Already large capacity in Europe. • Newsprint. Excluded as insufficient fibre • Magazines. Excluded as insufficient fibre

While the tissue option can stand on its own, the rest would likely require a supportive business climate through which investment and operating challenges can be addressed. 4.5 Recovered paper supply scenario analysis The 2010 RCP supply scenarios (low, base and high) developed in Section 4.4 have been compared with the mill furnish requirement, in Table 39 below. This indicates for the various options whether the conditions applied to create the scenario are sufficient to impact the viability of the mill option.

Table 39. Mill fibre requirement compared to scenarios (low, base, high) of RCP availability, Tonnes.

The Packaging Containers option is enhanced by a scenario where infrastructure develops to permit collection of segregated OCC from smaller retailers, businesses and institutional operations. This part may come at a higher marginal price. In the current state, the OCC furnish requirement and supply potential are tight, exposing the option to export of OCC. The scenarios for mixed unsorted RCP, which provides the other component of the furnish, also impact this option from the perspective that if all ONP/OMG is separated from mixed streams in the ROI, then the remaining volume of mixed unsorted is insufficient to support the option. Of course other options which would benefit from additional ONP/OMG, gain from this scenario. These include Packaging

00>400,0000Magazine

00>400,0000Newsprint

15,000 as above086,0000P&W Uncoated

19,000 as above056,0000Tissue

18,000 White Printer, office98,00070,00059,000Packaging -

Cartons

0196,0000237,000Packaging -Containers

Other RCP required

Mixed requiredONP/OMG required

OCC requiredMill Option

Other RCPAll RCP grades below are at max. possible

Mixed SupplyLow – 115,905Base – 318,088High – 362,199

ONP/OMG SupplyLow – 71,576Base – 100,743High – 220,572

OCC SupplyLow – NABase – 262,581High – 289,589

Supply Scenarios

00>400,0000Magazine

00>400,0000Newsprint

15,000 as above086,0000P&W Uncoated

19,000 as above056,0000Tissue

18,000 White Printer, office98,00070,00059,000Packaging -

Cartons

0196,0000237,000Packaging -Containers

Other RCP required

Mixed requiredONP/OMG required

OCC requiredMill Option

Other RCPAll RCP grades below are at max. possible

Mixed SupplyLow – 115,905Base – 318,088High – 362,199

ONP/OMG SupplyLow – 71,576Base – 100,743High – 220,572

OCC SupplyLow – NABase – 262,581High – 289,589

Supply Scenarios


Cartons. Longer term under all scenarios there is no indication that doubling the paper line would be possible. The Packaging Cartons option shows that OCC supply is not limiting. The largest impact on the option comes through ONP/OMG availability. Failure to achieve government targets and investment in infrastructure put this option at risk, and increase the exposure to ONP/OMG export demand. Increasing the ONP/OMG available (high scenario) is still not enough to consider a second line in the future, although exposure to exports are greatly reduced. The Tissue option is a low volume user of RCP. The ONP/OMG furnish requirement is met under all scenarios. The challenge will be that part of the furnish required from white printer and office RCP, as this collection and sorting needs development in IOI. Other pulp grades could fill a role here. There may be opportunities to combine the tissue option with another, for example Packaging Cartons. Printing and Writing option is similar to Tissue in its scenario interpretation. There is a sense that the supply scenarios indicate potential for combining two options, chosen from 3 alternatives – Packaging Carton, Tissue and Printing & Writing. Overall, it is important to note that achievement of RCP targets, support for infrastructure, sorting capability and real results from Government initiatives, do have an impact on the viability of mill options. A general underperformance of targets will eliminate some options, while high performance opens the way for multiple options (for example through site sharing) and reduced exposure to the RCP export market.

4.5.1 RCP Prices Mill models have also been subjected to sensitivity analysis, particularly for RCP prices, to address the impact of increasing prices driven by demand in places such as China. First, if RCP prices increase, then all producers including those in China face increasing production costs and need to decide if production curtailment or delayed investment is necessary. Behaviour so far indicates that the Chinese withdraw from the RCP market at prices around Euro 130/tonne for mixed grades. In addition the Chinese face a transport differential of around USD100/ton. Purely increasing the cost of RCP in the IOI mill model is pointless unless done in the context of other producers and their relative ability to pay increased RCP prices. The mill models have been used to measure exposure to this issue. The case below shows how ROCE is impacted with rising RCP prices. The ‘breakeven’ shown is when these prices reach Euro 130/tonne. At this point, the mill option, while less profitable is still positive, whether delivering to IOI markets or London.


Figure 12. Sensitivity to RCP price change. Packaging Cartons.

4.6 Extended Options. Optimisation. A case for multiple site occupation was examined assuming a Packaging Containers mill was combined with a tissue plant. Savings potential was assessed across all the major manufacturing inputs (RCP, energy, chemicals, personnel, maintenance, handling and other costs), and capital. The major items where cost savings are achieved include capital, through sharing of utilities and site infrastructure, maintenance, scale impacts in purchasing and logistics and central personnel. The total gains through such multiple site occupation are in the order of Euro 15-20/t, or between 5-10% of total cost. This takes a good step towards recovering the profit target position. A further optimisation available is the final market mix. The mill models assume delivery to London, except for tissue. Robustness is the key criteria in this case. However, it is clear that some of the production will be sold in IOI, and therefore reduce transport cost on some part (minority) of the output. Bio-energy. The mill models applied in this work are based on natural gas. However recent support for renewable energy and growing concerns about global climate change, have led to the emergence of bio-energy as a potential alternative. Two cases were addressed, one drawing on 100,000t of biomass material (produces about 24% of the mill needs) , and the other using 100% bio-energy at the plant, but drawing on 0.5 Mn tonnes of biomass. The bio-energy requires additional capital, but also attracts (in GB and NI) a renewable obligation certificate (ROC). In this, its value is assumed as £40 per MWh or Euro 59. The bio-energy plant produces both heat and power, but only the latter attracts the ROC. In the two cases, it is feasible to consider bio-energy, as the benefits in reduced energy cost outweigh the increased capital charge. Without the ROC, the natural gas option is economically better. The first case, requiring 100,000t should be achievable from NI and ROI forest resources (NI Forest Service, Coillte). The case requiring 500,000 tonnes would require wood to be redirected from other uses. However, the wood paying capability of bio-energy plants is usually quite high because of the ROC.

Transport to DublinTransport to LondonTransport to DublinTransport to London

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0% 50% 100% 150% 200% 250% 300% 350%

- Increase in recovered paper prices -

- ROCE -% -

Initial delivered prices, EUR/t:OCC 56Mixed Waste 53Office waste, ave.104ONP/OMG 59

Maximum price formixed waste in China


Virgin Fibre Line. There has been significant forest planting in IOI. Around the turn of the decade a further 300,000 m3 p.a. of pulpwood and bio-energy material could be available. This concept is an alternative to the optimisation case, where multiple site occupation is achieved by combining RCP based paper with a virgin fibre line, together with bio-energy. The challenge however is that even at this additional wood availability, the mill options are limited. The best fit occurs with a virgin fibre based Packaging Carton option, which would require around 400000 m3 of wood. This would require a redirection of some current wood supplies, but there would be logistics gains with both pulpwood and bio-energy material flowing to the site. By around 2015, increasing wood availability makes this a more possible option.

4.7 Environmental Aspects The relevant Directives and environmental objectives include the EIA Directive (Environmental Impact Assessment) , the IPPC Directive (Integrated Pollution Control) and the BREF Documents (Best Available Techniques Reference) for this industry sector. These and other environmental aspects are elaborated in Appendix 8. The mill options have assumed that these environmental guidelines are the basis for design and implementation. It is concluded that any proposed mill, irrespective of location within the IOI, will firstly require development consent in accordance with established EIA procedures. Secondly the emissions from that facility will require comprehensive emission controls and limits as represented by BAT and are to be regulated in accordance with IPPC licence procedures. Local authorities both north and south apply charges on industry for water supply and wastewater treatment. Currently however there is no uniform basis for these charges and consequently these vary widely throughout the IOI. It is concluded that irrespective of location it is to be expected that a paper mill, as a major water user and wastewater generator, would have to engage in such cost negotiations. The alternative to these charges is for the enterprise to provide its own water from groundwater sources and to provide full wastewater treatment on site It is also common practice for local authorities to apply development levies. As with environmental charges there appears to be no uniform approach in deriving the values. It is concluded therefore that development levies are only likely to be determined by direct consultation with the local authority in whose jurisdiction it is proposed to locate. 4.8 Business Support One of the key findings is that almost all of the mill options require a positive business platform through support and encouragement. The following are brief descriptions of such platforms in NI and ROI. Further details are provided in Appendix 9. Each investment project is assessed on its own merits, and this support assessment should not be interpreted that funding would be automatically forthcoming or the amounts involved.

Experience elsewhere in Europe shows that such initiatives can qualify for investment support. Like projects in UK can attract 20-30% of the capital investment in high priority areas. Recent industry investments on the Continent have attracted investment support from EU and national programmes.

The paper mill project would be subject to support because it entails:

• investment in a priority development area of the EU (the project has an investment capital of €150-380 Mn – more if multiple site occupation) – through the structural and


interregional funds of the European Community (Appendix 9). The project can meet structural fund guidelines of economic renewal, regeneration and cross-border co-operation;

• investment in a priority regional development area of ROI-NI, the border counties – through local and regional bodies. Programmes assist with location, pre-training, marketing, development capital, technology and R&D capital, venture capital and green technology assistance). There are specific north-south initiatives;

• new employment (75-300 full time direct jobs), which would also entail training, equal employment opportunities;

• subsequent investment, for example in paper converting, logistics and infrastructure. This would open the way for access to SME (small medium enterprise) support and large employment potential;

• export oriented (up to and over 50% of the sales output ~ €80 Mn); • potential for renewable bio-energy; • rural development impact, especially if wood based biomass is used in bio-energy; • promoting environmental and sustainability regulations; • promoting IOI growth and social objectives.

4.8.1 Northern Ireland See Appendix 9 for full details European Funding. For the current round of funding (2000-2006) Northern Ireland exceeded the qualifying criterion having a per capita GDP greater than 75% of the community average. However Northern Ireland was able to avail of newly introduced transitional arrangements that provided former Objective 1 regions access to the 4 Structural Funds but on a declining basis so that by the end of the funding period, the Region would have adjusted to the lower and more limited financial support likely to be made available to an Objective 2 Region. Northern Ireland therefore secured funding for a Transitional Objective 1 programme “Building Sustainable Prosperity” Invest NI. The primary agency of interest for this project falls under the remit of the Dept for Enterprise Trade and Industry, that being, Invest Northern Ireland (Invest NI). In addition to grant funding, Invest NI can offer debt facilities and equity (ordinary shares) capital to assist business towards faster growth. Corporate Funding. The amount of Invest NI funding available is to a large degree dependent upon the financial requirement of the company, anticipated employment creation, export potential and location. The funding is accessible via a client executive supported by specialist advisers. Corporate funding is available to those enterprises that satisfy the eligibility criteria and are considered viable. The roles and support available through the International Fund for Ireland and InterTradeIreland are covered in the Republic of Ireland section. 4.8.2 ROI See appendix 9 for full details


Support Levels For the purpose of deciding maximum funding rates (in compliance with EU rules) for industrial development, the ROI is divided into three regions:

Region Maximum support level (% of eligible expenditure)

Dublin/Mid East SME 27.5% Large firm 17.5%

South East/South West/Mid West SME 30% Large firm 20%

Border/Midland/West SME 55% Large firm 40%

Agencies

The Department of Enterprise, Trade and Employment (DETE) works through two principal agencies responsible for implementing policy with regard to industrial development:

• Enterprise Ireland (EI), which is responsible for the development of indigenous industry • Industrial Development Agency Ireland (IDA Ireland), which is responsible for foreign

direct investment (FDI) i.e. foreign-owned companies in Ireland. In the case of a major investment, such as is contemplated in this feasibility study, requests for assistance would be considered by the Boards of EI and IDA Ireland and, given the size and political thrust of the project, almost certainly at Cabinet as well. Funding is usually in the form of redeemable preference shares rather than a grant. Redemption of the preference shares is generally on the fifth anniversary of the investment. The International Fund for Ireland: This is an organisation established by the British and Irish governments in 1986 to promote economic and social advance and to encourage contact, dialogue and reconciliation between nationalists and unionists throughout Ireland. The fund gives priority to projects located in the most disadvantaged areas in Northern Ireland and the six Southern border counties InterTradeIreland: This is the cross-border trade and business development body, established under the international agreement between the governments of Ireland and the United Kingdom signed on Good Friday 1998 and commonly known as “The Belfast Agreement”. InterTradeIreland has a strategic vision “To lead the development of the island economy through distinctive knowledge-based interventions which will produce significant returns in the areas of cross-order trade and business development.”


APPENDICES

Appendix 1. Questionnaire

Appendix 2. Sector Listing

Appendix 3. Interview Listing

Appendix 4. ROI Imports

Appendix 5. ROI Exports

Appendix 6. IOI RCP supply base line

Appendix. 7. Mill Option Models

Appendix 8. Environmental Considerations

Appendix 9. Support

Appendix 10. References


Appendix 1. Questionnaire

North South Market Development Group/WRAP

Paper Mill Feasibility Study for the Island of Ireland-Phase 1

Questionnaire

INTRODUCTION: The management of municipal, commercial and industrial waste on the island of Ireland is a critical environmental issue. Government policy on both parts of the island seeks to reduce the amount of waste being generated and to endeavour that waste that is being produced should be reused and recovered. Paper is a major component of domestic and commercial waste sector, however to increase levels of recycling within the island of Ireland a sufficient number of stable markets are required to manage the materials removed from the waste stream. As an internationally traded commodity, the majority of paper recovered from the waste streams is predominantly exported for recycling overseas. At present, paper reprocessing is carried out at Smurfit in Dublin and Huhtamaki in Lurgan. The North South Market Development Group formed by the Department of the Environment in Northern Ireland and the Department of Environment, Heritage and Local Government in Ireland, in conjunction with the Waste and Resources Action Programme (WRAP), has developed a project with the overall objective of determining the feasibility of situating a papermill or mills on the island of Ireland. The study is being carried out by Jaakko Pöyry Consulting, UK; Pira International, UK; Circa Group; Dublin and Initiative Economic Development, County Armagh. We would therefore be grateful if you could answer relevant parts in the questionnaire below and return by fax to Pira International on +44 (0) 1372 802249. All answers will be treated as confidential. As part of this study we are seeking to assess the demand and consumption of paper products on the island of Ireland through contact with paper related companies in the island of Ireland. For further information, please contact Martin Kay, Pira International tel +44 (0) 1372 802000. PART 1 Review of consumption and demand for paper products

Company Information:

Date established: Estimated turnover 1999 – 2005: Total no of employees: No of sites and location of sites: Production and capacity per site: Market share island of Ireland: Recent changes: Future changes:


1 Information relating to the type and quantity of paper/products manufactured on the island of Ireland and subsequently consumed there. If more than 4 please continue on separate sheet.

About manufacture Paper products/types 1 2 3 4 About your paper/paper products made/converted/sold

Types of paper Tonnage of paper Types of paper product Tonnage of paper product Raw material used in paper or products (virgin or recycled)

Tonnage of raw material used (virgin or recycled)

Demand changes – last five years

Predicted demand changes forecast in next 2, 5 and 10 years

For each of the paper products/types above, please rank between 1 and 5, where 1 is a strong influence and 5 has no influence, the key influences on predicted demand for each product

Paper product/types Key influences on predicted demand 1 2 3 4 Fibre used Market needs and new product development

Legislation eg recycled content, food contact

Economics Impact of imports Change in manufacture on the island of Ireland

Potential to export Demographic change Other comments please


About consumption Paper products/types 1 2 3 4 About paper/paper products consumption

What are the main end use sectors for paper/paper products you make/convert/sell

i) Manufacturing ii) Retail iii) Commerce iv) Food and agriculture What percentage is exported

What percentage is exported with goods eg packaging

Demand changes – previous five years

Predicted demand changes – forecast in next 2, 5 & 10 years

For each of the paper products/types above, please rank between 1 and 5, where 1 is a strong influence and 5 has no influence, the key influences on predicted patterns of consumption for each product






2 Information relating to the type and quantity of paper/paper products that you import to

the island of Ireland. If more than 4 please continue on separate sheet. Paper products/types 1 2 3 4 About your paper/paper products imported

Types of paper Tonnage of paper Types of paper product Tonnage of paper product Raw material used in paper or products imported (virgin or recycled)

Tonnage of raw material used in imports (virgin or recycled)

Changes in imports over last five years

Predicted changes in imports forecast for next 2. 5 & 10 years

For each of the paper products/types above, please rank between 1 and 5, where 1 is a strong influence and 5 has no influence, the key influences on predicted demands for imports of each paper type






3 Are you able to give us information on the origins of the paper you use in your products. If

more than 4 please continue on a separate sheet. Paper products/types 1 2 3 4 Manufacturer Country of origin Sole supplier or several sources used

Influences on choice of supply of imports. Please rank between 1 and 5 where 1 is strong influence and 5 no influence for each paper product i) meeting specification/quality

ii) company reputation iii) recycled fibre content iv) country of origin v) cost vi) historical links vii) other Any other comments please

END OF Questionnaire


Please fax the completed questionnaire to:

Lesley Grant – Pira International

Fax No. +44 (0) 1372 802249

‘Thank you very much for your time!’ Please confirm company name, address, telephone and fax numbers. NB: Please PRINT the information below CLEARLY (one character per box). Respondent Name: (PRINT)

Job Title:

Company

Address:

Country

www.

Company

E-mail:

Tel. No:

Fax No:

Direct

E-mail:

Tel. No:

Fax No:


Appendix 2. Sector Listing Listing of IOI Paper Sector

Republic of Ireland Northern IrelandPrimary Manufactures Erin Mouldere Fibre Huhtamaki

1 1Converting Edward Kennedy & Co Ltd William Montgomery & Sons

James F Walsh Ltd Derry Journal Ltd.Cavan Box Ballymoney TimesCortex Packaging Ltd Carrick TimesD C Kavanagh Ltd Coleraine & Bellymoney TimesD O'Sullivan Print Supplies ltd North West of Ireland Printing & Publishing Co.Faulkner Packaging Delta Print & PackagingFitzpack Cartons Ltd AbertayInternational Paper Boxpak LtdIRE-TEX Group plc Thompson, Rodgers & Co. Ltd.Irish Flexible Packaging Ltd KER GraphicsKoverto Envelopes (Irl) Ltd Sonoco Industrial ProductsMunster Paper Sacks Ltd Newcel Converters LtdNational Envelope Company Limited Brainbox Creative SolutionsO'Hagen Packaging Ltd Victor StationeryRoss Products Kerry Mental Health Association Arolco LtdShabra Plastics & Packaging LtdSimmell Manufacturing LtdTara Tissue LtdThe Benson Box Company (Ireland) LtdTrimfold LtdVenture Packaging LtdWestern Box CompanyNew Era Packaging LtdAtlas Print & Packaging LtdAB Converters LtdAdvance Handling 2000Advanced Technology ProductsBio-Pak LtdCelloglas LtdConnaught PackagingDublin Box Company LtdElopak LtdIndustrial Packaging LtdDe La Rue Smurfit Ltd

35 16


Republic of Ireland Northern IrelandPrinting Serla Print Ltd BE Print Commercial Printers

Cambridge University Press The Print Factory PrintersCahill Printers Fergus PressChroma colour Imaging Limavady Printing Co.Colourman A1 Print Design - HiTi Photo PrintersE Prints Hendersons PrintEbrook Poster Management (NI) Ltd.Euroscreen group Zing Design and PrintFly Print Studio 57 Design & PrintFuture Print Limited RCD Digital PrintGroprint Limited Chean DesignHughes Print Ireland Pattterson GraphicsImagination Printing The North West of Ireland Printing & Publishing Co. Ltd.Intacta Print Action PressJJ Lalor Ltd. Memoriam Cards Antrim PrintersJayCee Printers Bangor Print & DesignKPS Colour Print Ltd Commercial Graphics (NI) Ltd.LCP Limited Connswater Graphics Ltd.Masterphoto Dundela PrintingMicroprint Easy PrintMillers Edenderry Print Ltd.P.W.L. Expert Printers Ltd.Paceprint Ltd. First Print DirectPrint and Display Flixx GraphicsPrintlines Ltd. GMK GraphicsPrintout Gortreagh Printing House Co.Printscreen GPS Colour Graphics Ltd.Snap Printing Graham & Sons (Printers)Ltd.Spectrum Print Management Heidelberg (UK) Ltd.Standard Printers Colour Printing House of Print & Design Ltd.The Postcard Company Ltd. Hylite Coatings Ltd.Venessa Print J Hollywood PrintersWalsh Printers Johntson Printing Ltd.

Quinns the Printer Ltd.Regency PressRW Pierce & Co (Printers) Ltd.X-Press Printers

33 37Republic of I reland Northern I reland

Corrugating Fitzgerald Packaging Ltd Federick Jones Ltd.Galway Corrugated Cases Diamond Corrugated Ltd.Irish Co-op Society Ltd SCA PackagingKilleen Corrugated Products Ltd Smurfit Corrugated CasesPackaging Components LtdSmurfit Corrugated CasesTime PackagingTuscarora Ireland LtdWoodfab Packaging Ltd

9 4Corrugating /sack Enviro Paper Bags Ltd

Irish Paper Sacks 2 0

Paper and board merchants Antalis Ireland (Sales) Ltd Campsie Paper Co.

Arctic Paper Ireland Ltd The Office StoreAtlantic Merchants (Limerick) Ltd Wallace Wrays Fine PapersBennett Paper Sales ltd ILP Protective PackagingContact Papers Ltd Robert Home Paper CompanyDerek R Dowling McNaughton PaperDevenney Office Supplies Ltd United Paper MerchantsEkman Ireland Ltd Jamont UK Ltd, Invercon Paper merchnatsEnso (IRE) Ltd A&P DisplayGlenroe Paper Sales & Agencies Ltd Spicers LtdGlenvalley Paper Co Bennett Paper Sales Ltd.Irish Merchants Ltd Enterprice Stationary Ltd.Irish Papers Ltd John C. Brow Ltd.J J O'Toole Ltd Antalis LtdLen-Pak Ltd Murray DonaldMarina Paper Ltd Just Paper & HygienePapertech Ltd Paperman ProductsPremier Paper LtdRealt Paper LtdRobert Horne Paper Co LtdTQ Paper LtdUnited paper merchants Ltd.Enterprise Stationery LtdJ R Bailey LtdReprocentre GroupRotoform

26 17


Appendix 3. Interview Listing

Date Company Activity People Location

4-Jan-05 Georgia-Pacific Ireland Ltd Tissue converterRichard Broderick-Managing Director Dublin

5-Jan-05 Repak Waste compliance scheme

RJ Cullen-Controller-Membership/Marketing & William Dolan Services

Manager Dublin

5-Jan-05 M real Ireland Ltd Paper salesTom Eklund-Managing

Director Dublin

5-Jan-05 Stora Enso Ireland Paper sales

David Gorman-Managing Director and Kenneth

Geraghty Dublin

6-Jan-05

Smurfit Corrugated Ireland/Smurfit Recycling

Ireland Converter

John O'Loughlin-Chief Executive/Dr Gerard

Travers-General Manager Dublin

7-Jan-05 UPM Kymmene (UK) Ltd Paper salesPeter Ahlbom-Managing

Director Dublin

10-Jan-05 SCA Packaging Warrenpoint ConverterNiall Rafferty-Director &

General Manager Warrenpoint, Newry

10-Jan-05 Robert Horne Paper MerchantJohn Higgins-Area

Manager Newtownabbey, Belfast11-Jan-05 Delta Print and Packaging Folding cartons Colin Bradley-Joint MD Belfast

11-Jan-05 Newcel Paper ConvertersTissue, corrugate converters

(and bottled water)Eunan McGurk-Managing

Director Newry

25-Jan-05 Smurfit Recycling IrelandSorting, bailing, sales and

distributionDr Gerard Travers-General

Manager Dublin

25-Jan-05 Indaver IrelandCollection, containerising,

sales and distributionJohn Johnston-Commercial

and Logistics Manager Dublin25-Jan-05 Baileys Andrew Bailey Dublin

26-Jan-05 Smurfit Corrugated Ireland ConversionJohn O'Loughlin-Chief

Executive Dublin26-Jan-05 EPA Regulation Brian Meaney Wexford26-Jan-05 Onyx waste operator' John Richardson Dublin

26-Jan-05 Hannay's waste operator'Darren Odonohue/Tony

Johnson Dublin

27-Jan-05 Kosmos RecyclingSourcing, sales and

distribution Robert Mathers Belfast

27-Jan-05 HuhtamakiSorting, bailing, sales and

distribution Adrian Jones Belfast

15-Feb-05 Dublin City CouncilWaste management

services

Margaret Foynes-Environment Awareness

Officer Dublin15-Feb-05 Arc 21 Local Government Group John Quinn Belfast

15-Feb-05 Bryson HouseCollection, containerising,

sales and distribution Eric Randall Belfast





Manager Dublin


Director Dublin



Geraghty Dublin

6-Jan-05


Ireland Converter




Director Dublin







Director Newry



Manager Dublin







Johnson Dublin






services









Manager Dublin


Director Dublin



Geraghty Dublin

6-Jan-05


Ireland Converter




Director Dublin







Director Newry



Manager Dublin







Johnson Dublin






services






Appendix 4. ROI Imports

Newsprint imports (tonnes) – Ireland 1999-2003

1999 2000 2001 2002 2003

Canada 14,795.9 14,896.2 11,954.5 16,951.2 17,658.7

Finland 2.1 0 44.2 0 26.7

France 14 30.2 0.7 0 0

Germany 475.2 5.5 59.6 24.9 0

Italy 106.9 46.4 8.3 2 0

Netherlands 125.4 59 67.4 50 5,374.2

Norway 8,707.1 14,173.5 19,967.1 15,264.2 16,208.3

Spain 1,206.9 5.2 55.7 0 45.3

Sweden 41,052.8 4,108.2 9,489.9 13,037.8 12,714.2

UK 15,454.7 27,620.7 35,357.8 32,003.5 34,883.6

USA 86.2 25 17.2 1.3 4.4

Total 82,227.1 61,169.9 77,222.5 77,535.1 87,115.7

New sprint imports - Ireland1999-2003

0

10000

20000

30000

40000

Cana

da

Finl

and

Fran

ce

Ger

man

y

Italy

Neth

erla

nds

Norw

ay

Spai

n

Swed

en UK

USA

tonn

es

19992000200120022003


New sprint imports - Ireland1999-2003

0

10

20

30

40

50

Finl

and

Fran

ce

Ger

man

y

Italy

USA

tonn

es

19992000200120022003

imports < 50 tonnes

Graphic: coated woodfree Ireland imports 1999-2003

1999 2000 2001 2002 2003

Canada 0 0 1.3 0 0

Finland 1,371.6 1,542.7 912.2 629 202.4

France 137.2 164.6 229.4 185.8 822

Germany 312.7 423.2 68.8 114.9 13.5

Italy 0 0 0 0 411.6

Netherlands 168.3 260.7 167.2 470.2 1,033.1

Norway 0 0 0 0 50.5

Spain 11.4 29.6 15.8 0 0

Sweden 1,425.2 1,899.8 2,076.7 1,313 1,033.9

UK 1,313.2 1,574.3 1,831.4 1,300.4 794.8

USA 0.9 28.1 61 0.7 14.7

Total 4,740.5 5,923 5,363.8 4,014 4,376.5


G ra ph ic: coa te d w oodfre e Im ports - Ire la nd1999-2003

0

500

1000

1500

2000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden UK

US

A

ton

ne

s

1999

2000

2001

2002

2003

Graphic: uncoated woodfree imports – Ireland (tonnes)

1999 2000 2001 2002 2003

Canada 0.3 1.5 0.3 0.9 0.1

Finland 5,111.1 6,102.7 5,297.6 4,495.4 5,817.7

France 6051 4457 3,113.8 2,732.4 2,037.8

Germany 10,612.8 10,215 9,995.1 11,157.9 9,697.5

Italy 278.1 1,135.9 527 38.4 680.5

Netherlands 1,786.9 1,724.7 1,756.7 2,081.1 1,579.9

Norway 0 0 0 720.2 0

Spain 44.8 261.1 1,276.1 2,023.6 1,698.6

Sweden 4,437.7 1,321.8 1,984.2 1,998.7 2,202.6

UK 29,549 25,939 29,497.8 32,975.3 38,905.2

USA 487.8 33.6 57.4 59.6 269.7

Total 58,359.5 51,192.3 53,506 58,283.5 62,889.6


G ra p h ic uncoa te d w ood fre e im ports - Ire la n d1999-2003

0

10000

20000

30000

40000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden UK

US

A

ton

ne

s

1999

2000

2001

2002

2003

G ra ph ic uncoa te d w ood fre e im ports - Ire la nd1999-2003

0

2000

4000

6000

8000

10000

12000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden

US

A

ton

ne

s

1999

2000

2001

2002

2003

Impor ts < 12000 tonnes


Coated mechanical imports – Ireland 1999-2003

1999 2000 2001 2002 2003

Canada 44.8 10.6 0 0 0

Finland 2,453.3 393.2 525.3 1,397.7 1,274.1

France 10,740.8 7,524.5 7,098.3 6,703.6 7,621.4

Germany 13,242.6 16,141.9 13,476.5 17,821 13,895.1

Italy 924.1 2,224.8 2,680.8 2,831.7 2,180.9

Netherlands 4,634.7 4,118.8 3,245.7 2,220.6 2,490.8

Norway 5.1 0 23.9 21.7 0

Spain 753.3 748.6 552.3 812 1,203.1

Sweden 9,389.2 3,680.1 3,212 2,213.2 1,944.6

UK 23,869.1 16,494.9 10,473.5 17,412.6 23,725.6

USA 30.1 8.9 1.4 284.7 198

Total 66,087.1 51,346.3 41,289.7 51,718.8 54,533.6

Co a te d m e cha n ica l im p orts - Ire la n d1999-2003

0

5000

10000

15000

20000

25000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden UK

US

A

ton

ne

s

1999

2000

2001

2002

2003

Graphic: Uncoated mechanical imports to Ireland (tones)


1999 2000 2001 2002 2003

Canada 0 0 0 0 0.6

Finland 465.1 865.6 117.3 569.3 0

France 130.1 586.5 738.1 1,232.1 467.7

Germany 9.7 40.4 0 269.2 33

Italy 0 0 0 128.8 22.6

Netherlands 4.1 1.1 1 7.9 4

Norway 0 0 0 0 0

Spain 49.2 123.6 174.6 180.2 22.5

Sweden 1,571.6 683.4 533.9 848.3 1,851.2

UK 2,978.9 1,332.8 755.4 6,921.9 3,959

USA 55.6 15.1 9.5 52.6 26.5

Total 5,264.3 3,648.5 2,329.8 10,210.3 6,387.1

G ra ph ic uncoa te d m e cha n ica l im ports - Ire la nd1999-2003

0

1000

2000

3000

4000

5000

6000

7000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden UK

US

A

ton

ne

s

1999

2000

2001

2002

2003


G ra ph ic uncoa te d m e cha n ica l im ports - Ire la nd1999-2003

0

400

800

1200

1600

2000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden

US

A

ton

ne

s

1999

2000

2001

2002

2003

Imports < 2000 tonnes

Tissue and tissue product imports to Ireland (tonnes)

1999 2000 2001 2002 2003

Canada 976.4 114 39.8 86.1 85.3

Finland 1,633 486.5 474.5 1,128.3 435.4

France 1,721 218.2 386.7 880.7 435.4

Germany 638.7 534.9 900.4 2,428.6 2,944.2

Italy 392.9 615.2 284.4 687.5 642.4

Netherlands 849.1 573.9 813 767.2 516

Norway 2 0 0 0 0

Spain 2,557.9 952 341.3 907.9 1,675.8

Sweden 175.1 198.6 338.9 336.6 497.6

UK 37,910.7 51,211.3 51,702.1 58,202.1 54,387.5

USA 191 277.8 349.6 425.7 394.8

Total 47,047.8 55,182.4 55,630.7 65,850.7 62,014.4


T issue a nd T issue p roduct im ports - Ire la nd1999-2003

0

10000

20000

30000

40000

50000

60000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden UK

US

A

ton

ne

s

1999

2000

2001

2002

2003

T issue a nd T issu e pro duct im ports - Ire la n d1999-2003

0

500

1000

1500

2000

2500

3000

3500

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden

US

A

ton

ne

s

1999

2000

2001

2002

2003


Kraftliner, testliner and other packaging paper import (tonnes)

1999 2000 2001 2002 2003


Canada 153.5 2.3 0 0 0

Finland 3,977.9 7,470.9 8,598.1 6,148.7 5,224.9

France 6,487 6,649.3 5,143.5 2,275.3 989.8

Germany 2,034 1,342.8 1,165.1 2,212.2 2,918.9

Italy 1,668.5 2,789.4 3,019.8 3,992.3 4,507.2

Netherlands 1,288.1 2,556.6 1,584.7 5,077.2 6,075

Norway 801.9 560.9 290 560.4 560

Spain 2,259.5 3,180.9 2,940.2 4,330.3 4,733.5

Sweden 50,878.2 62,706.5 61,224.2 54,338.3 58,991.8

UK 77,233.5 85,309 69,825.5 53,564.8 60,869.7

USA 12,802.1 11,000 7,902.8 10,026.8 9,331.4

Total 159,584.2 183,568.6 161,693.9 142,526.3 154,202.2

Kra ft l ine r, te st l in e r a nd o the r p a cka g ing p a p e r im po rts - Ire la n d 1999-2003

0

20000

40000

60000

80000

100000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden UK

US

A

ton

ne

s

1999

2000

2001

2002

2003


Kra ft l ine r, te st l ine r a nd o the r pa cka g ing pa pe r im ports - Ire la nd 1999-2003

0

2000

4000

6000

8000

10000

12000

14000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

US

A

ton

ne

s

1999

2000

2001

2002

2003


Converted packaging products (corrugated board, sacks and boxes) (tonnes)

1999 2000 2001 2002 2003

Canada 97.1 71.9 49.5 51.2 110.6

Finland 638.4 1,105.6 793.6 348.9 70.3

France 1,980.9 2,306.2 2,096.1 2,725.7 2,622.4

Germany 2,944.2 2,773.3 2,822.6 5,608.2 5,316.1

Italy 922.1 1,657.1 2,650.4 1,169.3 878.9

Netherlands 8,349.1 10,012.2 8,593.3 7,895 2,866.7

Norway 203.1 222.4 54.7 51.5 56.6

Spain 65.6 446 944.9 1,269.7 1,189.2

Sweden 1,627.4 1791 1,775.1 1,366.1 1,256.8

UK 7,3978.7 46,669.4 45,653.4 57,568.5 75,643.8

USA 519.7 1,137.4 823.2 1,284.6 1,761.9

Total 91,326.3 68,192.5 66,256.8 79,338.7 91,773.3


Cove rte d pa cka g ing pro ducts (corruga te d boa rd , sa cks a nd box e s) im ports - Ire la nd

1999-2003

0

20000

40000

60000

80000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden UK

US

A

ton

ne

s

1999

2000

2001

2002

2003

Cove rte d pa cka g ing p roducts (corruga te d boa rd , sa cks a nd box e s) im ports - Ire la nd

1999-2003

0

2000

4000

6000

8000

10000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden

US

A

ton

ne

s

1999

2000

2001

2002

2003


Specialty paper imports (tonnes)


1999 2000 2001 2002 2003

Canada 3.1 12.5 4.9 11.6 1.9

Finland 361.9 162.9 181.2 227.2 224.9

France 3612 3,196.7 1,965.7 2,289 1,940.4

Germany 1,748.1 2,431.3 3080.3 2,504 2,505.1

Italy 61.1 188.6 170.1 383.1 151.4

Netherlands 2,152.5 2,445.2 2,488 1,715.5 1,378.5

Norway 445.2 314.8 280.5 177.2 283.5

Spain 1,198.1 1,666.2 1,819.1 1,755.2 2,005.9

Sweden 1,219.3 615.6 1,114.3 458.3 940.7

UK 27,378.3 20,420.8 20,154.6 20,284.8 18,847.3

USA 196.4 267.3 157.1 484.6 536

Total 38,376 31,721.9 31,415.8 30,290.5 28,815.6

S p e cia lty pa pe r im p orts - Ire la nd1999-2003

0

5000

10000

15000

20000

25000

30000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden UK

US

A

ton

ne

s

1999

2000

2001

2002

2003


S pe cia lty pa pe r im ports - Ire la nd1999-2003

0

1000

2000

3000

4000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

nds

Nor

way

Spa

in

Sw

eden

US

A

ton

ne

s

1999

2000

2001

2002

2003


Other paper product imports

1999 2000 2001 2002 2003

Canada 103.7 26.8 39 35 46.4

Finland 48.7 34.4 30 66.6 45.6

France 1,460.9 1,180.8 616.2 748.6 508.6

Germany 1,752.9 2,946.6 3,434.3 5,136.9 4,247.5

Italy 240.2 199.9 595.4 605.5 632.5

Netherlands 676.2 683.8 481.2 571 474.5

Norway 28 61.3 119.4 84 90.1

Spain 90.7 77.8 86.5 177.3 93.3

Sweden 674.8 78 61.2 94.7 71.1

UK 30,631.2 30,387.5 28,403.9 26,733.4 24,941.4

USA 1,089.8 1,715.5 1,295.6 1,129.9 1,242.4

Total 36,797.1 37,392.4 35,162.7 35,382.9 32,393.4


O the r pa pe r product im ports - Ire la nd1999-2003

0

5000

10000

15000

20000

25000

30000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

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Nor

way

Spa

in

Sw

eden UK

US

A

ton

ne

s

1999

2000

2001

2002

2003

Othe r pa pe r product im ports - Ire la nd1999-2003

0

1000

2000

3000

4000

5000

6000

Can

ada

Finl

and

Fran

ce

Ger

man

y

Italy

Net

herla

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Nor

way

Spa

in

Sw

eden

US

A

ton

ne

s

1999

2000

2001

2002

2003



Appendix 5. ROI Exports

Figure 1. Export of Grade 1 (OCC) from ROI by country and year

Figure 2. Export of Grade 2 (P&W) from ROI by country and year

0 10000 20000 30000 40000 50000 60000 70000

1999

2000

2001

2002

2003

Grade 1 Exports by tonnage

NL GB ES IN CN ID HK TW US JP Rest

0 2000 4000 6000 8000 10000 12000 14000

1999

2000

2001

2002

2003




Figure 3. Export of Grade 3 (ONP/OMG) from ROI by country and year

Figure 4. Export of Grade 4 (mechanical pulp not ONP/OMG) from ROI by country and year

0 200 400 600 800 1000 1200

1999

2000

2001

2002

2003



0 5000 10000 15000 20000 25000 30000 35000 40000

1999

2000

2001

2002

2003




Figure 5. Export of Grade 5 (Unsorted Mixed) by country and year

Figure 6. Export of Grade 6 (sorted paper and board not OCC)

0 10000 20000 30000 40000 50000 60000 70000

1999

2000

2001

2002

2003



0 2000 4000 6000 8000 10000

1999

2000

2001

2002

2003




Appendix 6. IOI Base Year Calculation

Future projections of recovered paper. The future projections are based only on 3 grades • OCC (grade 1) • News and magazines (grade 2) • Unsorted (grade5) The other grades have not been considered – their volumes are insignificant in terms of the overall total and there is no real evidence that these other grades are being separated out. The starting point for these projections is the data supplied by EPA for Ireland and that supplied by the DoE in Belfast for Northern Ireland. The assumptions used for the projections of each grade are based on information received through the interviews, Pira’s own research and other data. Data supplied from the above sources does not neatly fit the grade definitions we are seeking to project. The data also relates to 2003. Assumptions have therefore been made for each and then the data sources combined to give a projected 2005 starting point. ROI– data 2003

Packaging 175,965 tonnes Assumption1: all this is OCC Non packaging 182,912 tonnes Assumption 2: 39,557 tonnes of this is news and magazines (based on Eurostat export figures) the rest is mixed.

NI – data 2003/2

Paper and cardboard packaging from C&I sources 38,200 tonnes and card (not mixed) from municipal waste 3,304 tonnes = 41,504 tonnes Assumption 3: this is OCC Paper (not mixed) from municipal waste = 11,560 tonnes Assumption 4: this is news and magazines All the rest i.e. the mixed paper and card at 8,731 tonnes from municipal waste and the separately collected paper and card from C&I sources at 57,200 tonnes = 65,931 tonnes Assumption 5: this is mixed grade (this is a big assumption but we have no evidence of how this could breakdown further at this time. However the consequences of this assumption being wrong will not effect the overall availability of the other grades, in fact it may enhance their quantity – but would diminish the quantity of mixed grade)


Island of Ireland starting point

OCC, tonnes News and Mags,

tonnes Mixed, tonnes

Total, tonnes

2003 217,469 51,117 209,286 477,872 2005 226,254 59,752 224,207 510,213 Note 2003 figures rounded off Assumption 6: OCC increases at 2% pa 2003-2005 and there is some lightweight product entering the waste stream Assumption 7: news and magazines assumes 1% growth on ROI figures and the initial influence of arc21, SWaMP etc. on NI figures. Thus Ireland part grows from 39,557 to 40,352 tonnes and the NI part from 11,560 to 19,400 tonnes. (based on arc 21 estimations that they are taking in 20,000 tonnes of dry recyclable now, of which 70% is paper and 75% of this is news and mags i.e. 10,500 tonnes. arc 21 constitutes 54% of the 641,000 NI households – extrapolating to all of NI = 19,400 tonnes) Assumption 8: mixed grows at 2% plus the influence of arc21 and SWaMP etc. which is increasing the amount collected – card is constituting 25% of paper collected – using above extrapolation means 6,466 tonnes extra collected


Appendix 7. Mill Models and Options Assessment

The appendix includes the analysis of the mill options: Each mill option is reviewed in terms of:

• Investment approach: description of mill configuration and key features • Investment model: description of mill equipment and flows, inputs and outputs. • Markets. Supply-demand balance • Producers: description of European producers – to determine the impact of a new facility on

the current producer base. • Competitiveness: cost competitiveness analysis showing the position of an IOI facility

compared to other mills and machines. The analysis employs a cost curve of producers shipping to London as the basis for comparison. The cost information is based on models and algorithms referred in the main report (Section 5).

• Feasibility: The mill option is compared to recent and historical prices, using the total cost of the mill option plus a profit margin – set at 10% return on capital employed. This indicates if the mill option would achieve profit targets in this period, and therefore a base indicator of feasibility. Phase 2 – the full feasibility - would then employ projections of costs and prices to arrive at estimates of profitability.

Terminology

The report has applied less technical terms to the mill product options. Different audiences will be reviewing this report, and the following listing is presented to assist in product interpretation depending on the reader.

Packaging Containers. Also termed unbleached testliner. Can be white surfaced (termed white top testliner, WT testliner). Fluting can also be produced at the facility.

Packaging Cartons. Also termed white lined chipboard (WLC).

Printing & Writing Uncoated. Also termed fine paper

Tissue


APPENDIX 7. Mill Models and Option Assessment. The following are base data which refer to the mill options – the mill specifications and cost base applied in the analysis.

MANUFACTURING & FINANCIALSPaper capacity, t/a Investment, MEUR Power consumption, MWe Sales (trend), MEUR/a

Unbleached Testliner 400,000 340 23 138WT Testliner 200,000 220 14 99WLC 250,000 420 21 168RCF Fine Paper 120,000 230 11 92Tissue 50,000 140 6 60

POWER PLANT – Describes the bioenergy potential, has not been applied in cost comparisonBP Power plant, MWe Heat, MWth Investment, MEUR % of green energy potential

Unbleached Testliner 17 102 38 24%WT Testliner 8 50 25 50%WLC 9 58 27 43%RCF Fine Paper 5 34 20 74%Tissue 2.5 17 14 100%

SITE & INFRASTRUCTUREArea, ha Paved area, m2 Building volume, m3

Unbleached Testliner 55 103,000 390,000WT Testliner 35 66,000 260,000WLC 65 118,000 510,000RCF Fine Paper 40 75,000 345,000Tissue 24 44,000 155,000

PEOPLE# of personnel Value of jobs, EUR/a

Unbleached Testliner 190 5,750,000WT Testliner 165 4,990,000WLC 370 11,190,000RCF Fine Paper 285 8,620,000Tissue 75 2,270,000

All prices in EUR Ireland

EUR

MARKET PRICES OF CHEMICAL PULPS- BSKP ADmt 524- BHKP ADmt 434

MARKET PRICES OF RECOVERED PAPER- OCC ADmt 56- Mixed recovered paper ADmt 53- ONP/OMG for deinking ADmt 59-70- White printing waste ADmt 158- Sorted office papers ADmt 68- Shredded office papers ADmt 78

ENERGYPower- Purchased MWh 84

Purchased Fuel- Natural gas GJ 5.0- Biomass GJ 2.8

PERSONNEL COSTS (incl. fringe benefits)Operating & Maintenance Person/a 35,800Supervision & Administration Person/a 48,600

3rd quarter 2004 average unit prices for the Republic of Ireland


PACKAGING – Containers

Option DescriptionProduct Specification: Unbleached Testliner, 80-150 g/m2. Various

packaging end-uses including:

Consumer goodsIndustrial/heavy-duty packagingFood packagingNon-food packagingBeverages

Furnish (example): 50% OCC / 30% Mixed waste

World Scale: Capacity 400 000 t/a De-inking plant on-site70+% power co-generation. Subsequent value-added steps of corrugating, sheeting and barrier coating

Investment: ca. EUR 380 million

Potential of a new mill:+ imports substitution in the IOI market+ large direct/indirect economical impact+ existing market and converting in the IOI+ good relative competitiveness+ availability of recovered packaging grades- significant capacity increase in the European market and subsequent

price pressure

Consumptions - Unbleached Testliner and Recycled FlutingCapacity t/a 200,000 300,000 400,000 - Ubl Testliner t/a 150,000 200,000 200,000 - Recycled Fluting t/a 50,000 100,000 200,000OCC t/a 135,000 195,000 237,000Mixed waste t/a 82,000 131,000 196,000Power, nominal MW 12 19 25Personnel person 250 280 300Investment MEUR 210 290 380

0

50

100

150

200

250

300

400 0

00 t/a

300 0

00 t/a

200 0

00 t/a

Purchased FibreChemicalsEnergyPersonnelOther manufacturing costsDelivery to London

- EUR/t -Cost level 2004/III, Exchange rates September 2004 averagesDelivered to London

Investment Model - Unbleached Testliner and Recycled Fluting

Testliner/Fluting machine

Fresh water

RCP/De-inking plant


Fuel(Bio-, NG...)

De-inking sludge

Steam & Electricity

Chemicals

OCC/Post consumerwaste recovery

National Grid

District heating

Power plant/CHP


Corrugatedconverters


PACKAGING - Containers

0

5000

10000

15000

20000

25000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004Capacity, fluting Capacity, ubl testliner Capacity, white testlinerApparent consumption Production

- 1000 tons -

0

200

400

600

800

1000

1200

1400

1600

1800

2000


- 1000 tons -

United Kingdom and Ireland Europe, total

net importsnet exports

Supply/Demand balance in the UK, Ireland and EuropeConsumption of recycled fibre based containerboards in Europe is more than 18 million tons annually. Consumption of white top testliner is estimated at ca. 1.0 million tons p.a., while allocated capacity is ca. 1.5 million tons. Growth of consumption for unbleached testliner is estimated at 2.7%, while the growth in demand of white top is estimated at 5.7%.

In the UK and Ireland consumption of recycled fibre based containerboards is close to 1.8 million tons/a. Total consumption of containerboards in Ireland is ca. 120 000 t/a

0 500 1000 1500 2000 2500

Jefferson SmurfitSCA

Kappa PackagingSAICAMondi

Papierfabrik Adolf JassPrinzhorn Group

Palm GroupOtor

DS SmithVarel

Emin LeydierLa Veggia

VPK PackagingPro-Gest

- Capacity in 1000 t -

Testliner

RCF Fluting

Unbleached Testliner and Recycled fluting producers in EuropeLeading suppliers in Europe are Jefferson Smurfit, SCA, Kappa and SAICA. Most companies have allocated their capacity close to even balance between testliner and fluting – which can be changed quite flexibly. Top 5 producers account for ca. 40% of total capacity.

A new 400 000 t/a paper machine would be significant compared to current producers.


PACKAGING - Containers

Competitiveness in the UK Market - Unbleached Testliner/RCF Fluting –A new Unbleached testliner/Recycled Fluting machine in IOI would be very competitive in relation to competitors in the UK market. There can be sufficient OCC and mixed waste even for a large 400 000 t/a machine producing both grades. Testliner production consumes more OCC and hence fluting would be kept as a supplementary grade. Fibre cost in IOI is favourable

1 0 0

1 2 5

1 5 0

1 7 5

2 0 0

2 2 5

2 5 0

2 7 5

3 0 0

3 2 5

3 5 0

3 7 5

4 0 0

0 1 ,0 0 0 2 ,0 0 0 3 ,0 0 0 4 ,0 0 0 5 ,0 0 0 6 ,0 0 0 7 ,0 0 0 8 ,0 0 0 9 ,0 0 0 1 0 ,0 0 0


- EUR/t -


Deliveredcosts

Manufacturingcosts

12 3

1) 400 000 t/a2) 300 000 t/a3) 200 000 t/a

10 0

12 5

15 0

17 5

20 0

22 5

25 0

27 5

30 0

32 5

35 0

37 5

40 0

0 1 ,0 0 0 2 ,0 00 3 ,0 00 4 ,0 0 0 5 ,0 0 0 6 ,0 0 0 7 ,0 0 0 8,0 0 0 9,0 0 0 1 0 ,0 0 0


- EUR/t -


Deliveredcosts

Manufacturingcosts

12 3

1) 400 000 t/a2) 300 000 t/a3) 200 000 t/a

0%

2%

4%

6%

8%

10%

12%

400 000t/a

300 000t/a

200 000t/s

- PM Scale -



Cost level 2004/III

Average

-2%

0%

2%

4%

6%

8%

10%

12%

400 000t/a

300 000t/a

200 000t/a

- PM Scale -



Cost level 2004/III

Average

TestlinerTestliner Fluting

Fluting

0

100

200

300

400

500

600

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Feasibility - Unbleached Testliner/RCF Fluting




The current price level for unbleached testliner wouldn’t justify an investment into a new paper machine in IOI – ROCE below 10%. There is vast amount of new capacity coming on stream in Western Europe and over capacity would cause significant further price pressure

Total production costs for recycled fluting are 5-10 EUR/t lower than for testliner


400kt/a

300kt/a

200kt/a

Ubl Testliner

Recycled Fluting

Trend price 2008


PACKAGING - Containers - White Surfaced

Option DescriptionProduct Specification: White Top Testliner, 90-170 g/m2. Various packaging end-uses

including:

Consumer Electronics packagingFood packagingNon-food packaging

Furnish (example): Top layer DIP + Office/high quality white waste paper (+ BHKP)Base layer OCC

Total recovered paper consumption ca. 220 000 t/a

World Scale: Capacity 200 000 t/a.Deinking plant on-site. Ca. 60-100% power generation on-site. Subsequent value-added steps of corrugating, sheeting and barrier coating


Potential for a new mill:+ imports substitution in the IOI market+ large direct/indirect economical impact+ existing market and converting in the IOI+ good relative competitiveness+-

better growth in white surface gradesavailability of high quality white recovered paper

- overcapacity in the European market

Testliner machine

Fresh water

RCP/De-inking plant


Fuel(Bio-, NG...)

De-inking sludge

Steam & Electricity

Chemicals

OCC/Post consumerwaste recovery

National Grid

District heating

Power plant/CHP


Corrugatedconverters

Consumptions - White top TestlinerCapacity t/a 120,000 160,000 200,000Market BHKP t/a 10,000 13,000 16,000White printer/office wat/a 11,000 14,000 18,000ONP/OMG for DIP t/a 39,000 52,000 65,000OCC t/a 79,000 105,000 131,000Power MWh/a 71,000 94,000 117,000Power, nominal MW 9 12 15Personnel person 240 250 270Investment MEUR 180 210 250

0

50

100

150

200

250

300

350

400

200 0

00 t/a

160 0

00 t/a

120 0

00 t/a



Investment Model – White Top Testliner




0 50 100 150 200 250 300 350 400

M-realKappa PackagingJefferson Smurfit

SCABillerud

PrinzhornSAICA

KorsnäsPalm

Papierfabrik Niederauer MühleEuropac

Papeteries de VeuzeLEIPA

OtorDS Smith

- Capacity in 1000 t -

Kraftliner

Testliner

White top testliner producers in EuropeLeading suppliers of white liners in Europe are M-real, Kappa, Jefferson Smurfit and SCA. In white top testliner largest producer is Prinzhorn followed by Saica, Jefferson Smurfit and Palm. Top 5 producers account for ca 45% of total capacity.

In Great Britain, DS Smith is the only producer.

A new 160 000 t/a paper machine would put the producer among top 6 companies in Europe

0

5000

10000

15000

20000

25000


- 1000 tons -

0

200

400

600

800

1000

1200

1400

1600

1800

2000


- 1000 tons -



Supply/Demand balance in the UK, Ireland and EuropeConsumption of recycled fibre based containerboards in Europe is more than 18 million tons annually. Consumption of white top testliner is estimated at ca. 1.0 million tons p.a., while allocated capacity is ca. 1.5 million tons. Growth of consumption for unbleached testliner is estimated at 2.7%, while the growth in demand of white top is estimated at 5.7%.

In the UK and Ireland consumption of recycled fibre based containerboards is close to 1.8 million tons/a. Total consumption of containerboards in Ireland is ca. 120 000 t/a


Competitiveness in the UK Market

A new White Top testliner machine in Ireland would be very competitive in relation to competitors in the UK market. A critical factor is the availability of white good quality recovered paper. If recovered paper must be replaced by kraft pulp the cost impact is significant. This estimate assumes a mix of white shavings, de-inked ONP/OMG and kraft pulp. The price for recovered office papers seems to be very low in Ireland

200

250

300

350

400

450

500

550

0 200 400 600 800 1,000 1,200 1,400


- EUR/t -


Deliveredcosts

Manufacturingcosts

1 23

1) 200 000 t/a2) 160 000 t/a3) 120 000 t/a

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

200 000 t/a 160 000 t/a 120 000 t/s- PM Scale -



Cost level 2004/III

Average

0

100

200

300

400

500

600

700

800

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004




Feasibility – White Top TestlinerThe current price level for white top testliner doesn’t quite justify an investment into a new paper machine in IOI – ROCE below 10%. The market is tight and the overall profitability in the business is not very good.

It must be noted that the market is very small and actual public price series don’t exist. The price in this example is derived from the current price difference between white top and unbleached grade


200kt/a

160kt/a

120kt/a

Trend price estimate 2008

Market price estimate, real


PACKAGING – Cartons (White Lined Chipboard - WLC)

Consumptions - WLCCapacity t/a 120,000 180,000 250,000Market BHKP t/a 10,000 15,000 25,000White office waste t/a 11,000 16,000 18,000ONP/OMG for DIP t/a 33,000 50,000 70,000OCC t/a 29,000 43,000 59,000Mixed waste t/a 47,000 71,000 98,000Kaolin/CaCO3 t/a 14,000 20,000 28,000Power MWh/a 95,000 143,000 199,000Power, nominal MW 12 18 25Personnel person 260 310 370Investment MEUR 360 390 450

Investment model – White Lined Chipboard

WLCmachine

Fresh water

Waste paper plant


Fuel(Bio-, NG...)

De-inking sludge

Steam & Electricity

Chemicals

Packaging/Post consumerwaste recovery

National Grid

District heating

Power plant/CHP


Cartonboardconverters

050

100150200250300350400450500550

250 0

00 t/a

180 0

00 t/a

120 0

00 t/a



A new WLC machine would be reasonable in scale and is flexible in terms of raw material mix

Option Description

Product Specification: Multilayer Bleached Folding Cartons based on recovered fibre, 150-300 g/m2. Various end-uses including:

Food packagingCigarette packagingNon-food packagingBarrier/PE –coated boards

Furnish (example): Top layer White high quality recovered paper + BHKP2nd layer 100% DIPBase layer 50% OCC + 50% Mixed wasteBack layer 25% DIP + 75% Mixed wasteCoating 5-20 g/m2/side

World Scale: Capacity 250 000 t/a. Among the largest WLC PMs in EuropeDeinking plant on-site. 40+% power co-generation on-site. Subsequent value-added steps of corrugating, sheeting and barrier coating


Potential for a new mill:+ imports substitution in the IOI market+ large direct/indirect economical impact+ existing market and converting in the IOI+ good relative competitiveness+ flexible in terms of raw material mix- availability of white high quality recovered paper- would be a huge capacity increase in the market place


PACKAGING – Cartons (White Lined Chipboard - WLC) PACKAGING – Cartons (White Lined Chipboard - WLC)

0 200 400 600 800 1000 1200 1400

Mayr-Melnhof

Reno De Medici

Cascades

Moritz J. Weig

Stora Enso

Buchmann

Graphic Packaging Corp.

Kappa Packaging

Ilim Pulp

Cartiera Pirinoli

- Capacity 1000 t/a -

WLC Producers in EuropeLeading suppliers in Europe are Mayr-Melnhof, Reno di Medici and Cascades. There are tens of small companies in the market and the top 5 producers account for 50% of total capacity

In Great Britain WLC is only produced by two companies and the total allocated capacity is 12000 t/a. There is no WLC production in the Island of Ireland

The total WLC capacity in Europe is 4.7 million tons. A new machine in the Island of Ireland would even put a new player on to the top 10 producer list

0

2000

4000

6000

8000

10000

12000

14000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004


- 1000 tons -

0

200

400

600

800

1000

1200

1400

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004


- 1000 tons -


net imports

net exports

Packaging Carton MarketFolding carton consumption in Europe is close to 10.5 million tons, Producers then export a further 1.7 Mn tons (net). About 35% of consumption is WLC. Growth of cartonboard consumption is around 1% p.a., but the growth of WLC consumption is estimated to be higher at ca. 3%, even higher for Eastern Europe at up to 6% p.a. Total consumption of WLC is estimated to reach 4.5 million tons in 2010. There is capacity in place, so the opportunity for Ireland would come through excellent competitiveness, location relative to markets, and development of new attractive high-value niches (converting).

In the UK and Ireland consumption is ca. 1.1 million tonnes/a, of which 0.7 million is net import. Irish cartonboard consumption is estimated at ca. 50 000 t/a, all of which is imported – local converters would welcome a domestic supplier.


WLC - CompetitivenessA new WLC machine in the Island of Ireland would be very competitive in the UK market. Most of the capacity in Europe is very old and small in scale. The local converting industry in IOI could consume at least 15-20% of the production.

200

250

300

350

400

450

500

550

600

650

700

750

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000


- EUR/t -


Deliveredcosts

Manufacturingcosts

12

3

1) 250 000 t/a2) 180 000 t/a3) 120 000 t/a

0%

2%

4%

6%

8%

10%

12%

250 000t/a

180 000t/a

120 000t/s

- PM Scale -



Cost level 2004/III

Average

0

100

200

300

400

500

600

700

800

900

1000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004




WLC - FeasibilityThe opportunity is built around production of Recovered Fibre based Bleached Duplex Board, WLC. A new machine wouldn’t quite achieve 10% ROCE with current price levels even though the price level for packaging - cartons has remained generally quite positive for last couple of years. There is also a variety of end-uses available, which would link through local IOI converting. A potential option for IOI if costs can be optimised and local converters gain from domestic producer

250kt/a


220kt/a

180kt/a

120kt/a

Trend price 2008


PRINTING AND WRITING - UNCOATED

Option Description

Product Specification: Uncoated office/printing and writing papers . End-uses include:

Copy paperContinuous stationeryEnvelopesNotepads/Drawing pads

Furnish (example): 50-100% Recovered paper + chemical market pulp

World Scale: Capacity 100 000 t/a. Small machine due to the lack of white high quality recovered paper

Deinking plant on-site. 45+% power co-generation on-site.


Potential for a new mill:+ some imports substitution in the IOI market

+ environment friendly image increases demand for these papers

+ relatively small mill and hence not too demanding in terms of traffic, site area, environment etc.

- availability of white high quality recovered paper

0

100

200

300

400

500

600

700

100 k

t/a, 1

0% m

arket

pulp

120 k

t/a, 2

5% m

arket

pulp

160 k

t/a, 4

5% m

arket

pulp

Uncoated WF Paper machine

Fresh water

De-inking plant


Fuel(Bio-, NG...)

De-inking sludge

Steam & Electricity

Printing plants/Publishers

Chemicals

OMG/Office/Postconsumer waste recovery

National Grid

District heating

Power plant/CHP


BHKP

Consumptions - Recycled Uncoated Fine PaperCapacity t/a 100,000 120,000 160,000Market pulp t/a 8,000 24,000 58,000White office waste for t/a 16,000 16,000 15,000ONP/OMG for DIP t/a 88,000 88,000 86,000Kaolin/CaCO3 t/a 26,000 31,000 41,000Personnel person 250 280 310Investment MEUR 210 230 250



Investment Model



0 20 40 60 80 100 120 140 160

M-real

Dalum

Steinbeis Temming

Matussière & Forest

Golzem

Cartiere Cariolaro

Paperalia

Lenzing

Hermes

Cartiera Romanello


RCP Printing and Writing. Uncoated. European Producers

Leading suppliers in Western Europe are M-real, Dalum and Steinbeis Temming. Top 5 producers account for 75% of total capacity in western Europe.

In Great Britain, M-real New Thames is by far the largest producer. Also DS Smith (St. Regis Wansbrough) and Smith Anderson (Leslie) produce some recycled printing and writing paper in the UK.

A 120 000 t/a paper machine would be among the biggest in this market segment in Europe

0

5000

10000

15000

20000

25000

30000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004


- 1000 tons -

0

500

1000

1500

2000

2500

3000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004


- 1000 tons -



RCP Printing and Writing. Markets

Total consumption of fine paper in Europe is ca. 19 million tons, of which 580 000 tons is estimated to be recycled fibre based fine paper. Growth of recycled fibre based fine paper consumption is estimated at 2.8% up to 2010 in all of Europe.

In the UK consumption of recycled fine paper is estimated at ca. 120 000 t/a. The relatively large size of UK market is due to local production. New Thames production is based on integrated DIP.



TISSUE

CompetitivenessCompetitiveness of a new recovered paper based fine paper machine would be close to the industry average in the UK market when compared to all fine paper producers. The recycled based producers tend to be smaller and typically position to the 3rd and 4th quartile. Recycled grades can enjoy slight price premium in the UK market

The availability of white good quality recovered paper is the limiting factor and the use of market pulp has a direct negative cost impact

200

300

400

500

600

700

800

900

1,000

1,100

1,200

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500


- EUR/t -


Deliveredcosts

Manufacturingcosts

1 2 3

1) 100 000 t/a10% market pulp



-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

160 000 t/a 120 000 t/s 100 000 t/s

- PM Scale -



Cost level 2004/III

Average

0

200

400

600

800

1000

1200

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004


WoodFibreChemicalsEnergyPersonnelOther manuf. costsTransportCapital charges

Delivered costs to the UK Market, Cost level 2002/IVCapital charges contain of depreciation and 10% ROCE


FeasibilityA recovered paper based uncoated fine paper machine could achieve 10% ROCE with current price level. Prices for recycled grades are not very different from virgin fibre based prices – in some countries there is a small (5-15%) discount whereas in the UK recycled grades enjoy a price premium and there would be demand for larger volumes. However, the raw material quality is crucial for end product quality and pricing – the availability of white high quality recovered paper doesn’t enable production of premium qualities in IOI

100kt/a

120kt/a

160kt/a

Trend price 2008

Estimated market price = 90% of Copy-B


Option Description

Product Specification: Multi-ply tissue papers. End-uses include:

Hygiene papersNapkinsIndustrial towels

Furnish (example): 100% Deinked pulp

World Scale: Capacity up to 50 000 t/a. World scale machine

Deinking plant on-site. 40+% power co-generation on-site.


Potential for a new mill:+ imports substitution in the IOI market

+ links to local converting hence creating several indirect jobs

+ relatively small mill and hence not too demanding in terms of traffic, site area, environment etc.

- availability of white highest quality recovered paper- recent capacity increase in the UK

+ all production could be consumed locally

Tissue machine

Fresh water

De-inking plant


Fuel(Bio-, NG...)

De-inking sludge

Steam & Electricity

Tissue paperconverter

Chemicals

National Grid

District heating

Power plant/CHP


Consumptions - Recycled TissueCapacity t/a 15,000 30,000 50,000White office waste for t/a 5,600 11,200 18,600ONP/OMG for DIP t/a 16,800 33,500 55,900Power MWh/a 17,000 31,000 50,000Power, nominal MW 2 4 6Personnel person 47 53 75Investment MEUR 80 110 150

0

100

200

300

400

500

600

50 00

0 t/a

30 00

0 t/a

15 00

0 t/a


- EUR/t -Cost level 2004/III, Exchange rates September 2004 averagesDelivered to Dublin

Investment Model


TISSUE

0 200 400 600 800 1000 1200 1400 1600

SCA

Kimberly-Clark

Georgia-Pacific

Metsä Tissue

Sofidel

Kartogroup

Tronchetti

Procter & Gamble

Wepa

Cartiera Lucchese


Tissue. European Producers

Leading suppliers in Western Europe are SCA, Kimberly-Clack and Georgia-Pacific. Top 5 producers accounting for 50% of total capacity in western Europe.

In Great Britain, Largest producer is Kimberly-Clark with capacity exceeding 300 000 t/a. SCA and Georgia-Pacific are next, with LPC as fourth. These four producers hold 80% of the UK capacity.

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004


- 1000 tons -

0

200

400

600

800

1000

1200

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004


- 1000 tons -



Tissue. Markets

Consumption of tissue paper in Europe is ca. 6.3 million tons. Growth of consumption has been some 3.8% p.a. within the last 10 years in all of Europe. A demand growth of 3.2% p.a. is expected up to 2010 in Western Europe.

In the UK and Ireland consumption is ca. 0.9 million tonnes/a, of which almost 90% is produced in the United Kingdom. Irish consumption of tissue products is ca. 60 000 t/a.


TISSUE

0

200

400

600

800

1000

1200

1400

1600

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003


WoodFibreChemicalsEnergyPersonnelOther manuf. costsTransportCapital charges

Delivered costs to the Irish Market, Cost level 2004/IIICapital charges contain of depreciation and 10% ROCE


FeasibilityThe real prices for tissue jumbo reels have been quite stable. A new paper machine can be competitive in the local market enjoying a clear transport cost advantage. With more than 30 000 t/a capacity 10% ROCE would be achievable.

It must be noted that the actual market prices vary according to grade quality. The ultimate competitiveness is largely defined by converting operations.

50kt/a

30kt/a

15kt/a

Trend price estimate 2008


Appendix 8. Environmental Considerations.

The viability of a paper mill is not simply confined to the availability (in terms of quality, cost and proximity) of raw materials, energy source, transport and labour but extends to include a necessity for suitable geographical locations where the residual emissions can be adequately assimilated by the environment. Environmental Regulation of Paper Mills As a consequence of the significant environmental dimension of paper mills, these, in common with many major industrial activities, are subject to a number of EU Directives and standards/guidelines. EU Environmental Directives are implemented in each Member State by means of local regulation. While variations in the administrative and legislative procedures will vary in different Member States the overriding principle is that these Directives set down the minimum arrangements for the control of the specified activities. Consequently, irrespective of the location within IOI of any future paper mill the environmental controls will, at minimum, be no less stringent. The relevant Directives and environmental objectives include the EIA Directive, the IPPC Directive and the BREF Documents for this industry sector. Each is further elaborated below.

EIA Directive

Council Directive 85/337/EEC on the assessment of the effects of certain public and private projects on the environment. This Directive and its amendments (commonly known as the EIA Directive) give effect to the requirement for an Environmental Impact Assessment (EIA) to be conducted prior to specified projects proceeding to the development stage. In the context of paper production the Directive requires EIA of industrial plant for:

(a) The production of pulp from timber or similar fibrous materials (b) Production of paper and board with a production capacity exceeding 200

tonnes per day1

(c) Cellulose-processing and production installations Note: 1 Where a development is considered “likely to have significant environmental effects” plants at or below this threshold are also subject to EIA. It has been the usual practice for the term “likely significant effects” to be interpreted in the context of the precautionary principal, i.e. such projects will normally be deemed to require EIA.


IPPC Directive

Council Directive 96/61/EC on integrated pollution prevention and control (IPPC Directive). This Directive requires that, prior to commencement of production, the emissions from specified activities be regulated by means of a permit. Under IPPC licence the emissions of the various environmental media (air, water, waste etc.) are addressed in an integrated manner. Activities specified in the Directive as subject to IPPC include industrial plants for the production of:

(a) pulp from timber or other fibrous materials (b) paper and board with a production capacity exceeding 20 tonnes per day

Best Available Techniques

The IPPC permits must be based on the concept of Best Available Techniques (BAT). BAT is represented by a combination of optimisation of production/process efficiency and controls, wastewater treatment and formal environmental management techniques. The EU is in the process of defining BAT for each specified activity and this work is co-ordinated by the European IPPC Bureau to produce what are termed BAT Reference (BREF) documents. The relevant BREF document in this instance is the “ Integrated Pollution Prevention and Control (IPPC), Reference Document on Best Available Techniques in the Pulp and Paper Industry, December 2001”. This document sets out a comprehensive list of the best techniques for limiting the environmental emissions for pulp and paper production and establishes emission values for a range of environmental parameters that are considered to be appropriate for the sector. In determining the conditions to be contained in the IPPC licence the regulatory authority is required to take full account of this BREF document.

It is concluded therefore that any proposed mill, irrespective of location within the IOI, will firstly require development consent in accordance with established EIA procedures. Secondly the emissions from that facility will require comprehensive emission controls and limits as represented by BAT and are to be regulated in accordance with IPPC licence procedures. Environmental Profile of Paper Mills

Recovered fibre has become an important source of raw material for the paper manufacturing industry. This is not only for reasons of price but also because of the increasing environmental constraints imposed on the paper and packaging industry. These constraints include a requirement for producers to maximize the “recycled” content of their product and there are also obligations placed on the user for their ultimate disposal in an environmentally efficient and acceptable manner (primarily through segregation and return to paper/board producers and, to a lesser extent, as a fuel).


Paper is made from fibres, water and chemical additives with significant energy inputs needed to drive the production process. Electric power is mainly consumed in the operation of various mechanical plant elements. Process heat is primarily used for heating water, other liquors, for air dryers and for steam. Significant quantities of process water and cooling water are used. Various additives may be applied to assist the manufacturing process and to provide the paper product with the desired characteristics. A range of solid wastes and sludges are also generated. Recycled fibre (RCF) processes can generally be divided in two main categories, namely:

processes with exclusively mechanical cleaning i.e. without de-inking. They comprise products like testliner, corrugating medium, board and cartonboard

processes with mechanical and chemical unit processes i.e. with de-inking.

They comprise products like newsprint, tissue, printing and copy paper, magazine papers (SC/LWC), some grades of cartonboard or market DIP.

The environmental profile of paper mills varies with the type of product and the scale of production. An overview of the nature and scale of the profile presented by an integrated RCP based paper mill (including possible bleaching, sizing, coating) can best be considered in terms of inputs and outputs as presented below. (Source: BREF –Pulp and Paper Industry 2001) Inputs

Major Raw Materials

Recovered paper, starch Energy

Electricity from public grid, fossil fuels and/or biofuels for steam and electricity generation

Water

Cooling and process water Additives

Process aids: retention aids, tensides, de-foaming agents, biocides, soap, dithionite, NaOH, H2O2, Na2SiO3, acids and alkali, flocculation agents

Product aids: fixing agents, dry or wet strength agents, dyes, optical brighteners, others depending on the product properties


Outputs

Products.

Different grades of paper, packaging containers, packaging cartons, tissue, newsprint, printing & writing

Wastewater – process dependent

Organic substances, chlorinated organics, nitrogen, phosphate, suspended solids, salts, coloured substances

Solid waste

Sludge from raw water treatment, primary sludge (fibres, fillers, coating pigments), bio-treatment plant sludge, sludge from chemical wastewater treatment, rejects, de-inking sludge, ashes from steam/power generation, small amounts of other types of waste

Air emissions - regulated

From energy generation: SO2, NOx, CO2, CO, HCl, dust (emission depend on type of energy supply and type of fuels used)

From the process: small amounts of volatile organic compounds-VOCs (some paper grades only), visible plume, odour (mostly avoidable)

Energy

Waste heat to air and water Noise Mechanical plant, cooling fans, compressors, traffic etc. Wastewater

Wastewater is the principal environmental issue related to paper mills. Wastewater disposal requirements are also likely to be an important factor in site selection as post-treatment disposal will require a receiving system of sufficient assimilative capacity to accommodate the residual pollutants. The expected quantities and characteristics likely to arise from the refined choice of possible mill types identified in this study are elaborated below. BAT is represented by a combination of optimisation of production/process controls, wastewater treatment and formal environmental management techniques. BAT for wastewater emissions arising from RCP mills are set out in the Tables below. The values refer to plants where recovered paper processing and papermaking is carried out at the same site. Variations in process and product mix will clearly depend on the particular mill however for practical purposes the values presented can be considered as indicative of the overall scale of emissions (Source: BREF –Pulp and Paper Industry 2001)


Table 1. Average wastewater emission for RCP mills before and after primary + secondary (biological) treatment. Parameter Without de-inking With-inking

mg/l (min-max)

kg/t (min-max) mg/l kg/t

BOD1 before treatment

1,800 12.3

770 8.3

BOD after treatment

10 (3- 28) 0.06 (0.01- 0.13)

9 0.09

COD2 before treatment

3,200 22 1900 21

COD after treatment

150 (60- 270) 0.77 (0.29- 1.12)

290 3.1

TSS3 25 (17-40) 0.13 (0.06 – 0.21)

- -

Discharge volume

- 5.7 (3.1-11) m3/t

- 11 m3/t

Note: 1 BOD: Biological Oxygen Demand indicates the amount of biodegradable organic matter in the wastewaters. 2 COD: Chemical oxygen demand indicates the amount of chemically oxidisable organic matter in the wastewaters (also COD and BOD as a ratio are an indicator of the biodegradability of the pollutants) 3 TSS: Total Suspended Solids (in water) Based on these average values the likely wastewater arising for each plant capacity considered can be derived (See Table 2 below). For purposes of comparative scale it is usual to express the BOD load (i.e. the primary descriptor for biodegradable organic wastewaters) in terms of Population Equivalent (PE.). PE is the untreated domestic sewage load that would be generated by an equivalent population. (1 PE = 0.065kg BOD/day). Table 2. Projected untreated wastewater loads and population equivalents arising from RCF mills for the capacities considered in this report

Paper production capacity t/a

Without de-inking

With de-inking

Wastewater m3/day

BOD kg/day

Population Equivalent

Wastewater m3/day

BOD kg/day

Population Equivalent

400,000 6,424 13,862 213,263 12,397 9,354 143,909

250,000 4,0123 8,659 133,218 7,744 5,843 89,895


200,000 3,209 6,925 106,538 6,193 4,673 71,890

120,000 1,927 4,157 63,960 3,718 2,805 43,160

50,000 804 1,734 26,681 1,551 1,170 18,004 Note: Wastewater volumes exclude cooling water (can be largely re-circulated). While wastewaters from paper mills are capable of being treated to a high standard (possibly as good as 10mg/l BOD) it is apparent from the Population Equivalent values (up to 213,263 PE) that the quantities arising for treatment can be very substantial. Following extensive treatment access to a major sewer or surface water (large river, estuary, coastal waters) will be required. In the case of discharge to sewers secondary treatment may be provided through co-treatment with domestic sewage in the municipal treatment plant rather than at the mill. In order to ensure that the paper mill input remains the smaller fraction of the received wastewater loads and does not overwhelm the municipal plant this option will be confined to those sewerage systems serving larger towns and cities. Process Water

Process water (i.e. excludes cooling water) demand can be regarded as essentially equivalent to wastewater volumes and for the purposes of this exercise evaporative and other process water losses can be ignored. On this basis water requirements can be expected to range between some 1,000m3/day and 7,000m3/day. Energy consumption and Air Emissions

Air emissions in RCP based paper mills are mainly related to plants installed for the production of heat and in some cases for co-generation of electricity. Saving of energy corresponds therefore with reduction of air emissions. The power plants are usually standard boilers and can be treated like any other power plants. Various options for incineration of rejects and sludge arising on site may be available however their applicability is limited by the size of the mill and to a certain extent by the fuel used for generation of steam and power respectively. Energy efficient recovered paper mills consume process heat and power as follows:

Integrated non-deinked RCP paper mills (e.g. testliner, fluting): 6 - 6.5 GJ/t process heat and .7 - 0.8 MWh/t of power

Integrated tissue mills with DIP plant: 7 - 12 GJ/t process heat and 1.2 - 1.4 MWh/t ofpower

Integrated newsprint or printing and writing paper mills with DIP plant:

4 - 6.5 GJ/t process heat and 1 - 1.5 MWh/t of power. (Source: BREF –Pulp and Paper Industry 2001) It was determined in the course of this study that some 100,000t/a of biomass (wood fuel – bark, chips, offcuts, forest residues) could potentially be available as a source of “green energy” to supplement fossil fuels (natural gas, oil) requirements. The viability of such an


approach in the first instance, or the proportion of the energy requirement that could be contributed from biomass, will be greatly dependent on the particular mill product(s), configuration and location in terms of fuel haulage distances. Theoretically this quantity of biomass could contribute between 25% and 100% of the power (heat) consumption that is required to be generated on site. Traffic

Inward and outward traffic will be generated for which good road communications will be a necessary site consideration. Inward traffic will include:

Materials delivery (recovered paper, additional raw material, additives, fuel – possibly including biofuel)

Services (outsourced supports for maintenance, canteen etc.) Employees and visitors (cars)

Outward traffic will include:

Finished product(s) Process wastes (reject materials, paper based sludges, chemical and biological

treatment plant sludges, ash in the case of biofuel use) Services Employees and visitors (cars)

From an environmental and road infrastructure perspective the primary traffic elements to be considered are those associated with movement of the recovered paper and product (and biofuels-if used). It is assumed that most bulk materials will be handled by heavy goods vehicles (HGVs). Outward movement of finished product may approximately equate in volume to pre –compacted raw material intake. The table below provides a rough estimate of possible HGV movements in such circumstances. However where product is to consist of tissue significantly greater outward traffic numbers will arise due to the inherently low density/high volume nature of tissue. Table 3. Approximate HGV movements likely to be associated with raw material supply and product for plants of various capacities. (excludes biofuels) Plant capacity (t/a)

HGV movements per day for raw materials and product (assumes 20t capacity)

400,000 55 250,000 35 200,000 30 120,000 20 50,000 10


Site Considerations These various inputs/outputs have varying degrees of importance in considering a suitable site location for the chosen mill type. These are as follows: Wastewater Of the various environmental outputs it is the wastewater that is considered to be the most significant site constraint factor and the most geographically dependant. That is because the wastewater emission levels (following the application of BAT) will be such that the receiving waters must have sufficient “Assimilative Capacity” to ensure that mandatory receiving water quality standards are not exceeded. The availability of such receiving waters is highly dependent on fixed (geographical) factors namely: proximity to river or estuary of suitable size and characteristics, coastal waters, or sewers associated with major urban centres. The study suggests that organic wastewater loads up to a population equivalent of some 213, 000 people can arise. Process Water

While the upper value for process water requirement is high (7,000m3/day or 1.5mgd) such quantities of water are available at a large number of locations in IOI. Where not in close proximity to a major urban centre with a piped water supply groundwater sources are widely available as an alternative source. In the ROI major water users in more rural areas such as large food/dairy industry complexes have utilised significant quantities of groundwater reliably and effectively for many years. Raw Materials

Proximity to suitable quality and quantity of recovered paper for delivery by an adequate roads network. (Proximity to market is considered as less important given the higher value of product versus raw material) Energy

Energy requirements are represented by both electricity and fuel. While there is a comprehensive electricity supply network throughout IOI availability of an appropriate supply will be, to at least some degree, geographically dependent. In the case of fuel it is likely that only in the case of a proposal to utilise either natural gas or biofuel will geographical factors have a role in site selection. Atmospheric Emissions

By contrast to wastewater, air emissions (following the application of BAT) can be accommodated by the provision of sufficient stack height and the avoiding of proximity to unduly sensitive receptor sites at a local level. As such air emission considerations are essentially independent of site location.


Solid Wastes and Sludges

Solid wastes and sludges can be generally accommodated by offsite disposal irrespective of location. The disposal of wastes in regulated throughout IOI by a comprehensive range of permits and waste tracking procedures derived from various EU Directives. Under these regulations an adequate number of specialist, licensed, waste disposal contractors are readily available.

Traffic/Roads

Good road access for up 55 HGV movements per day will be required. Land Area Requirements An examination of various existing plants suggest that the site area requirements can vary between 65 hectares and 24 hectares depending on plant product mix and capacity. These indicative values, including paved areas estimates, are provided below. Product Type Plant

capacity (t/a)

Site area (hectares1

)

Paved area(m2)

Packaging – Containers. Unbleached testliner 400,000 55 103,000

Packaging – Containers –White surface testliner 200,000 35 66,000

Packaging – Cartons – white lined chipboard 250,000 65 118,000

Printing & Writing. 120,000 40 75,000

Tissue 50,000 24 44,000 Note: 1One hectare (ha) = 10,000m2


Water and Wastewater Charges

Local authorities both north and south apply charges on industry for water supply and wastewater treatment. Currently however there is no uniform basis for these charges and consequently these vary widely throughout the IOI. The most recent data collected by the DOEHLG (up to 2003) from the various local authorities throughout the ROI supports this view. The collected data shows combined water/wastewater charges to vary between as little as €0.71 per m3 (Wicklow) to a high of €26 per m3 (Cork) with a mean value of €3.78 per m3. This wide variation is in part due to discrepancies in how individual local authorities calculated the reported charges. Also in counties such as Cork (the highest reported charge) which have major industrial enterprises these charges have been negotiated on a case by case basis with a view to full cost recovery. It is concluded that irrespective of location it is to be expected that a paper mill, as a major water user and wastewater generator, would have to engage in such cost negotiations. The charges will normally be calculated on a cost recovery basis and include such elements as required capital investment for upgrading of the municipal plant, running cost contributions, monitoring charges and provision for future plant replacement/refurbishment. EPA routinely applies additional monitoring and compliance audit charges in the ROI under the IPPC licence regime. The alternative to these charges is for the enterprise to provide its own water from groundwater sources and to provide full wastewater treatment on site. Many major industries choose to adopt this approach as, depending on location, it can potentially provide significant cost savings. Development Levies

It is common practice for local authorities to apply development levies. As with environmental charges there appears to be no uniform approach in deriving the values. For example two recent apartment developments on two side-by-side 10-acre sites of near identical scale in south County Dublin attracted levies of some €2m (2002) and €6m (2004) respectively. In each case the services to be provided by the local authority were limited to sewer and water connection and were of similar scale. It is concluded therefore that development levies are only likely to be determined by direct consultation with the local authority in whose jurisdiction it is proposed to locate.


Appendix 9. Support Instruments for Proposed Paper Mill Northern Ireland Northern Ireland comprises six counties: Armagh, Antrim, Derry, Down, Fermanagh and Tyrone. In compliance with EU rules, the border counties in the North of Ireland are deemed to be: Armagh, Derry, Down, Fermanagh and Tyrone.

Introduction

This document sets out the potential funding streams available in Northern Ireland for a project such as the proposed Paper mill. As such, potential funding sources are outlined under the following headings:

• European Funding • Agency Funding and Supports

European Funding Under the 1994-99 round of Structural Funds support, Northern Ireland had been accorded the status of an Objective 1 Region (to 2006), that is a region whose development was lagging behind others in the European Community and warranted support from all 4 Structural Funds, those being:-

• ERDF: European Regional Development Fund • ESF: European Social Fund • EAGGF: European Regional Development Fund • FIFG: Financial Instrument for Fisheries Guidance

For the current round of funding (2000-2006) Northern Ireland exceeded the qualifying criterion having a per capita GDP greater than 75% of the community average. However Northern Ireland was able to avail of newly introduced transitional arrangements that provided former Objective 1 regions access to the 4 Structural Funds but on a declining basis so that by the end of the funding period, the Region would have adjusted to the lower and more limited financial support likely to be made available to an Objective 2 Region. Northern Ireland therefore secured funding for a Transitional Objective 1 programme “Building Sustainable Prosperity” which was complemented by a continuation of the PEACE programme. It is therefore expected that additional European funds will become available post 2006 (when the current support tranche expires) however this will be limited and competition will be very strong. It is also a reasonable expectation that many of the streams of support currently available under PEACE II funding, will also be supported in the new PEACE III era of European funding. Therefore, although the greatest majority of EU funding has already been allocated and calls have closed, examination of PEACE II funding priorities and measures should highlight the potential support available to a project such as the Paper Mill post 2006. The PEACE II programme had the following priorities:

• Economic Renewal


• Social Integration, Inclusion and Reconciliation • Locally based regeneration strategies • Outward and Forward Looking Region • Cross-border cooperation • Technical Assistance

The EQUAL programme concentrating on equal opportunities in relation to training and employment of socially disadvantaged individuals and groupings may also be a potential source of funding depending on the chosen location and the recruitment strategies employed. INTERREG IIIA offers various avenues of potential assistance for consideration if re-opened or repeated post 2006, those being:

• Measure 1.1: Business and Economic Development • Measure 2.1:Inter-regional Economic Infrastructure Theme A Cross-Border

Enterprise Facilities • Measure 2.2: Environmental Protection and Management • Measure 2.3: Renewable Energy/Energy Efficiency

Agency Funding and Supports Barry Gardiner MP is the Northern Ireland minister responsible for the Northern Ireland Dept. for Enterprise Trade and Industry, Dept for Employment and Learning (which controls Enterprise Ulster and Ulster Supported Employment Ltd) and the Dept for Education - an indication perhaps of the close-knit and often overlapping responsibilities of these different government departments and their agencies. The primary agency of interest to this project falls under the remit of the Dept for Enterprise Trade and Industry, that being, Invest Northern Ireland (Invest NI). Invest NI Through its overseas and local office networks, Invest NI ensures that companies locating in Northern Ireland have access to a range of practical and financial support to help them get started quickly and successfully develop their businesses.

• Location selection - Invest NI maintains a portfolio of sites in business and industrial parks and a range of property ready for immediate leasing. They also offer bespoke advice and guidance to help choose the right location for a business.

• Information provision - Key commercial information can be tailored to the needs of the

individual company and introductions provided to industry leaders, universities, centres of excellence, business professionals and other potential business partners.

• Inward visits/site visits - Visit programmes are set up specific to the client needs.

• Contacts - Contacts are provided for local professional services.

• Grant and incentives - Invest NI offer a range of business solutions that include flexible

and competitive financial incentives:


• Capital - the financial package can be tailored to facilitate new company start-ups, providing development capital, or to provide fixed asset assistance on buildings and equipment for large capacity and capability driven investment plans.

• People – to provide pre-employment training grants of up to 50% of eligible training costs, a recruitment and selection service and employment grants as each new worker is recruited.

• Technologies – the incentive package is geared towards projects that involve innovation, advanced technologies and enhanced design capability and university or research linkages. R&D grants of up to 50% are available.

• Venture Capital – The NITECH Fund has been established as a venture capital fund to finance the commercialisation of technology within new-start or existing businesses. This enables SMES and researchers to take an R&D project to proof of concept and commercialisation stages. Staged investments range between £20,000 and £200,000 with a maximum total investment of £250,000 being provided to any one company. The fund is available to Northern Ireland based start-ups.

• Green Technology Initiative - Invest NI provide interest free loans towards the cost of

capital equipment, as well as providing an information service in relation to environmental legislation, and providing a quarterly bulletin distributed to Industrial and Manufacturing Engineers and other environmental related sectors and companies – potentially a good method of inviting tenders for construction and generally publicising the paper mill to enhance uptake of its services. Upper limit is £50000.


Corporate Funding The amount of Invest NI funding available is to a large degree dependent upon the financial requirement of the company, anticipated employment creation, export potential and location. The funding is accessible via a client executive supported by specialist advisers. Corporate funding is available to those enterprises that satisfy the eligibility criteria and are considered viable. In addition to grant funding, Invest NI can offer debt facilities and equity (ordinary shares) capital to assist business towards faster growth. Invest NI will explore in conjunction with the client company’s management team, the most efficient capital structure based on cash flow patterns, expenditure needs over time and refinancing ability. Invest NI will consider funding proposals to the extent that it has been demonstrated that funding is not available from private sector sources or where the private sector is not willing to do so on acceptable terms to projects viewed as viable by Invest NI. Given that the roles and supports available through the International Fund for Ireland and InterTradeIreland have already been covered in the Republic of Ireland document, this brings to a close potential supports in Northern Ireland and the border county region.


Republic of Ireland (RoI)

Support levels

For the purpose of deciding maximum funding rates (in compliance with EU rules) for industrial development, the RoI is divided into three regions:

Region Maximum support level (% of eligible expenditure)

Dublin/Mid East SME 27.5% Large firm 17.5%

South East/South West/Mid West SME 30% Large firm 20%

Border/Midland/West SME 55% Large firm 40%

The regions cover the following counties: Dublin/Mid East: Dublin, Kildare, Meath and Wicklow. South East/South West/ Mid West: Wexford, Waterford, Kilkenny, Carlow, Kerry, Clare, Cork, Tipperary and Limerick. Both of the above are part of an Objective 1 Region in transition. Border/Midland/Western: Galway, Mayo, Sligo, Donegal, Louth, Westmeath, Longford, Laois, Leitrim, Roscommon, Offaly, Cavan and Monaghan. This is an Objective 1 Region. For the purposes of cross-border collaboration projects, such as those funded inter alia by the International Fund for Ireland, the border counties in the RoI are Louth, Cavan, Monaghan, Donegal and Leitrim. Agencies

The Department of Enterprise, Trade and Employment (DETE) controls two principal agencies responsible for implementing policy with regard to industrial development: Enterprise Ireland (EI), which is responsible for the development of indigenous industry Industrial Development Agency Ireland (IDA Ireland), which is responsible for foreign direct investment (FDI) i.e. foreign-owned companies in Ireland. Both agencies have offices throughout Ireland, often in the same building, and collaborate closely.


The International Fund for Ireland: This is an organisation established by the British and Irish governments in 1986 to promote economic and social advance and to encourage contact, dialogue and reconciliation between nationalists and unionists throughout Ireland. The fund gives priority to projects located in the most disadvantaged areas in Northern Ireland and the five Southern border counties. In the period up to September 2004 the IFI had approved projects to the value of almost Euro 419M. IFI has four main areas of activity: • Regeneration of deprived areas • Community capacity building • Economic development • International links Economic development covers: • The Business Enterprise and Technology Programme • Research and Development between Ireland and North America or Europe

• Tourism Programme • Flagship projects • Two investment companies, which provide venture capital on normal commercial terms The Business Enterprise and Technology Programme is most relevant to this project. However, funding provided to existing projects has been in tens and hundreds of thousands at most. InterTradeIreland: This is the cross-border trade and business development body, established under the international agreement between the governments of Ireland and the United Kingdom signed on Good Friday 1998 and commonly known as “The Belfast Agreement”. InterTradeIreland has a strategic vision “To lead the development of the island economy through distinctive knowledge-based interventions which will produce significant returns in the areas of cross-order trade and business development.” InterTradeIreland is committed to: • Establishing a channel for and an information source on North-South trade and business

development • Creating the climate whereby significant changes in the nature and level of trade and co-

operation between the two economies can be generated • Enhancing competitiveness by encouraging information sharing, joint marketing initiatives,

joint research and development and other ventures. • Encouraging the flow and exchange of venture capital within the two economies and between

firms and third level institutions. InterTradeIreland is thus not primarily a funding body. County Enterprise Boards:


These can provide modest amounts of support (<10k) to companies employing ten staff or fewer.

Supports

Both EI and IDA Ireland provide extensive supports to their client companies. These include marketing, personnel development, business planning, technology acquisition and financial supports for feasibility studies, R&D, training and capital acquisition. Normally, these supports are negotiated by the company’s Development Advisor at a local level on a case by case basis, within guidelines. The amount of EI funding will be determined by the need for financial support for the project, the anticipated export growth, the potential employment and the regional location. Funding is usually in the form of redeemable preference shares rather than a grant. EI generally seeks redemption on the fifth anniversary of investment. In the case of R&D and training supports some or all of the preference shares can be re-designated as a non-repayable grant. Repayability is highest in the Dublin/Mid East region and lowest in the Border, Midland and Western region. Funding may be invested up front, depending on the company need and timing of the project expenditure or it may be in the form of tranched installments to match expenditure. Investment and job creation funding will always be re-payable, as there will be no longer capital or employment grants. In the case of a major investment, such as is contemplated in this feasibility study, requests for assistance would be considered by the Boards of EI and IDA Ireland and, given the size and political thrust of the project, almost certainly at Cabinet as well. It will not be a simple case of filling in a standard application form. Whether a request for financial support for this project would be addressed to EI or IDA Ireland would depend on the amount of FDI involved. Venture Capital can of course be raised in the normal commercial way. EI does not act as a broker but can assist companies with contact details in specific areas of interest for the major Irish venture capital companies. Details are also available from the Irish Venture Capital Association, whose members professionally manage over 95% of the Euro 1.25 Billion managed by venture capital funds on the island, InterTradeIreland and others. EI partners with venture capital funds to provide finance. Under the National Development Plan (NDP) 2001-2006, the Government has committed Euro 95M through EI to partner with the private sector to continue the development of the venture capital market for SMEs. EI has committed to 15 funds aimed at SMEs at start up, smaller investment amounts (<500k first round), a greater regional perspective and sectors that have been difficult to finance, e.g. Biotechnology. The Business Expansion Scheme is a tax-related incentive to encourage investment in industry. It applies to relatively limited sums, in the order of Euro 1M, with restrictions. Interreg III:


This is an EC initiative to encourage trans-national co-operation in spatial planning and development between national authorities. The North West Europe (NWE) Programme covers Ireland and the UK as well as states in near continental Europe. Interreg is funded from the European Regional Development Funds (ERDF) and Irish participation is managed by the Department of Environment, Heritage and Local Government. Funding is competitive. At this stage it would be unrealistic to count on any support for this project from Interreg. Support from Interreg III will be focused on four areas, including promoting the environment and good management of cultural heritage and of natural resources. The allocation to the NWE programme is Euro 109M. There are five priority areas, the most important here being: Priority 4: Develop a stronger ecological infrastructure and a reduced ecological footprint. The NWE ecological footprint, i.e. its negative global environmental impact must be reduced. This entails tackling a wide variety of issues such as managing waste disposal, developing renewable energies and promoting sustainable use. The North South Ministerial Council (NSMC) agreed in 1999 a range of areas for co-operation, including the environment. A working group of the NSMC has issued joint communiqués on water quality, the environmental impact of agricultural activities and waste management. On the last topic, a steering group of officials has been established to develop a structured approach to a joint programme for the development of markets for recyclable materials e.g. materials that are collected in bring banks, segregated household waste collections, recycling centres, etc.


Appendix 10. References


References A North/South Analysis of Manufacturing and Growth and Productivity – Dr Eoin O’Malley and Prof Stephen Roper – InterTrade Ireland Report 2001 A Strategy for Developing Recycling Markets in Ireland, Published by the Environmental Protection Agency and Clean Technology Centre, Ireland, 2002 Accredited paper reprocessors drop to 43 while exporters increase to 41, Marley, ME, Paper Technology, vol. 45, no.8, p3 Oct 2004 arc21 Waste Management Plan, Jan 2003, www.arc21.com Biodegradable Waste Strategy for Northern Ireland, Draft Report, Published by Environment and Hertiage Service, DoE, May 2003 Birkner 2004 Directory of the Paper industry Published by Birkner & Co, 2003 CEPI European Pulp and Paper Industry Annual Stastics 2003 Published by the Confederation of European Paper Industries, June 2004 Coiltte The Irish Forestry Company http://www.coillte.ie/ DEFRA Task Force Report on Packaging Waste, November 2001 Department of Agriculture and Rural Development www.dardni.gov.uk Department of Enterprise, Trade and Investment www.detini.gov.uk Department of the Environment, Heritage & Local Government DOEHLG www.environ.ie/doei/doeipol.nsf Distribution Packaging in Europe, Pira International, September 2002 EC Directive on Environmental Impact Assessment 85/337/EC EC Directive on Integrated Pollution Prevention and Control 96/61/EC EC Directive on Packaging and Packaging Waste 94/62/EC EQUAL programme A European Social Fund Community Initiative http://europa.eu.int/comm/employment_social/equal/index_en.cfm EPA 2005.. Meeting with Brain Meaney, EPA, Wexford. 6th January 2005. ESRI The Economic and Social Research Institute of Ireland– www.esri.ie Eurostat – Dataset DS-016890 – EU Trade since 1995 Financial Times - Currency Exchange Rates


Future of Corrugated Board Packaging for the European Market , Pira International, 2003 Future of Print 2, Pira International, 2004 Green Bin report, Published by Oxigen Environmental Ltd, July 2004 Industrial and commercial waste production in Northern Ireland 2002: A final report to the Environment and Heritage Service Integrated Pollution Prevention and Control (IPPC), Reference Document on Best Available Techniques in the Pulp and Paper Industry, December 2001 INTERREG IIIA A European Commission Community Initiative to encourage transnational co-operation on spatial planning. http://www.interreg.ie/main.html Kelly’s Business Directory Published by Reed Business Information National Waste Database Interim Report 2002, Published by Environmental Protection Agency, Ireland, 2004 National Waste Database 2001, Published by Environmental Protection Agency, Ireland, 2003 Navigating the Challenges of Global Markets and Structural Change,11th International Containerboard Conference, Paperloop, Chicago October 2004 NITECH Fund Venture capital to finance the commercialisation of technology within new-start or existing businesses. http://www.investni.com/index/develop/dv-invest-in-rdt/research_and_development/nitech.htm North West Region Waste Management Group – Waste Management Plan, http://www.northwestwasteplan.org.uk/downloads/5253.00%20NW%20WMP%20Front%20Cover.pdf Northern Ireland Forest Service http://www.forestserviceni.gov.uk/home.htm Northern Ireland Transitional Objective 1 programme ‘ Building Sustainable Prosperity’ Northern Ireland Waste Management Strategy Review Report, Published by Environment and Hertiage Service, DoE, June 2004 Official Producer Responsibility Packaging data, 2004 http://www.defra.gov.uk/environment/waste/topics/packaging/ Packaging in 21st Century, A Strategic Futures Report, Pira International, June 2001 Paper and board – European list of standard grades of recovered paper and board, European Standard EN643, December 2001


Paperloop – on-line information service for pulp and paper industry www.paperloop.com PEACEII programme The EU Programme for PEACE and Reconciliation in Northern Ireland and the Border Region of Ireland http://www.europe-dfpni.gov.uk/peaceii.htm Personal communication - Andrew Rothwell –Moulded fibre products, March 2005 Social Research Institute, ESRI, Medium Term Review 2003-2010, July 2003 Press Release, ‘Roche expresses regret at Smurfit closure’ Press Office, Dept. of the Environment, Heritage and Local Government, Ireland, January 2005 Production Indices-Industrial Sectors Pulp and Paper Industries NACE 21 http://eirestat.cso.ie/MIEMvarlist.html Quarterly Economic Review – Dept of Enterprise Rade and Investment – www.detini.gov.uk Renewable Obligation Certificates http://www.restats.org.uk/renewables_obligations.html Southern Waste Management Partnership – Waste Management Plan - www.swampni.org.uk Statistics on the trading of goods – user guide, 2004 edition, published by Office for Official Publications of European Communities Statistical Yearbook of Ireland 2004 Published by the Stationery Office, Dublin, Ireland, October 2004 The Belfast agreement http://www.nio.gov.uk/the-agreement The Complete Worldwide Tax and Finance Site www.worldwide-tax.com/ireland The Northern Ireland Household Waste Characterisation Study, 2000, Published by Environment and Hertiage Service, DoE, Jan 2001 The Recovered Paper Market Capital Markets Day, Liger P, StoraEnso, 2003 The Times Business Section Wed Jan 12 2005 p50 Tissue report www. euromonitor.com/disposable_paper_products_in_Ireland Trade Stastistics Published by Central Statistics Office Ireland December 2003 We are changing the way we deal with waste are you? Published by Waste Management Services, Dublin City Council, 2004 Will recovered paper prices remain stable throughout 2005? Marley, ME, Paper Technology, vol. 45, no.10, p2, Dec 200