(www.chinapaperonline.com) China’s paper and board producers, led by Nine Dragons, began to set up mills in foreign countries as early as 2008. The intention, initially at least, was to develop new markets of finished products as a complement to the congested investment in China. Since 2018, however, things have changed as a result of the fiber shortages that may impair the cost effective operation of the China-based industry that significantly consumes recovered paper collected from both domestic and foreign lands. Today, Malaysia has become a hot spot with its ample forest resources, good geographic location serving China and North America, Europe and Oceania and friendly government policy to attract foreign investment.
On April 3rd, 2019, Shanying Paper – the 3rd largest paper and board company in China – was reported to have entered into a memorandum of understanding (MoU) with the Sarawak State Economic Development Corporation (SEDC) of Malaysia. According to the MoU, Shanying plans to spend US$1.8 billion to build a 2 million/mtpy containerboard mill consuming recovered paper from local and foreign supplies. Construction from 2020, if on schedule, Phase I of the project is to complete and begin commercial runs in 2023, paving the way for construction of Phase II the same time.
Earlier in the year, Lee&man - the 2nd largest paper conglomerate in China – was said to have earmarked HK$5.1 billion to build a 550,000/ mtpy pulp mill and a 700,000/mtpy containerboard mill in Malaysia in 5 years. This will add to the company’s existing mill in Vietnam and will export the products to China, where by 2035, paper and board consumption may likely exceed 300 million/tonne!
Jinxing Paper, a containerboard producer publicly listed in the Shanghai Stock Exchange, also announced early this year to invest US$299.4 million for a pulp and containerboard complex in Malaysia. Under the 4-year plan, the company will first build a 800,000/mtpy recycled pulp mill using OCC from USA in particular. In Phase II, the company will add a 600,000/mtpy containerboard mill.
The Zhejiang Xinshengda Holding Group Co. Ltd., a former alliance of 7 paperboard producers in Fuyang and became the current holding group after merging another 12 paper makers in Zhejiang Province, was in keen discussion with Malaysian authorities on the construction of a 700,000/mtpy coated duplex board mill. Employing 3 machines, the project, if goes through, will begin commercial runs in 2020.
Not to including the statement of Nine Dragons to have owned investment in Malaysia, the combined pulp and paper capacity of the announced projects above has exceeded 5 million/mtpy! If all go through, Malaysia will become a major pulp and paper production country in Asia, benefiting from the strategic change of China’s paper industry from feeding its domestic consumption with local production to meeting with future demand in China by shipping packaging paperboard produced in mills in Malaysia and other foreign countries to China.