Summary
Four years after the initial announcement this mill is finally showing signs of becoming a reality. Financial markets have improved and now underwriting the US$1.7 billion project is no longer such a challenge.
Having Sodra as a joint-venture partner proved to be the catalyst.
This mill will produce 1.1 million mt of Bleached Eucalytpus market pulp for India, China and other SE Asia countries. This is most welcome in light of the new paper machines being installed.
Analysis
Gunns has a long history of growing cold-weather resistant Eucalyptus trees on 300,000+ hectares of plantations. These trees all went into chips which found their way to pulp mills in Japan, Korea, China and Taiwan. Erecting a world class pulp mill is a major "value-added" project that will greatly increase revenue in years to come.
Eventually the pulp mill may provide the fiber for a new paper machine to produce UFS papers for the growing Australian market.
India will no doubt be the major market area since that country's huge middle class will be increasing its appetite for A4 Copybond, book papers, commercial offset printing papers, tablet, CPO, Carbonless and fancier text and cover grades.
Environmentalists have been particularly aggressive in their opposition siting damage to old growth forests, water and air purity and harm to indigenous animal population. Gunns has been successful in proving to the Gov't that these fears are unfounded, or, if present, could be controlled. The threat to old growth forests was shown to be invalid because the eucalyptus plantations have been cultivated for the past 30 years.
This new pulp joins the new joint venture (Arauco and Stora-Enso) mill in Uruguay which will produce both pulp from Radiata Pine and cold weather resistant Eucalyptus. The new paper machines being installed in India and China will have a huge pulp requirement and this new BEK mill will help satisfy those needs. As an example, India has a new machine measuring 438" wide that will run 4500 fpm - producing 650,000mt/year. With at least 75% of this being fiber, the fiber need will be 500,000 - almost half the new Gunns' mills' output! China has two coated freesheet machines being installed that together will require almost 750,000mt of fiber. These three machines will more than exhaust the output of the Gunns' mill.
It is expected that Sodra will be providing about 40% of the financing needed. Expected startup will be sometime in 2012. Bell Bay is located in northern Tasmania (Australia).
