PULP AND PAPER

Ellesmere Guardian, Volume LIV, Issue 22, 21 March 1933, Page 8

PULP AND PAPER

DOMINION POSSIBILITIES.

FACTS FROM ABROAD.

COSTS AND MARKETS

(By L.C.W)

Pulp and paper manufacture are among the world's greatest industries. In Europe, Scandinavia and Great Britain are leaders, the former in pulp and paper, the latter mainly in the conversion of imported pulp into all classes of paper and allied products. Across the Atlantic, Canada and the United States monopolise the business, and the form.gr now exports more than the rest of the world combined. The reasons for this are two. For success you have to have in juxtaposition the water power for generating electricity, as well as river or sea transport for the raw material and finished product, and large and accessible areas of suitable forest. Canada is a country that fulfils these requirements almost 100 per cent. The location of a mill is mainly determined by the presence of water power that can be economically harnessed to the needs of the industry. There are mills that produce for their own purpose more units of electricity than are generated at Arapuni. Canada is the bast country to examine in any attempt to gauge the elements that constitute the essentials in a successful development of the ' industry. Several of the large companies in ttie United States have adopted a policy of shutting down their old home mills and building new ! mills in Canada to equal or exceed their previous production. In 1930 there were 32 mills making pulp only, 49 combined pulp and paper mills and 28 mills making paper only. But the present trend is toward the building of the larger combined mills of the type known as "self-contained newsprint mills," and toward the merging of individual companies into a comparatively small number of large groups. Production Figures.

The quantity of pulp made in Canada in 1930 was 3,619,345 short tons, of a value of 112,355,872 dollars, or approximately £6 per ton. It is the immense capital figures that must startle those used to dealing in less spectacular finance. The properties of one of the moderately-sized combined mills, according to the 1932 balance-sheet, are valued at over I £5,000,000, and with all these assets the profit shown was only just over £40,000, owing to depressed trade conditions. It has been noted that the movement is toward the combined pulping and newsprint mill, and the reason for this is that the output that is necessary for economic newsprint production is 100,000 tons per annum, of 22401b., and with such production it pays to be self-contained as far as possible. This output entails a four-unit plant, each with a daily capacity of 100 tons. The cost of such a plant, with its accessories, even in England, where the machinery is made, would be £1,750,000.

Such a mill could not be erected in New Zealand for less probably than £3,000,000. Canadian and English opinion is agreed on the point that production on a lesser scale has become an uneconomic proposition, and that those engaged in manufacture in a small way, in almost all cases, will be eliminated by competition. At present it would be difficult to suggest any reasonable outlet for tonnage which might be manufactured in New Zealand in excess of home consumption. This, at the present time, represents only about 20 per cent, of the normal annual output of a modern plant. Output and Prices.

No large mill anywhere is now working to capacity, and in some cases plants that ran from Tonight Sunday, to midnight Saturday, year in and year out, are now only running half time. It is the colossal nature of the enterprise that anyone viewing the matter from the standpoint of New Zealand possibilities, must consider. In Newfoundland, a six-unit plant has timber limits up to two and a half million acres. It was in New-' foundland that a disastrous attempt

was made to establish a mill with British capital just after the closa of the war. Some millions of pounds were lost in the enterprise. Of course, there are a variety of products, more especially various kinds of building boards and materials which are based on wood pulp. The World's Paper Trade Review of August 19 gives the prices for various descriptions of chemical pulp delivered at English ports as ranging from £7/5/- to £ 10/15/-. In New Zealand practically all the materials used in the manufacture of chemical wood pulps would have to be imported. The price of mechanical wood pulp also delivered at United I Kingdom ports, according to the! same trade journal, varies from £2 to £2 12s 6d for the 50 per cent, moist and from £5/10/- to £6/15/- for the dry.

There have been several tentative proposals to manufacture newsprint in New Zealand, but the total consumption of the country is so small, comparatively, that if all other factors were favourable, an export would be essential to success. And it is not to be expected that this country could enter into unprotected competition with the immense organisations and .aggregations of capital on the other side of the world. There is a mill in the Dominion producing kraft paper (used largely for wrapping parcels), but here consumption is entirely local and there i3 a duty of £10 (with surtax £8) per ton on the imported article if of British origin. Foreign is subject to a duty of £10 10s, plus surtax. It seams certain that this class of paper could not go in competition abroad, where the price is below £20 per ton, f.o.b. Canadian ports.

It will be seen that there are many points to consider in examining the possibilities of ' establishing a pulp and paper business in New Zealand, besides the supply of wood. Principal among them are water carriage, cheap water power, abundant finance, and, most important of all/ some assurance of profitable outside markets.