NPG, MPM and Hokuetsu Kishu Hit by Japanese Earthquake, Tsunami; Fears for Integrated Mills

BRISBANE, Australia, March 14, 2011 /PRNewswire/ -- A massive 8.9 earthquake that struck Japan last Friday has put several large pulp and paper mills out of commission.

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The megaquake, whose epicenter was in Miyagi prefecture north of Tokyo, sparked a huge tsunami that caused devastation across much of the country's northeastern seaboard, and is estimated to have killed several thousand people.

Both the quake and the tsunami may have damaged several pulp and paper facilities in the region severely, though firms are still determining to what extent.

And while such physical damage seems mostly localized to a few northeastern prefectures so far, a local source explained that, as several large integrated pulp mills and receiving ports for wood chips from North America, South Africa and Australia are located there, raw materials procurement is going to be more difficult for the country in general.

Many Japanese paper and board producers have chosen over the years to produce their pulp in-house. The measure is intended to control raw material costs, as woodchip prices tend to be less volatile than those of market pulp.

However, after being hit by one of the largest earthquakes on record, followed by a ten meter tsunami, there is some fear that the receiving docks and equipment of the northeastern pulp mills will be offline for some time.

MPM flagship down: A case in point is Mitsubishi Paper Mills' (MPM) integrated Hachinohe mill, in Aomori prefecture. It is the company's Japanese flagship facility, and one it has concentrated its production on in recent years in an attempt to cut internal costs.

The integrated plant, which can produce 585,000 tonnes/yr of bleached hardwood and softwood kraft pulp, none of which is sold to the market, around 849,000 tonnes/yr of printing/writing paper and 59,000 tonnes/yr of solid bleached board, was hit hard by the tsunami.

It flooded its whole first floor and injured at least six staff members. Production has stopped there, and MPM is still investigating the extent of the damage.

MPM also reported that production had shut down at some converting plants and building materials plants inland, in quake-affected areas.

NPG production hit hard: Within Miyagi prefecture itself, Nippon Paper Group (NPG) reports that two of its mills, Ishinomaki and Iwanuma, have been offline since the quake. Employee casualties were minor, with one staff member at the Ishinomaki mill injured.

The Ishinomaki facility's stock was destroyed and the site flooded with mud from the tsunami, while half the stock at the Iwanuma mill was a write-off. There was some structural damage to Iwanuma's buildings as well.

NPG is still evaluating the effect of the events on the mill's machinery.

An integrated facility, Ishinomaki can produce 643,000 tonnes/yr of various wood pulp grades, 370,000 tonnes/yr of deinked pulp, and almost 1.1 million tonnes/yr of graphic and specialty paper. It produces no market pulp.

The Iwanuma mill, also an integrated facility producing no market pulp, has a capacity of 420,000 tonnes/yr of thermomechanical pulp, 514,000 tonnes/yr of deinked pulp, 522,000 tonnes/yr of newsprint and 120,000 tonnes/yr of uncoated mechanical and woodfree paper.

Elsewhere, in Fukushima prefecture, NPG's 44,000 tonne/yr carbonless paper mill in Nakoso has also stopped production, and stocks there have been significantly damaged as well.

Further afield on the northwestern coast, the Akita mill, operated by NPG's subsidiary Nippon Daishowa Paperboard, has stopped production. No information is available yet on damage levels or a possible restart date.

The facility can produce 714,000 tonnes/yr of fiber, split evenly between virgin and recovered, as well was 170,000 tonnes/or of coated woodfree paper and 400,000 tonnes/yr of kraft linerboard.

Also, production has been somewhat interrupted at NPG's Fuji mill, which can produce 380,000 tonnes/yr of wood pulp, 230,000 tonnes/yr of fiber from recovered paper, 30,000 tonnes/yr of printing/writing paper and 94,000 tonnes/yr of packaging paper. However, the company expects normal production to restart soon.

Activities are continuing as usual at NPG's other mills, including its mills in Hokkaido prefecture, which is relatively close to the quake's epicenter.

But the company is concerned about the procurement of raw materials over the medium term.

It flagged up that all of its stocks in the Sendai port, on the east coast and close to the quake epicenter, have been destroyed, and that it lost some stock at a Tokyo port as well.

Oji also impacted: In terms of other companies, the damage seems less serious so far.

Oji Paper's Nikko mill in Tochigi prefecture has stopped production after being affected by the earthquake. The company has not announced when it will restart production.

The facility can produce 244,000 tonnes/yr of various carton and containerboard grades, as well as 36,000 tonnes/yr of pulp.

Oji has also revealed that four of its converting plants in the northeast have stopped production, and that it was still evaluating the damage done to them.

And Hokuetsu Kishu Paper's 100,000 tonne/yr cartonboard Hitachinaka mill in Ibaraki prefecture has also stopped production. The company has released no details about injuries or the extent of the structural damage, but about 30% of its stock has been lost.

The firm also reported that its flagship mill in Niigata prefecture stopped operating on Friday when the earthquake caused a water pipe to leak, but that the facility restarted production on Sunday.

The Niigata mill can produce 720,000 tonnes/yr of groundwood pulp, 1.26 million tonnes/yr of graphic paper, and 45,000 tonnes/yr of boxboard.

About RISI

RISI is the leading information provider for the global forest products industry. The company works with clients in the pulp and paper, wood products, timber, biomass, tissue, nonwovens, printing and publishing industries to help them make better decisions. Headquartered in Boston, MA, RISI operates additional offices throughout North and South America, Europe and Asia. More information can be found at www.risi.com.

SOURCE RISI

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