Biomaterials May Be Next Growth Engine for Paper Industry

According to a report this past week featured on the Bloomberg Business, New York, N.Y., USA, website, as the digital age curtails use of newsprint and stationary, European papermakers are retooling their factories to produce more profitable materials that go into everything from fuels to sweeteners and even hair dye.

 

According to Bloomberg, that’s because global growth in pulp and paper consumption plunged 80% in the seven years through 2014, forcing companies such as Stora Enso and UPM-Kymmene to find new uses for the raw materials coming from trees that they manage.

 

The shift is creating a business selling so-called biomaterials, defined as goods created from living things. In industrial terms, it’s the science of making products from plant sources instead of conventional sources. While paper companies have long used waste wood as a power generation fuel, turning to biomaterials opens a wealth of new possibilities.

 

We’re "looking for an engine of growth, and biomaterials is it," said Juan Carlos Bueno, head of a unit working with the products at the Helsinki, Finland-based Stora Enso. The company got 38% of its earnings from paper last year, down from 70% in 2006. "We are working toward being a renewable materials company instead of a paper company."

 

Stora Enso now produces ingredients used in ketchup, salad dressings, baked goods, hair dye, diapers, sponges, and car tires. UPM-Kymmene, another Finnish pulp and paper company, makes wood-based fuels and gels for medical research and plastics.

 

The article points out that fuels are another big product for the industry, which generates waste from processing wood. Those ventures will continue to grow along with the investments in biomaterials, said Claire Curry, an industry analyst at Bloomberg New Energy Finance in New York.

 

Norske Skogindustrier ASA in July said it plans to invest 150 million kroner ($18 million) to build a biogas facility next to its Saugbrugs mill in southern Norway. The plant will convert the mill’s raw-materials waste into renewable fuel to sell to AGA, a unit of Germany’s Linde AG.

 

"The pulp and paper industry has every reason to move into biomaterials, particularly biochemicals as they are more valuable than biofuels," Curry said. "We can expect to see pulp and paper companies playing a significant part in this industry."

 

Stockholm, Sweden-based forest products maker Holmen AB meets 70% of its thermal-energy needs by burning bark from trees and wood-derived biofuels. The company is researching how to raise energy extraction levels and use its by-products to make chemicals, according to its website.

 

"Over the next 10 years, we are projecting an 8.2% annual growth rate for wood pellets, the most important traded biomass commodity," said Seth Walker, bioenergy economist at RISI. He said he "expects paper companies to develop significant biomaterials businesses, especially in Europe."