Tk100cr fresh investment to ramp up waste paper processing

Paper industry leaders are now leaning towards boosting the recycling of waste paper as the dearth of dollars continues to hinder the import of raw materials of pulp and paper.

According to sector insiders, the new investment will be a shot in the arm for the industry, which has been facing a crisis since the pandemic hit in early 2020, halting imports. The Russia-Ukraine war made the crisis only worse with the dollar shortage.

Lipy Paper Mills Ltd, a company that currently produces and exports white print paper, has invested Tk100 crore in waste paper processing to turn discarded or thrown-away paper into new paper products.

Shahriar Hasan Khan, deputy managing director of Lipy Paper Mills, told The Business Standard (TBS), "We made the investment in waste paper processing to reduce the dependence on import of raw materials (pulp). We are now in the middle of installing modern machinery in our factory in Sonargaon to process discarded paper and make new products."

According to people concerned, at present only a few local paper mills have the required infrastructure to recycle waste paper. 

Bashundhara Paper Mills Ltd, Base Papers Ltd, Meghna Pulp and Paper Mills Ltd and a few other mills are engaged in the paper recycling business.

But the amount of waste paper recycled by these mills is inadequate compared to demand. The demand for recycled waste paper, which is reused as a raw material in paper mills, is soaring now. Hence, the price of paper is increasing.

The paper industry faced its first blow during the pandemic when educational institutions and offices were shut for a long time.

As offices and educational institutions reopened, the paper business started to rebound quickly to meet the gap in demand arising out of the pandemic.

But the Russia-Ukraine war was a double whammy for the industry, bringing in major supply chain disruptions and price hikes of raw materials.

Shafiqul Islam Vorosha, president of the Bangladesh Paper Importers' Association, told TBS, "Opening letters of credit (LC) is a big problem now for the industry. We can open only 20% of the LCs required for importing raw materials. That is why local mills are unable to produce paper products as per demand."

The National Curriculum and Textbook Board (NCTB) has also faced problems in the free distribution of books due to the increase in the price of paper and the shortage of pulp (needed to make paper).

To solve the shortage of pulp, the NCTB supplied its own old books to the paper mills. These old papers have been recycled and new paper has been produced, with which the new textbooks of NCTB have been printed.

The newspaper industry has also been counting losses due to the soaring paper prices.

According to Textbook Printing and Marketing Association sources, the country needs about eight lakh tonnes of paper every year. The local mills produce the lion's share of the yearly demand while some paper is imported from different countries. However, a majority of the raw materials needed for producing paper are imported.

Why is Lipy Paper investing in paper recycling?

As a new player in the waste paper processing sector, Lipy Paper Mills is setting up a new waste paper processing factory in Sonargaon upazila of Narayanganj.

According to PULPPAPERnews, Lipy Paper bought paper processing machines from the ANDRITZ Group — an international technology group offering plants, equipment, systems and services for various industries including the pulp and paper industry.

The ANDRITZ RCF (Recycled Fibre) line is the first-ever paper processing line in Bangladesh, which is scheduled to start operation in the middle of 2023.

According to sources, ANDRITZ will supply key equipment for two RCF lines, featuring a total capacity of 150 tonnes per day and processing LOCC (Local OCC) and MOW (Mixed Office Waste) as raw material for the production of test liner, writing and printing paper.

Shahriar Hasan Khan, deputy managing director of Lipy Paper Mills, told TBS, "We are investing Tk100 crore in waste paper processing mainly to reduce the pressure on foreign exchange reserves and produce new products from discarded paper."

"The NCTB could not print books on time due to a shortage of raw materials and the high cost of paper. As a result, books have been printed by processing old paper with a lot of effort. The quality of these books is also not good," he said. 

"Around 40 tonnes of waste paper is created from every 100 tonnes of paper sold. This waste paper goes into landfill. It is possible to save dollars by recycling this waste paper locally," Shahriar Hasan Khan added. 

Mohammad Iqbal, organising secretary of the Bangladesh Waste Paper Suppliers Association, said, "For the last two years, the demand for waste paper from paper mills is increasing. But the amount of collected waste paper is far less compared to demand. Waste paper is not coming to the proper channel and a large part of it is ending up in landfills."

Bashundhara Paper Mills Ltd, one of the major players in the paper industry and market leader in the tissue industry, is the major shareholder in the paper processing industry.

M Mazedul Islam, general manager of Bashundhara Paper Mills, said, "Our mill has been in operation for a long time to produce raw materials by processing waste paper, which is able to meet part of the raw material demand of the local mills."

"Now the dollar crisis has worsened the shortage of raw materials in the paper industry. Bashundhara Paper has not had any problems yet. But we might face issues in the future if the dollar shortage continues. In that case, waste paper processing will provide good support," he added.