Newsprint for developing countries

Börje Kyrklund

Börje Kyrklund is Chief of the Pulp and Paper Branch in the FAO Forestry Department.

The economics of combining different pulping processes

In the early 1970s, the thermomechanical pulping process (TMP) attracted great attention in the pulp and paper industry. The reasons were that, first of all, it provided a means of producing good-quality pulp through a mechanical process and, secondly, there were indications that no chemical pulp would be needed in combination with it in the paper, making furnish for newsprint. Thus the old dream of producing newsprint from 100 percent mechanical pulp seemed to have come true.

Then came the energy crisis. As a result, the high energy consumption of the thermomechanical pulping process turned into a serious problem. The question was whether the exclusion of chemical pulp from the furnish compensated for the increased cost of energy. In addition, as more experience was gained with newsprint made from 100 percent TMP, it turned out that, depending on the raw material used for pulping, there was a varying tendency to liming in the printing process. Consequently, the paper-making furnish for newsprint based on TMP today usually contains some chemical pulp although the proportion is lower than that normally used with stone-groundwood or chip refiner pulp.

Equipment manufacturers who promoted either TMP or the stone-groundwood process published advertisements and pamphlets in support of their preference. Taking the extreme points raised, it was claimed that 80 percent of the refining energy in the TMP process could be recovered as steam and used for drying the paper with no additional steam requirement. At the other extreme, it was claimed that stone-groundwood, owing to the low power cost, was economically more favourable than TMP. The comparison of manufacturing costs was, in the latter case, based on pulp production only, ignoring the different requirements of the paper-making furnish for each of the cases. Similarly, the TMP advertisements neglected to mention that the heat eventually recovered from the TMP refiner, after purification, usually came out in the form of hot water.

However, at present an integrated paper mill having a capacity of 600 tonnes per day is being built by United Paper Mills at Jämsänkoski, Finland, where the intention is to recover the heat from the refiners in the form of steam at paper machine drier pressure. No other steam is expected to be required except for start-ups. If this project is successful' it means that significant savings can be made in the overall energy bill of such a mill. Nevertheless, owing to lack of verified information at the time of preparation of this paper, the possibility of steam recovery has not been taken into account in the present study.

In the late 1970s, a new mechanical pulping process appeared on the scene and turned into an immediate commercial success. This was the pressurized stone-groundwood (PSG) process which allowed the manufacture of pulp equivalent in quality to TMP pulp at a power consumption of the same level as that of normal stone-groundwood.

The comparisons made in this report do not aim at establishing the viability of newsprint mills under different conditions, but only at comparing capital and manufacturing costs. Otherwise, the mill net price of newsprint, which can vary widely in different developing countries, would have to be taken into account for determination of the viability of the mill. Inclusion of another variable would only complicate the analysis without adding anything substantial to it, since its objective is purely to compare processes.

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The processes chosen for comparison of costs were stone-groundwood, pressurized groundwood, chip refiner pulping and two-stage thermomechanical pulping. In order to arrive at a fair appraisal of the pros and cons of each process, the basis for comparison was the cost of newsprint manufacture, using the different processes, taking into account the differing quantities of chemical pulp required and, consequently, the differences in mechanical pulp output to obtain the same quantity of newsprint.

The mechanical pulping capacities of the cases selected were 100 tonnes (bone dry) per day for the stone-groundwood and chip refiner pulping processes, and 120 tonnes per day for the others. With the inclusion in the furnish of 20 percent of chemical pulp with the stone-groundwood and the chip refiner pulp, and of 10 percent with the other mechanical pulps, the total newsprint production corresponded to about 140 tonnes per day or 46000 tonnes per year. Although this is certainly a small newsprint mill by today's standards in the industrialized world, it can be considered to represent an average-to-large unit in developing countries. It was further assumed that no bleaching would be required in any of the cases and that all electric power would be purchased. The logs would be mechanically debarked and the bark used as fuel to reduce the overall fuel requirement for generation of processing steam. Pine would be used as raw material and the mill was assumed to be located in a Central American country.

The following capital cost estimates include all investments in wood supply, pulp mill, paper mill and in all services such as steam, power and water supply and effluent treatment, offices, maintenance shops, and so on.

The differences in plant capital in the cases studied are attributable to the following cost items: equipment for wood supply, pulp mill and power supply and their installation; structures and engineering.

All other costs would be practically the same. A summary of the plant capital costs is shown in Table 1. The estimates are based on costs prevailing during the second half of 1980.

Although there are considerable differences in certain individual cost items, especially in the cost of equipment for the wood supply and the pulp mill, there is surprisingly little difference between the final plant estimates for the different cases (see Table 2).

The total investment estimates range from US $69 million for stone-groundwood to US $71.5 million for thermomechanical pulping - a maximum difference of about 4 percent of the investment requirement. It can, consequently, be concluded that the investment requirement using the different alternative processes for mechanical pulping is the same - about US $70 million - provided that mill designs are of the same level of technical sophistication. Their ultimate ranking with regard to total investment depends entirely on how the equipment is ordered and who the contractor is, as the variations in investment requirement in Table 2 are well within the limits of variations in prices and fees charged by different manufacturers and contractors.

For the estimation of the manufacturing costs, it was assumed in the base estimates that only roundwood would be used as fibrous raw material. This is, of course, somewhat unfair to the refiner based processes, but the use of sawmill residues will be considered separately further on in this report. Bark would be burnt for steam generation and thus partly replace oil as fuel. Salaries and wage rates applicable during the second half of 1980 in some Central American countries have been applied and the unit costs assumed for the most important cost elements are given in Table 3.

The manufacturing cost estimates for the different cases are shown in Table 4. As the investment has been found to be the same for all cases, the process with the lowest manufacturing cost will automatically give the highest return on investment.

It can be immediately concluded that, under the assumptions made, the manufacturing costs for newsprint are lowest using the thermomechanical or pressurized stone-groundwood pulping processes. The manufacturing cost on application of the chip refiner pulping process is the highest (US 1;18.8 million per year) followed by the cost on application of stone groundwood - US $17.6 million per year. From these results, it would seem that a more detailed study of the influence of changes in cost inputs on the ranking of the processes relative to manufacturing costs would be most interesting with regard to the pressurized groundwood and the thermomechanical pulping processes.

FIGURE 1. COMPARISON OF PRODUCTION COSTS OF NEWSPRINT BASED ON PSG OR TMP

Table 1. Plant capital for 46000-TPA newsprint mill (based on different mechanical pulping processes)

Item	Mechanical pulping process)
	Stone-groundwood	Pressurized groundwood	Chip refiner pulp	Thermomechanical pulp
	Thousand US dollars
Equipment
- wood supply	400	400	1600	1600
- pulp mill	6200	8000	4400	5000
- power supply	1200	1200	1400	1600
- other equipment and spare parts	19800	19800	19800	19800
Subtotal equipment	27600	29400	27200	28000
Freight	2100	2200	2100	2200
Installation 1	8200	8200	8200	8500
Structures 2	10200	10200	10900	10900
Total direct cost	48100	50000	48400	49600
Construction overhead	2200	2200	2200	2200
Engineering	2800	2900	3300	3500
Contingencies	5900	5900	6100	6200
Total plant capital	59000	61000	60000	61500

¹ Includes contractor's overhead and assumes 30 percent expatriates In labour force
² Includes contractor's overhead, site and site services

One advantage of thermomechanical pulping and refiner pulping which has not been discussed so far is that residues from sawmills can be used instead of roundwood. This is especially advantageous if the pulp-and-paper mill is integrated with a sawmill, in which case the residues can be chipped and simply conveyed directly to the pulp mill chip storage area. In that case the cost of pulpwood in the form of chips would be charged mainly for accounting purposes. If the chips or residues are delivered from a non-integrated sawmill at some distance from the paper mill, the cost of loading and transport will have to be accounted for as well as the actual price claimed by the sawmill.

Although the pressurized stone-groundwood process could use cores from plywood manufacture as raw material, this is not easily obtainable and little attention has been given to it in the considerations that follow.

Figure 1 makes a comparison between the manufacturing costs of newsprint based on pressurized groundwood and thermomechanical pulping, assuming that the paper-making furnish contains the same proportion of chemical pulp in both instances. (The actual proportion, whether 0 or 20 percent, does not affect the result of this comparison, nor does the size of the mill.) At a wood cost for thermomechanical pulping of US $20/m³, this process could carry a power cost of only US $13/MWh to be competitive with pressurized groundwood pulping with a wood cost of US $25/m³. Such a low power cost would most probably be very difficult to find anywhere. However, at a power cost of US $30/MWh, as assumed in the base comparison, the thermomechanical pulping process would be competitive if the cost of residues could be reduced to US $14.50/m³. Such a wood cost might well be achieved in an integrated operation with a sawmill, or if there were no competitive use for the residues.

As another example of the interpretation of Figure 1, it could be pointed out that at a power cost of US $50/MWh and a roundwood cost of US $25/m³, the thermomechanical process would have to be supplied with residues at a cost not exceeding US $8/m³ in order to be competitive with the pressurized groundwood process. However, it is doubtful whether newsprint production based on any process would be viable at such a power cost.

From these comparisons it can be concluded that availability of sawmill residues at a cost lower than that of roundwood might, under favourable conditions, help reduce the manufacturing cost of thermochemical pulp for newsprint manufacture to such an extent that this process becomes a financially preferable alternative pulping process to the pressurized stone-groundwood process.

Table 2. Total investment requirement for 46000-TPA newsprint mill (based on different mechanical pulping processes)

Item	Mechanical pulping process)
	Stone- groundwood	Pressurized groundwood	Chip refiner pulp	Thermomechanical pulp
Plant capital	59000	61000	60000	61500
Pre-operational and start-up expenses	2000	2000	2000	2000
Interest during construction	5900	6100	6000	6200
Working capital	2100	1400	2500	1800
Total investment	69000	70500	70500	71500

Table 3. Unit prices assumed for main manufacturing cost elements

Item	Unit	Amount
Wood	$/m3	25
Purchased chemical pulp	$/ADT	550
Fuel oil	$/tonne	180
Electric power	$/MWh	30

The comparison made in Figure l of the two mechanical pulping processes presumes that wood is available for either of the two processes in sufficient quantities. However, in many cases there might be a shortage of roundwood to supply a newsprint mill of adequate size using the pressurized stone-groundwood process. The reason for this might be competition from sawmills on the roundwood market. Thus the prices which the paper mill would have to pay for roundwood in order to ensure an adequate supply of wood might increase beyond a prohibitive limit. This situation does not, of course, make itself felt to the same extent if the wood is supplied from pulpwood plantations.

The utilization of roundwood for pulping, without giving consideration to the possibility of use of sawmill residues, is an example of inadequate management of the forest resources. If there are no alternative uses for the residues - either industrial uses, as for panels, or social uses, as for domestic fuel - the residues have a negative value. This is because the sawmills in that case have to dispose of this material, for instance through incineration. There is no doubt that, when a possible use develops for sawmill residues, their value increases to the positive side, especially if there are a number of alternative uses. If the competition between those uses is sufficient, the price of sawmill residues delivered to the paper mill may increase almost up to the level of the price of roundwood. Although the economic advantage of the use of residues in this case diminishes, seen from the point of view of the paper mill in isolation, there still remains the advantage of more efficient utilization of the resources. This consideration indicates that there might be reason to install one pulp mill line based on the pressurized stone-groundwood process, using roundwood mainly obtained from the forest thinning operations, and another with the thermochemical process for use of sawmill residues.

Table 5 presents some examples of an economic comparison of the alternatives with one or two pulping processes. In case A, which includes only pressurized stone-groundwood manufacture, it is assumed that the plant includes in the wood supply some logs of a diameter which corresponds to the minimum size of sawlogs. For this reason, the price of wood has been taken as high as US $30/m³. In cases B and C, two processes of pulping have been assumed and sawmill waste has been included in the wood supply. Thus the use of roundwood in these two cases has been limited to cheaper logs which could not be used by the sawmills.

Table 4. Manufacturing costs for 46000-TPA newsprint mill

Item	Stone-groundwood	Pressurized groundwood	Chip refiner pulp	Thermomechanical pulp
	Thousand US dollars
Wood	2260	2770	2310	2860
Chemical pulp	5320	2660	5320	2660
Fuel oil	1580	1510	1570	1510
Electric power	3000	3150	3930	4260
Alum	50	50	50	50
Rosin size	130	130	130	130
Other materials	1380	1440	1560	1560
Labour	1900	1900	1900	1900
Administration and overhead	1000	1000	1900	1000
Contingencies	980	890	1030	870
Total manufacturing cost	17600	15500	19700	16800

Table 5. Economic effect of the combination of mechanical processes in a newsprint plant

	Case A	Case B	Case C
Processes
- PSG 1	100	50	50
- TMP 2	-	50	50
Cost of wood
- roundwood	30	25	25
- residues	-	15	23
Newsprint production cost $/tonne
- wood	72.20	48.70	58.70
- electric power	68.50	80.70	80.70
- other costs [Table 4]	208.30	209.60	209.60
Total	349.00	339.0	349.00

¹ PSG = Pressurized stone- groundwood.
² TMP = Thermomechanical pulp.

In the first case, the total manufacturing cost of newsprint, based essentially on the data given in Table 4, is US $349 per tonne. With a price of US $15/m, for sawmill residues combined with a reduction in the roundwood price, the manufacturing cost decreases to US $339 per tonne. This corresponds to an adequate assumed price of residues in a situation where there would be no competition from alternative uses. It should be pointed out that, if the roundwood in Case A could be obtained at a cost of US $25/m³, the manufacturing cost, according to Table 4, would be US $337 per tonne of newsprint. This means, however, only a difference of US $2 per tonne compared to Case B and, in the latter case, the sale of residues also constitutes an additional source of income for the sawmills.

In Case C it is presumed that there would be alternative uses for the sawmill residues and that their price would increase up to a point where manufacturing cost of newsprint would reach the same level as in Case A. Under these conditions, the newsprint mill could pay up to US $23/m³ for the sawmill residues. Although there would be no advantages in Case C over Case A as regards the total manufacturing cost for newsprint, there would still remain the overall beneficial effect of more economic use of the forest resources.

The examples given in Table 5 do not consider the effect of variation of the proportions of pulp produced according to the mechanical processes. These are no doubt variable as well and the optimum ratio depends on local conditions. It is sufficient to mention in this context, just to give an extreme value, that using the thermochemical process alone, the manufacturing cost of newsprint would be US $340 per ton, assuming that only sawmill residues are used as raw material at a cost of US $15/m³, under conditions otherwise unchanged from those in the above examples.

Although this article has not considered all possible details and variables which might have been examined - for instance, the effect of future increases in the cost of energy and wood in real terms - some general conclusions would still be valid independently from those aspects which have been excluded:

· The total investment in a newsprint mill does not depend on the mechanical pulping process selected.

· The processes of major interest are pressurized stone-groundwood and thermomechanical pulping.

· The preference as regards one of these processes depends on the local conditions with respect to costs of electrical energy and the availability and cost of wood in the form of roundwood and/or sawmill residues.

Finally, the most important conclusion: that the two processes mentioned do not necessarily compete but may in many instances constitute complementary processes in the same mill. Installation of both processes in a mill allows an economic utilization of the forest resources without waste of raw material and may reduce the manufacturing costs for newsprint and result in an economic improvement in general in the forest industry activities in an area.

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