Nine Dragons called off its investment plan for paper making in India

Nine Dragons called off its investment plan for paper making in India

New Delhi | 10th July 2020 | The Pulp and Paper Times:

China’s largest paper manufacturer giant Nine Dragons Paper has completely called off its plan to set up a multi million dollars paper making infrastructure near Paradip, Odisha.

“The plan has been cancelled last year in December for the multiple reasons. The main one behind the call off is China – US trade war, they were under stress,” Said Mr. Varoon Narang, Vice General Manager at Nine Dragons Paper Holdings Ltd. to The Pulp and Paper Times.  

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Nine Dragons was supposed to set up a unit in the state and investment of INR 4500 crore over five years to create 10,000 job opportunities, a statement from the chief minister's office (CMO) said. Nine Dragons Paper will invest 12 billion rupees (£1.28 billion) to construct the mill, which is expected to open its first phase in 2022.

“During the Period, the economic environment remained challenging both at home and abroad. The ongoing trade negotiation between China and the U.S., coupled with further depreciation of RMB against USD and the significant reduction of import quota of quality recovered paper, posed huge challenges for the paper manufacturing industry in China. Despite the capricious market environment, China’s economy still retains its resilience with the inelastic demand in the downstream rallied as compared to the preceding period, providing rooms for price hikes,” admitted by Ms. Cheung Yan, Chairlady Nine Dragons Paper in the Annual report for FY19-20.

“Instead of expanding immediately in India, they go to invest in defunct paper mill purchased in US by them. Yes, the situation was daisy here in India and process is seemed to be time-consuming,” Mr. Narang further revealed.

 Nine Dragons has now totally drawn off its the expansion plan in India.

On investment in US, report says that, “On The Group’s annual design production capacity in packaging paperboard, printing and writing paper, high value specialty paper and pulp products of which including the four US mills capacity as at 31 December 2019 was approximately 17.3 million tpa in aggregation, comprising approximately 9.1 million tpa of linerboard, approximately 3.4 million tpa of high performance corrugating medium, approximately 2.6 million tpa of coated duplex board, approximately 1.1 million tpa of printing and writing paper, approximately 1.1 million tpa of high value specialty paper and pulp products. The four US mills capacity of approximately 1.3 million tpa, including of approximately 0.9 million tpa coated one-side, coated free sheet and coated ground wood grade for printing and writing paper and specialty paper products; and of approximately 0.4 million tpa recycled pulp and kraft pulp products”

Ms. Yan further stated on the capacity of Nine Dragons, “We added packaging paper production capacity of 0.95 million tpa, which has enabled us to enjoy greater economies of scale. As of 31 December 2019, the Group’s total designed production capacity for paper production amounted to 16.47 million tpa. The aggregate new packaging paper production capacity of 1.10 million tpa at the Hebei and Dongguan based is scheduled to commence production in the first quarter of 2020. Combined with the newly added packaging paper production capacity of 0.55 million tpa in Malaysia in 2021, the Group’s total designed production capacity for paper production will exceed 18 million tpa” 

While 2020 is deemed to be a year of challenges for both the global and the Chinese economy, the recent outbreak of COVID-19 has posed even greater difficulty to the entire packaging industry of China.

“In addition, we have set up a new base in Malaysia to increase the production capacity of recycled pulp by 0.48 million tpa. In respect of paper manufacturing, we added a total production capacity of 0.95 million tpa for linerboard in Shenyang and Quanzhou to enjoy greater economies of scale. Regarding the downstream industry chain, we have successfully expanded our scope of business to include the production of corrugated sheet and corrugated boxes by acquiring the packaging plants, as well as carried out a series of management optimization, all of which allow us to provide one-stop premium services to end-customers,” report says.

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