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Materials for paper production go to woodwork factories
Hybrid acacia, which is material for paper plants, is being sold to woodwork factories, leaving paper plants thirsty for materials. A lot of paper plants are running on imported materials at high prices.
Valuable 7-year-old hybrid acacia forests
In Tan Hiep commune in Binh Long district, Binh Phuoc province, 100 km from HCM City, there is a 6,000 ha acacia forest, owned by HCM City-based Lam Hai Company Ltd.
In fact, the forest previously belonged to Liksin Paper Packaging Printing Enterprise, which then transferred the forest to Lam Hai Company for $1mil in 1997.
Duong Van Hai, Director of Lam Hai Company, said that if selling 5-year-old acacia to paper plants at VND690,000/ster (1 ster = 1.5 cu m), the company would get the profit of VND23-25mil/ha after deducting expenses. This means that every year, the company would get VND5-10mil in profit for every hectare, which proves to be not worthwhile.
Therefore, acacia forest developers tend to grow acacia for two more years. At that time, when acacia is seven years old, its trunks have bigger diameters and hence greater volumes of wood which forest developers sell to woodwork factories to get 1-2 times more profit.
As a result, the hybrid acacia, previously material for paper plants, has now become a valuable material for woodwork processing.
Selling acacia to woodwork factories, saying ‘no’ to paper plants
Tran Van Da, General Director of Binh Duong-based Thuan An Woodwork Processing Joint Stock Company, which specialises in making decorative furniture from hybrid acacia, said that in early 2007, a cu m of hybrid acacia (18 cm in diameter) was priced at VND1.35mil, while it rose to VND1.5mil in early 2008. Currently, hybrid acacia is selling at VND1.85mil/cu m.
Da said that even if accepting the high prices, it is not easy to buy hybrid acacia now as there are a lot of woodwork factories competing fiercely with each other. Meanwhile, paper plants do not have opportunities to buy hybrid acacia, because they only offer to buy at low prices.
He said that every year, Thuan An Woodwork Company consumes tens of thousands of cu m of hybrid acacia wood, which it collects from Dong Nai, Tay Ninh and Binh Phuoc.
Lam Hai Company also said that the company initially planned to develop a forest with hybrid acacia and eucalyptus for paper materials (10-15,000 cu m a year). However, the company then decided to sell 80% of the materials as woodwork processing materials. Only by-products like bent branches are being sold to paper plants.
While paper plants complain about material shortages, they still offer the stable level of VND690,000/ster of hybrid acacia, or VND700,000/tonne of material trees ($40). After buying acacia, some plants even chop the acacia into small pieces and then export it as raw material at $120-140/tonne. It seems more profitable to export it than to make pulp with it.
Rubber trees competing with hybrid acacia for land
Nguyen Chien, the owner of the private-run enterprise Nguyen Hy in Binh Duong province, said that he leased 200 ha of land from Phuoc Binh afforestation yard and began developing materials for paper plants in 2003. However, in June 2008, Chien decided to plant rubber trees.
Chien said that if selling materials to paper plants, he would get VND25mil/ha, while the expenses would be nearly VND20mil. Meanwhile, he can get VND35mil/ha a year by planting rubber trees.
No official statistics have been released about the area of hybrid acacia that has been chopped down to give way to rubber trees; however, this has been an increasing trend as the rubber latex price has increased sharply from VND30mil to VND56mil/tonne.
Experts have warned that the paper industry is facing a lot of challenges. Lacking materials for making pulp, paper plants now have to import pulp at high prices. It would be understandable if paper prices skyrocketed further in the time to come.
Tran Duc Thinh, Chairman of Tan Mai Paper Company, said that his company still has to import 70% of materials for making pulp. The company plans to develop material areas in some provinces in the Central Highlands, but with the interest rate of 21%, it is not currently feasible.
VNN
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