Paper Recovery and Challenges Around the World Bowater Inc. - - PowerPoint PPT Presentation

Paper Recovery and Challenges Around the World

Tappi – 8th Forum on Recycling Niagara Falls, Ontario September 24, 2007

Bowater Inc. Director of Recovered Paper Bob Tucker Bowater Inc. Director of Recovered Paper Bob Tucker

Presentation Overview

• Introduction
• Recovered Paper Major Issues
• Fiber Cost
• Global Trade
• Transportation
• Quality Deterioration
• Adequate Supply

AbitibiBowater AbitibiBowater Mill Locations Mill Locations

Ponderay Thunder Bay Gatineau Calhoun

Mokpo (S. Korea)

350,000 TPY

Bowater Recycle Mill Locations Bowater Recycle Mill Locations

Coosa

Bridgewater (UK)

Snowflake Thorold Belgo B.Comeau Alma Augusta

• A. River

250,000 TPY

Total N. American Consumption 1.2 million tons

AbitibiBowater AbitibiBowater Recycle Mill Locations Recycle Mill Locations

Total N. American Consumption 2.8 million tons

Current Market Conditions

• World RP demand is strong - “Sellers Market”
• Growth in Asia utilizing RP will further stress the market
• Current price levels do not allow for profitable operations
• Quality of residential ONP is deteriorating, even so there

isn’t enough of it.

• Unlikely that these conditions will change in the near-term

Fiber Cost

Global Trade

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007e ONP 1257 1305 1481 1726 1888 2132 1820 2018 2223 2214 2009 1947 2202 2808 3600 4038 4074 4561 OCC 2731 2749 2718 2353 3285 4002 2983 2590 2733 2344 2952 3021 3696 4492 4201 4719 5327 5417 Mixed Paper 1146 1005 895 958 1181 1877 1745 1733 1726 2362 3161 3784 3949 5091 4982 5686 6497 6554 Totals 5134 5059 5094 5037 6354 8011 6548 6341 6682 6920 8122 8752 9847 12391 12783 14443 15898 16532

EXPORT OF US RECOVERED PAPER (ONP, OCC & Mixed Paper)

1000 2000 3000 4000 5000 6000 7000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007e

Thousands of Short Tons

ONP OCC Mixed Paper Source: AFPA

RISI projects world RP demand will grow another 40 million mt’s by 2011

Transportation

Freight Optimization

Transportation

Modes and Challenges

– Rail“Don’t seem to want our business” – Truck“Driver regulations(hrs.) shortage, fuel, service challenges” – Ocean“Volatile container rates/supply” – Transit Times “Inventory strategy” – Weather:

» Suspended Collection » Delayed Pickup/Delivery » Quality Implications – equipment/sorting

Quality Deterioration

ONP Content Evolving

• Processing costs have been increasing each

year as the % of ONP in a load of ONP has been decreasing

65 75 85 95 1994 1996 1998 2000 2002 2004 % NEWSPRI NT I N ONP

Source: Abitibi-Thorold Mill, CPPA De-inking Committee Oct 5, 2006

What is Single Stream?

The combination of dual stream, Paper fibers and commingled containers collected as one. 96 Gallon containers Automated side loader collection vehicles State of art [regional] processing facilities Reduces collection costs (supplier and municipal), but increases mill costs Reduces Workers Comp costs

Increases volumes - good & bad

Single stream Material

• Single “Scream”

Geographic Distribution of MRFs Serving Single Stream Systems

12 10 32 15 8 33 10 38 64 15 10 20 30 40 50 60 70

Northeast South Midwest West

2002 2006 No Glass -2006

Source: Governmental Advisory Associates, Inc. Westport, CT

Bowater Newsprint Coosa Pines, AL Pulper Rejects

2.57% 2.78% 3.21% 3.94% 3.33% 2.94% 2.96% 2.63% 2.78% 2.16% 2.65% 2.50% 2.46% 2.83% 1.92% 2.58% 2.92% 2.59% 2.38% 2.45% 2.67% 2.90% 2.93% 2.72% 2.67% 2.63% 2.62% 1.85% 1.84% 2.28% 2.34% 2.29%

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% J a n

• 5

M a r

• 5

M a y

• 5

J u l

• 5

S e p

• 5

N

• v
• 5

J a n

• 6

M a r

• 6

M a y

• 6

J u l

• 6

S e p

• 6

N

• v
• 6

J a n

• 7

M a r

• 7

M a y

• 7

J u l

• 7

% of Total Consumption

Prohibitives: Outthrows:

ONP Quality – Inspection Results

Managing Quality Problems

• Mill Recognition of Supplier Realities
• Supplier Education of Mill Realities
• Clear Mills Specifications
• Consistent Quality Enforcement
• Partnership Between Mill and Supplier

Adequate Supply

2006 Recovery Rate = 53.4% Total Recovered 53,488 Total Supply 100,198

NORTH AMERICAN NEWSPRINT

Source: Pulp & Paper Products Council

• Drivers of Decline in 2006
• Grammage: -1.6%
• Advertising: -2.0%
• Circulation: -2.7%
• Typical Market Initiatives
• Conversion to specialties

and other products

• Value enhancements

with customers

• Ship to other markets
• Sell, close, merge assets

North American Demand

(Millions of Metric Tons)

8 9 10 11 12 13 14 1999 2000 2001 2002 2003 2004 2005 2006 2007 YTD*

2.7% -0.4%

• 10.8% -2.3% -1.1%
• 2.3%
• 5.6%
• 6.0%
• 10.4%

* YTD July 2007

Adequate Supply

What will positively impact collections?:

• Municipal education & recognition of RP value
• Further integration into collection by consumers
• Political/Environmental Pressures (U.S., China?)
• Incentive based recycling (RecycleBank)
• U.S. Population growth

RecycleBank - WHAT WE DO

Thank You

Bowater Inc. Director of Recovered Paper Bob Tucker Bowater Inc. Director of Recovered Paper Bob Tucker