No Paper Tigers

Papermakers have come a long way from the techniques developed by the Egyptians and the Chinese millennia ago. Although there are still artisanal studios that produce small quantities of specialty grades, papermaking is today a big business--and one that increasingly depends on chemicals to enhance the performance of pulp and other fibers.

Unlike textiles, for example, "papermaking is not a people-intensive industry. It's capital intensive," points out Stephan Bocken, global head of Ciba Specialty Chemicals' paper business. It is not unusual, he notes, for a modern papermaking machine to cost a cool $1 billion. Hence, the reliance on chemicals to keep equipment running efficiently, with no tearing or loss of paper quality.

Two basic segments of chemicals are used in papermaking: process chemicals, used in turning vast quantities of pulp or other fiber into paper, and functional chemicals, which build a variety of performance properties into that paper.

The processing segment includes deinking compounds, biocides, deposit-control agents, felt conditioners and cleaners, defoamers, and effluent treatments.

Functional chemicals include dyes and fluorescent whiteners, coatings, resins that impart wet and dry strength, sizing agents, specialties such as fluoropolymers to impart grease and oil resistance, and color-forming agents.

The paper chemicals market is fairly evenly split among Europe, North America, and "rest of the world." But Finland, according to Bocken, "is the technical driver of the industry." That's why Ciba was so pleased, he says, to have acquired Raisio Chemical earlier this year. "We were far more global--they were very Finnish. But they are very strong in high-growth grades of paper and in the highest growth regions. For example, Raisio had just started up a plant in China near Shanghai."

The Raisio acquisition was followed in short order by Ciba's purchase of the Quebec paper chemicals business LPM, which focuses on processing chemicals.

And just last month, Finland's Kemira acquired another Quebec-based paper chemicals company, Equip International. The deal, which Kemira says will add about $10 million per year in sales, brings with it "new niche technologies in process chemicals."

Chemical suppliers are consolidating to match a customer base that is consolidating--with a difference. "The papermaking industry is worldwide but not global," Bocken says.

He contrasts it with the petrochemicals industry. "Companies like Dow and Exxon are global. Styrene has the same specifications whether in Houston or Dubai or Singapore. When you are dealing with trees, though, there are summer-to-winter differences in pulp, geographic differences, and differences in what trees the pulp comes from."

Moreover, every paper machine runs slightly differently. But those differences, suppliers say, give the opportunity to provide comprehensive solutions and systems for individual mills.

Kemira last month inaugurated its new technology center and production facilities in Krems, Austria. Krems, the company says, is one of its "strongholds in continental Europe in the field of chemicals and solutions for the paper industry." Among the company's most recent investments at the site is a new plant, based on Kemira technology, for polyaluminum chloride, used for effluent water treatment in papermaking.

Similarly, Lanxess' papermaking pilot plant in Leverkusen, Germany, is used to optimize production processes and to develop new process technologies. Lanxess has research facilities and technical laboratories scattered around the world.

For chemical suppliers, the job is sometimes to provide additives that help papermakers maintain paper properties while using less pulp. Other times, the use of more fillers and chemicals--in extreme cases, as much as 50% by weight--helps customers achieve better properties.

Papermakers need this kind of help, according to Nick Dunlop-Jones, a marketer in Clariant's global paper business unit, because they are competing to maintain their piece of the market against the incursion of polymer films and metallic foils. They need, for example, barrier-type coatings that impart grease and oil resistance to food packaging. For this application, Clariant has recently developed a new fluoropolymer for high-performance packaging papers such as those used in pet-food bags.

Special sizings and coatings might enhance the ability of paper to be printed with water-based inks for high-resolution, brilliantly colored images on digital printing papers, for example. "These inks are water-based," Dunlop-Jones says, "so you must engineer the surface of the paper to obtain a strong permanent image." The phaseout of solvent-based inks, in fact, is an important factor driving the papermaking industry's shift to a more chemical-intensive product.