Entering the tissue business in 2007, based on numerous small machines, Huamei has found success. Now it is investing in a big new mill with world-class equipment to make highgrade quality.
Hugh O’Brian
Huamei Paper Group, headquartered in Nanning in Guangxi province in southern China, has only been inthe tissue business since 2007. However, judging from the rate of growth that the company has had sofar, and its very ambitious expansion plans for the near future, one has to assume that Guangxi sees avery bright outlook for the tissue business in the coming years.
Huamei is owned and led by Mr. Lin Rui Cai, who originally entered the papermaking industry in the year 2000 producing writing and printing papers. Then in 2007 the group decided to change its direction to enter the tissue industry and therefore purchased 10 small Chinese-made tissue machines and installed them at Tianyang Mill in Baise City,Guangxi Province. Eventually more small PMs were added so that today the Group has over 150 machines.
The initial investment at Tianyang in 2007 was then followed with the startup of another mill in Chongzuo in 2008 only six months from deciding to set it up. Later, a third site was opened at Laibin, Guangxi in 2010. Soon after wards other mills were springing up in Longzhou, Yizhou, Hezhou, Fuqing one after another. Today, Huamei has, as mentioned,more than 150 small tissue machines making about 200,000 tons per year of medium grade parent reels and finished products. And more machines are being added all the time.
A tissue company with over 150 machines is some what hard to imagine but Mr. Lin says that they are all rather small and quite slow. The speed is generally below 200 m/min and the widths of the machines are normally 2.1 m, 3.5 m, or 4.2 m.
Production of jumbo rolls has been a big part of Huamei’s business since the beginning, Mr. Lin explains. “We ship jumbo rolls, generally in widths of 1.72m and 1.95m, to most of China with the exception of only a few provinces like Xizang, Linjiang, etc. The Huamei tissue jumbos are popular with converters, because the qualityis recognized as being very good for the price.”
In addition, the company is also making finished products, much of which is sold under the brand called “Be Health”. Huamei is aiming to make “Be Health” the leading brand of middle-grade house hold paper in China.
Currently of the nearly 200,000 annual tons of tissue the company makes, only 30,000 tons are finished products.
State-owned pulp mill purchased. The fiber raw material used at Huamei’s tissue plants in Guangxi ismostly based on the abundant supply of bagasse (sugarcane stalks) as Nanning is the sugar capital of China.Previously, much of the bagasse was simply burned to get rid of it or used for heating and cooking. Thus, the raw material is quite readily available at a good price.
To expand the company’s pulp producing capacity, Huamei recently bought a wood chip pulp mill in Guangxi that had previously been owned by the Chinese government. Capacity is 120,000 tons per year of wood pulp and the chips are locally produced in Guangxi from their own forest. The pulp mill was purchased to help secure the raw material for Huamei’s tissue operations. With this new pulp capacity, the company is planning to add paper machines at the site at a later date. It will also invest in converting lines to allow productionof finished products. In addition, Huamei Group plans to build a professional house hold tissue/AFH industryzone in Guangxi.
Big project at Lvjinin, Fujian province. Mr. Lin is clearly very happy with the way the group has developed so far in tissue. Now he has embarked on a very ambitious expansion plan which involves a new greenfield tissue mill site at Lvjin in Fujian province which is about 1,500 km due east of Nanning.
The expansion project, which is being undertaken by the independent company Lvjin under the Huamei Group, will take place over 2013/14. Mr. Lin confirmed that four 2.8 m 30,000 tpy tissue machines have been ordered from Metso and if all goes according to plan, the first one will be up and running in November 2013.
One of the reasons he chose Fujian province is because of a Chinese government policy encouraging entrepreneurs to “return to home town” to set up businesses. Therefore he started discussing the Lvjin project from last April 2012 and finally got approval in late July 2012.
For the Lvjin mill, fiber supply will be based on imported wood pulp. In addition to the Metso paper machines, fully automatic converting and packaging machines will come from Fabio Perini companies. This will help give a big increase in tissue quality from the company, which means it can enter the high-level tissue grade category.
As far as the timing, as mentioned above, the first PM at Lvjin will start in November, and three months later the second PM is planned to come online. Numbers three and four will then each start one after another.
Most modern tissue mill in China. “We believe that our investment in Lvjin will make it one of the most modern tissue mills in China,” says Mr. Lin. “We have all the certificates that a modern paper company needs, like EIA, and all of the equipment and facilities will be truly state-of-the-art with our target to make the best quality tissue in China. Furthermore, there are excellent transport connections for the mill with a railway connection as well as a seaport being very nearby. In addition, a major highway is also located very close to the mill.”
In total Huamei is planning to invest about RMB 1 billion inthe Lvjin project. And Mr. Lin is optimistic that the investment will be a success and has therefore built the site with the space needed to double the capacity from about 120,000 tons per year to 240,000 tons when it becomes necessary. From the appearance of the site plan, it seems that there is space to expand even further than that needed.
With the view to long-term development, Mr. Lin has decided that Huamei will focus on producing mid-leveland high-level tissue products. In China, presently he feels there is large untapped potential to increase tissue consumption in the rural and countryside areas.
Plans for more PMs in Guangxi pulp mill
Huamei Paper Group now owns 8 subsidiaries, plus the newly purchased pulp mill where another new expansionis being planned. Regarding that expansion at the Guangxi pulp mill, Huamei will evaluate how well the Metso tissue machines are working, and then based on that decide which supplier to use for the installation ofa new tissue machine there. Mr. Lin also says they are seriously considering installing a double sized machineat the site. “For Lvjin, we chose the 2.85 m wide design because it gives both the quality and a cost advantage compared to 5.6 m wide. However, for the future in Guangxi province we are thinking that a 5.6 m wide machine might make more sense.”
Market growing well.
When asked about the market conditions in China for tissue, Mr. Lin says that “competition is very tough but we see the enormous potential for growth. For sure, some small companies, some companies that are less flexible, or those with environmental problems, will have to close. But the ones who have invested in top quality equipment will keep pace with the times and stay ahead of the competition.”
“We feel very confident that with the high quality tissue that we will be able to make on the new machines, we will be in a strong market position based on high quality raw material, high quality machines, and competitive prices. Maybe this is relative to my character; I trust myself very much. I’m very optimistic and I see that things are working well with this business. According to current production, we will meet the 400,000-ton plan ahead of the schedule, and we will reach 600,000 tons jumbo rolls and finished products annual output by 2015. In addition, we have a very flexible and excellent management team so we can make quick decisions and move forward very rapidly when needed. This is a big advantage.” •