• Paper

Paper as an essential element of life

India’s rapid urbanization and a surge in literacy rates created a huge demand for paper-based products. The paper commodity has become a versatile material largely due to its wide range of applications. Basically, the paper material is being produced by pressing moist fibres together (typically the fibres being derived from wood, rags or grasses) and drying them into flexible sheets. But, with the rising demand, changing consumer preferences and environmental concern, recycling of paper has become a major trend in the paper and paper board industry.

As a result, the paper recycling market has witnessed significant growth in the last few years due to depleting environmental resources. The demand for recycled paper is increasing at a CAGR of more than 7-8 per cent annually in the developing countries. CARE Ratings expects that the overall paper demand growing at a CAGR of 6.7% to touch 20.7 million tones in FY20. Tight markets, low Chinese pulp inventories, lack of supply coming to the market, and healthy demand are the primary factors that provide an upside to the prices in 2018.

The global demand for paperboard has increased marginally in 2016 and 2017, while the Printing & Writing and the newsprint segments have actually witnessed de-growth primarily on account of increased preference towards the paperless economy and higher penetration of digital media. The industry is classified into four segments, Printing & Writing (P&W), Packaging Paper & Board, Specialty Papers and Newsprint. Amongst, the market share of Printing & Writing (P&W) based paper has remained stable at around 30%, while Packaging Paper & Board share has increased from 46% in FY08 to 52% in FY17.

Globally paper industry segment is substantially smaller as compared to the domestic segment while Specialty segment is proportionally larger compared to its domestic counterpart (largely due to the tissue and similar paper being consumed globally on a much larger scale as compared to India). More than 400 million tonnes of paper and cardboard are produced worldwide every year, with more than half coming from recovered sources.

Paper recycling has reduced the landfilling, every ton of paper recycled saves more than 3.3 cubic yards of landfill space, and if you measure by weight. Therefore, the paper is a material that we were used to recycling since 87 per cent of us have access to curbside or drop-off recycling for paper. Recycled paper is the major source of the raw material for most of the paper mills in Indian and the rest of the world.

As per the industry estimate, paper can be recycled on an average of 4 to 6 times. Each time recycling occurs, the fibres become shorter and weaker and virgin pulp must be introduced into paper production to maintain the strength and quality of the fibre. Through this process, recovered paper and forest-based product complement each other ecologically and economically.

Process of Recycling
• Sorting: Paper products must be separated according to their composition and degree of deterioration. Different types of paper can sometimes be mixed. Others, such as paperboard, are recycled using a single-grade process, meaning that no other type of paper can be mixed in during its processing.
• Baling: Large quantities of paper are packed using hydraulic machines that apply enormous pressure to compact recovered paper into blocks that are easier and more cost-effective to transport.
• Shredding: Recovered fibre is shredded into smaller pieces and mixed with water to make pulp.
• Washing: The pulp is washed, refined and cleaned, then turned into a slush that undergoes filtering through screens and other separation processes to remove contaminants such as ink, clay, dirt, plastic and metals. Dyes, coatings and other additives can be introduced during this process. Water is continuously drained and cleaned for reuse.
• Bleaching: In order to whiten paper, the pulp can be bleached using hydrogen peroxide and chlorine.
• Pressing: The resulting paper sheet, known as ‘web’, is pressed between massive rollers to extract as much of the remaining water as possible and to ensure uniform smoothness and thickness. The semi-dry web is then run through heated dryer rollers to remove any remaining water.
• Rolling: The finished paper is processed into large rolls ready to be manufactured again into new consumer products.

Facts of paper recycling
• One tonne of recycling paper saves up to 31 trees, 4,000 kWh of energy, 1.7 barrels (270 litres) of oil, 10.2 million Btu’s of energy, 26,000 litres of water and 3.5 cubic metres of landfill space.
• Burning of one tonne of paper would generate about 750 kilograms of carbon dioxide.
• Recycling paper saves 65% of the energy needed to make new paper and also reduces water pollution by 35% and air pollution by 74%.
• Recycling one tonne of corrugated containers save 390 kWh of energy, 1.1 barrels (176 litres) of oil, 6.6 million Btu’s of energy, and 5 cubic metres of landfill.
• Recycling cardboard requires only 75% of the energy required to make new cardboard.

Key challenges:
Among the major challenges with the Indian paper recycling mills is the recycling rates are languishingly very low as compared to the global average for a variety of reasons.
1. There is neither strong social awareness nor enough political will to promote recycling as a way of life.
2. Waste collection and segregation mechanism are largely un-organised leading to scrap contamination.
3. Most municipal infrastructure is inadequate in terms of collection, transportation and scrap yards.
4. Appropriate technologies to maximize recovery from recycling are still nascent stage. Indian recyclers have no choice but to depend mainly on imports for quality scrap.
5. To hedge such risks we need to ensure that there is sufficient supply of domestic scrap conforming to globally acceptable quality standards.
6. The high cost of Paper Recycling machinery and also an urgent need to incentivize innovation and R&D as unavailability of indigenous technology often forces players to rely on the costly import of machinery.
7. The power cost is another big deterrent in attracting new investments in this industry. Respective state governments must connect exemption from electricity duty.
8. Ministry of Environment & Forest (MoEF) to remove recycled fibre (RCF) based paper mills from RED……..industries.

Growth potential:
Leading paper recycling mills are establishing automatic and highly efficient recycling systems to curb high manufacturing cost and eliminate labour-intensive operations by automating the existing process. There are lots of opportunities in the paper recycling market in Indian because it is the leading importer of the waste paper in the world.

The waste paper prices, however, may fluctuate on account of volatility in international waste paper prices, healthy demand, and forex fluctuations. Additionally, the Chinese Government has banned the import of several varieties of waste paper, which is the primary raw material for the finished paper. Consequently, the production of finished paper is expected to be hampered in China.

This, in turn, is expected to lead to some relief in raw material prices and improve realizations. The profitability of the players is expected to be maintained in the medium term at the back of eased out cost side pressures and improved realizations of the finished goods. Packaging paper & board segment caters to industries such as FMCG, food & beverage, pharmaceutical, textiles, etc.
Demand for Packaging Paper & Board segment is expected to grow at a CAGR of 8.9% and reach 11.4 million tonnes in FY20 due to factors such as increased urbanization, the requirement of better quality packaging of FMCG products marketed through organized retail, and increasing preference for ready-to-eat foods.

Printing and Writing segment demand is expected to grow at a CAGR of 4.2% and reach 5.7 million tonnes in FY20. The demand is expected to grow on account of an anticipated pick-up from the education sector with improving literacy rates and growing enrolment as well as an increasing number of schools and colleges.
Improving literacy rates, rising circulation and an increasing number of newspapers and magazines is expected to support growth in newsprint demand which is expected to reach 2.8 million tonnes in FY20.

Need for Material Recycling Policy:
The Recycling Industry in India plays a very important role in terms of its economic output as well as employment generation along with the contribution towards sustainable management of resources. However, to date, the Recycling Process in the country remains unregulated owing to the absence of the laws governing the scrap sector. For the proper recycling of the Scrap Material in India, implementation of Material Recycling Policy is the need of the Industry.

The material recycling industry due to the un-organised structure is plagued with various challenges at every stage of its value chain: Generation, Processing, Usage, Disposal, thereby creating environmental issues.
It suffices to say that we require a more integrated and strategic framework to effectively address environmental issues, enhance productivity & efficiency, increase Recycling Rate & recovery rate. With India being one of the world’s fastest-growing economies with poised peak material demand, the time has demanded organized structure & rolling out of Material Recycling Policy.

Therefore, MRAI expects vibrant Material Recycling Policy to:
•Bring the un-organised into the organised sector without having an impact on the employment.
•Potentially develop the recycling markets in India.
•Incorporate good standards of recycling where there should be minimal waste and maximum recovery.
•Attaining the concept of Zero Waste Policy in India
•Focusing on environmental savings.
•Setting standards for the quality of scrap to be provided to the recyclers.

The Outcome from the Material Recycling Policy will be:
• Setting up of recycling zones, clusters across various parts in India.
• Enhance awareness and insight into the significance of achieving resource efficiency & sustainability.
• Ensure maximum recovery of quality scrap domestically, proper scrap collection & segregation centre.