1. business and industrial
2. construction

Stora Enso Guangxi
Project
Rajah Jayendran,
SVP, MD Stora Enso Integrated Project & Operations
London, 28 May 2015
The renewable materials company
Disclaimer
It should be noted that certain statements herein which are not
historical facts, including, without limitation those regarding
expectations for market growth and developments; expectations
for growth and profitability; and statements preceded by
“believes”, “expects”, “anticipates”, “foresees”, or similar
expressions, are forward-looking statements within the meaning
of the United States Private Securities Litigation Reform Act of
1995. Since these statements are based on current plans.
estimates and projections, they involve risks and uncertainties
which may cause actual results to materially differ from those
expressed in such forward-looking statements. Such factors
include, but are not limited to: (1) operating factors such as
continued success of manufacturing activities and the
achievement of efficiencies therein, continued success of product
development, acceptance of new products or services by the
Group’s targeted customers, success of the existing and future
collaboration arrangements, changes in business strategy or
development plans or targets, changes in the degree of protection
created by the Group’s patents and other intellectual property
rights, the availability of capital on acceptable terms; (2) industry
conditions, such as strength of product demand, intensity of
competition, prevailing and future global market prices for the
Group’s products and the pricing pressures thereto. price
fluctuations in raw materials, financial condition of the customers
and the competitors of the Group, the potential introduction of
competing products and technologies by competitors; and (3)
general economic conditions, such as rates of economic growth in
the Group’s principal geographic markets or fluctuations in
exchange and interest rates.
The renewable materials company
Stora Enso Guangxi Milestones
Establishing plantations in
Guangxi
Announced decision to
build a world-class
consumer board and
pulp mill
Received the approval
from MOFCOM and NDRC
Decision to split the
project to phases 1
and 2
Three Joint
Ventures set up.
2002
2012
2013
State land use and
construction permits
IFC becomes owner
of the project with 5%
Kicked off mill
construction
2014
The renewable materials company
The renewable materials company
Office relocation to Tie Shan
Gang was completed
Start of
board
production
Pending approval
for the phase 2,
pulp mill by the
Stora Enso board
2015 Mid-2016
Rajah Jayendran
•
SVP, Managing Director Stora Enso Guangxi
Integrated Project and Operations
•
Based in Asia since 2000
•
Background
–
SVP, Head of Commercialization Asia Pacific, Linde Group,
Singapore
Leading all investments and business expansions in APAC
–
SVP, Head of Strategic Projects
Lonza AG, Basel/Shanghai
Corporate restructuring and Asia expansion
–
EVP, Chief Strategy and Planning Officer
ChemChina/Bluestar Beijing
Corporate restructuring and multi billion dollar expansion
and international M&A
–
VP, Bayer MaterialScience AG, Shanghai
3.1 bln USD greenfield integrated site in Shanghai
establishing materials and chemicals business in China
The renewable materials company
Guangxi Project: Phase I & II
Guangxi overview
•
•
•
Area: 236,700 km2
Population: 46.8 mil
Capital: Nanning
Pulp line
Effluent Plant
Power Plant
China
Board Mill
Myanmar
Laos
Vietnam
Woodyard
Water
treatment
Main Office
The renewable materials company
Guangxi project- two phases
Phase I
Forestry
Pulp
Board
Bleached ChemiThermo Mechanical Pulp (BCTMP)
Plantation area
Phase II
Liquid Packaging
Board(LPB)
Internal use
(production for pulp)
Bleached Hardwood
Kraft Pulp (BHKP)
Harvested volume
External purchase
of wood
Internal use
of BHKP
Pulp raw
material
(UBSKP/BSKP/
BHKP)
External
sales of BHKP
Chemicals
Market
The renewable materials company
Folding Box Board
(FBB)
Guangxi project first phase investment
Historical and planned Capital Expenditures, 2014-16
Total investments
including plantations
for the first phase
MEUR
450
450
390 390
400
400
350
350
•
EUR 800 million
Capex approved to
date
300
300
250
250
230
230
180
200
200
180
150
150
100
100
50
50
0
2014
2014
The renewable materials company
The renewable materials company
2015
2015
2016
2016
Mill construction underway with operations
ramp-up in mid-2016
•
•
Construction began November 2014
Leveraging
SE-global
capabilities
•
•
•
Extensive mentorship and knowledge sharing initiatives
Developing
local talent
•
•
•
Currently 135 employees, ramp up to 210 by end of 2015
Achieving
operational
milestones
Board Mill to be fully operational in mid-2016 and to
gradually ramp up to full capacity (450k t/a) in 18 months
Exchange programs to European mills
On-ground training provided for operations and technical
customer services
Recruiting from a variety of local vocational schools
Mill training to vocational school students ongoing
The renewable materials company
The renewable materials company
Overall Progress
• Overall progress at 30% completion as of May 22
• Construction progress on track at 25% completion
• Procurement progress 95% completion
• On track to meet mid-2016 operational start-up timeline
• 4.0 million working-hours free of incidents on site
The renewable materials company
The renewable materials company
Mill construction progress
Board Machine Plant
Roof structure
Effluent treatment plant
Power generation boiler
The renewable materials company
The renewable materials company
Forestry operations covering four territories
In Guangxi province – 1/3 social land, 2/3 state land
China
Plantation
areas
Myanmar
Laos
Vietnam
Total
Leased
Guangxi by SE
m ha
% total
Land base
23.7
0.4
Forest land
14.4
0.6
Fast
growing
Eucalyptus
1.96
4.6
Nanning Region
Euca area: 18,000 ha
Standing volume:
2,950,000 m3
Qinlian Region
Euca area: 15,000 ha
Standing volume:
1,749,000 m3
The renewable materials company
Yulin Region
Euca area: 17,000 ha
Standing volume:
2,218,000 m3
Beihai Region
Euca area: 22,000 ha
Standing volume:
2,971,000 m3
Guangxi Mill
Mitigating actions
– contract correction and conflicted land
Social land
contracting
Potential risks
Mitigating actions
• Land use contracts
• Conduct contract negotiations to:
– Update legacy agreements
– Reconcile conflicting document,
– Adjust rental & payment to buyout
•
Conflicted land
management
require correction
Complex property
disputes and conflicting
economic interests with
villagers, local
governments
• Land contested by locals,
causing disruption to
forestry ops (e.g., violence
against contractors, wood
theft, bribes)
middlemen
– Compensate local stakeholders
• Proactively engage with local gov’t to
•
•
align project objectives with local gov’t
intent
Co-operate with local gov’t and police to
assess conflicts containment actions & to
address illegal wood processing mills
Train staff in conflict avoidance and mgmt
1 Calculated as contracts with "Major Defects" which have been corrected and no longer classified as major defects
61% of contracts1 have been corrected as of March 31, 2015
The renewable materials company
The Guangxi Consumer Board Mill
will be operational mid-2016
The renewable materials company
World of packaging