Roaring Dragon

Yan Cheung

REVERSAL OF FORTUNE. In North America, quite a few paper makers have vertically integrated to start their own recycling divisions to help supply their mills.

The story of Nine Dragons involves a reverse vertical move. Hong Kong husband and wife entrepreneurs Ming Chung Liu and Yan Cheung created America Chung Nam (ACN) in 1990 as a U.S.-based broker of scrap paper to mills in China.

By that time, Yan Cheung had already been involved in the paper industry for some time, having worked with paper mills in southern China and having started a Hong Kong-based scrap paper brokerage in 1985. Her husband Ming Chung Liu started a career in medicine before becoming first a steel trader and then the co-founder of ACN in 1990.

Throughout the first half of the 1990s, ACN built strategic alliances with paper recycling companies in the United States as a way to procure fiber for the growing Chinese paper making industry.

In 1996, the duo decided to build their own consuming destination in China, and work began on the Nine Dragons paper mill in Guangdong province in southern China.

The maneuver has left ACN (and its companion company ACN-Europe, which sources fiber there) in place as a major recovered fiber trading operation at the same time that Nine Dragons has emerged as a major producer of packaging grades.

The Nine Dragons mill in Guangdong originally consisted of two paper machines making kraft linerboard at the combined rate of 600,000 tons per year.

In the decade since, Nine Dragons has grown into a papermaking beast that befits its name, now having the capacity to produce 3.3 million metric tons of containerboard annually, with plans in place to install another 1.8 million metric tons of capacity by the middle of its 2007 fiscal year. The company’s ultimate goal for the two sites is to produce at least 9 million metric tons annually.

CONSTANT CRAVINGS. As large appetites go, few can match those of the hungry dragons at the two Nine Dragons complexes in China.

As of mid-2006, eight paper making machines at the original Guangdong mill and two at the company’s second complex in Taicang (in Jiangsu province, about 60 miles from Shanghai) were chewing through a steady supply of OCC and other types of fiber at an impressive pace.

A visitor to either paper making compound will find substantial acreage devoted to the storage of baled OCC (and smaller amounts of mixed paper and other grades).

The company estimates that, at the two complexes combined, some 400 intermodal containers filled with recovered fiber arrive daily. Nine Dragons supply arm ACN will most likely purchase some 5.7 million tons of recovered paper in calendar year 2006, more than double the 2.6 million tons it purchased as recently as 2003.

Where does all this OCC come from? Initially, the vast majority came from North America, and the region remains the leading supply source. With the establishment of ACN-Europe, though, the supply mix has become more diverse. In 2005, while 41 percent of Nine Dragons’ furnish came from North America, Europe now supplied some 19 percent of the total.

Ming Chung Liu says U.S. OCC has the best fiber yield, but also notes that the shipments may contain an alarmingly high level of prohibitive materials.

At the Nine Dragons Taicang/Shanghai mill, a fleet of 100 trucks helps bring in the steady supply of fiber, according to Manager of the Import and Export Department Xin Gang. Some 400 trucks are needed to serve the larger Guangdong mill, according to Nine Dragons Secretary to the General Manager Mason Chiu.

Each container of this constant stream of recovered fiber is directed toward one of 24 loading docks at the Taicang mill. In June of this year, 12 of those docks were already receiving fiber for the third and fourth paper machines at the mill even though they were not yet online.

As massive as the operation is at the Taicang mill, the scale is more than doubled at the original Nine Dragons complex in the city of Dongguan in China’s southern province of Guangdgong. As of mid-2006, eight paper machines were operating at the Dongguan mill, with two more being built.

Both complexes are designed to be largely self-contained, with their own power generating plants on the front end and their own wastewater treatment plants at the end of the process.

COMPLEX SOLUTIONS. When hosting visitors at its mills, Nine Dragons managers such as Xin Gang in Taicang or Mason Chiu in Dongguan can show their guests a great deal more than the paper machines and the masses of inventoried OCC.

Nine Dragons has purchased about 500 acres of land at each location. The tours in both cases can begin with a trip to a nearby major river (the Yangtze in Taicang, the Pearl in Dongguan), where piers have been built by Nine Dragons to handle incoming shipments of coal and raw materials.

According to Ming Chung Liu, China is rich in coal, but the infrastructure to generate and transport power from these raw materials is still under development. Thus, Nine Dragons made the decision to ensure its own power supply at both locations.

Additionally, the company can sell excess power to nearby industrial users and municipalities, and in Taicang it is also can charge users who wish to ship through its Yangtze River terminal.

In addition to providing its own power supply on the front end, the company has also put systems in place to minimize pollutants and solid waste at the back end of its operations.

In Taicang, the plastics screened out before pulping are used as feedstock for plastic lumber production.

The papermaking process starts with crews who open up the bales of OCC and look for contaminants and off-spec material. Once this material is pulled out, the OCC is sent through a series of disc screens to remove more off-spec paper and trommel screens to remove fines before heading to a pulper via conveyor.

At the pulper and beyond, the papermaking process becomes highly automated, as Nine Dragons has invested in the most modern European, Asian and North American machinery to create high volumes of rolled paper products on its 10 (soon to be 15) paper machine lines.

In early 2006, the company’s initial public stock offering was made to enable it to tap into sources beyond its own revenue stream to finance its investments in land, facilities and equipment that have allowed it to quickly become a major player on the global papermaking scene.

Growth is anticipated in any of several forms. There is still room for expansion at its two existing sites, while a statement accompanying its most recent quarterly report notes, "We plan to establish new production bases in central-western and northern China in the next three to five years."

The group’s ambitions are not small, according to its 2006 annual report: "The Group aims to become the world’s leading manufacturer of packaging and paperboard products."

According to Ming Chung Liu, such plans are the only way the company can ensure its continued existence even in a growing market. "In the future, if you have just one paper machine or two machines, you won’t compete," Ming Chung Liu told Recycling Today. "In our business, economy of scale is very important."