Finnish Poyry prepared Koreans Plan $200M Paper Facility

Korean-owned Corn Pulp & Paper Holdings (CP&P) mulls the establishment of a $200 million pulp and paper facility in Isabela utilizing corn stalks from the corn growers in the province as raw material.

Danilo B. Tumamao, Isabela provincial agriculturist, told Business Bulletin at the sidelines of the “Global Status of Commercialized Biotech Crops” that CP&P plans to invest in Isabela because of the abundance of corn stalks.

Isabela, the country’s biggest corn hub, produced 1.26 million metric tons (MT) of corn in 2011, a sizable 20 percent of Philippines’ total corn output.

The proposed paper manufacturing plant has a production capacity of 40,000 metric tons (MT) of pulp per year for exports, particularly Korea.

The project’s feasibility study was prepared by Finnish firm Poyry, which is engaged in “engineering balanced sustainability” projects in industries as hydropower, nuclear energy, transmission, pulp and paper, chemicals, transportation, and mining.

CP&P is partnering with a local firm A&L Consulting. Both partners are now raising an initial $40 million financing for the planned paper facility. A memorandum of agreement (MOA) has just been signed between the stakeholders for the project supported by the Isabela Gov. Faustino Dy.

The Philippine partner, A&L, is separately planting corn on 12,000 to 15,000 hectares of land in Isabela in its bullish prospect for the crop.

Tumamao said the Korean project is an opportunity for Isabela to further increase its corn production as this would require extensive planting program of genetically-modified (GM) corn and 20,000 hectares to produce the much needed corn stalk.

“Their interest is the corn stalk, and Bt (Bacillus thuringiensis) corn has stalks that are clean, so it may be best to use it for pulp and paper. But the corn may still be used for its grains,” said Tumamao.

The Korean company earlier visited Indonesia, Thailand, Vietnam, and Cambodia for possible location of its project, but has preferred the Philippines as an investment site. CP&P believes the Philippines is an attractive place to invest in, particularly in Isabela.

The group also visited other sites in the country including Pampanga, Pangasinan, and Bukidnon in Mindanao, but Cauayan in Isabela was chosen as the final site. Isabela is also the site of South East Asia’s biggest bulk handling facility for corn and rice in Reina Mercedes.

Araneta & Lee (A&L) Consulting Chairman Jovy S. Araneta said the group is choosing Isabela as site for the plant because of the abundance of corn plants which generate stalks that are at the moment considered waste.

CP&P has just completed a pilot work of the technology in China that used corn stalk as raw material for pulp manufacturing.

“This is a cutting edge technology developed by Koreans. They are utilizing corn as a renewable resource,” said Araneta.

“We feel the market is easy. We can sell it anywhere. Corn is a political commodity worldwide. It’s becoming scarce,” said Araneta.

The Philippines has regularly been importing corn and corn substitutes at around one million MT yearly.

The Isabela provincial government also has a support for corn planting, Tumamao said, through the “Production Incentive Based Loan Assistance to Marginalized Farmers.”

“We will provide small farmers with loans. We have almost 50 percent share of small farmers (with an average of 1.7 hectare-land) in our production, so we have to take care of their welfare,” Tumamao said.

Farmers that hit a corn yield of five MT and above will be privileged to get the loan converted into a grant.

“We have a clearance from COA (Commission on Audit) on this program that will use our EDF (economic development fund),” he said.

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