The integrated mill at Nantong, China — and the cancelled wastewater pipeline (2007)

The side granting the permits was also paying for the plant

The wastewater pipeline was not equipment Oji laid itself. It was built by the city of Nantong at a cost of roughly $125.3M (¥10bn) as a condition of attracting the investment, and on that single line — 150,000 tonnes a day discharged into the Yellow Sea — rested the premise of integrated production including in-house pulp. Nothing was missing on the approvals side: both the environmental assessment clearance from the State Environmental Protection Administration and the project authorization from the State Council had been obtained. Even so, the plan was reversed in the course of a single day, 28 July 2012. That the party granting the permits and the party bearing the cost of the infrastructure were the same local government was a backstop at the time of entry, and turned into the absence of any escape route when residents converged on the government offices.

That said, the Nantong investment cannot be dismissed with the single word failure. The mill kept operating, and integrated production from pulp did begin in 2015. What stumbled was less the business itself than the speed envisaged in 2007. The No. 1 paper machine started five years behind the original plan, at a reduced scale of 400,000 tonnes a year rather than 600,000, and the road led to the $506.2M (¥55bn) impairment booked in the year to March 2016. After this experience, Oji’s investment turned toward pulp in Brazil, forests in Oceania and packaging materials in Europe. The outline of its overseas investment appears to have been redrawn — from a model of building mills to capture demand in growth markets, to one of securing resources and end-uses.