Monday, January 9, 2017 11:15 am

TOKYO (From the Nikkei Asian Review) -- Oji Holdings will construct a new Australian plant for food-grade cardboard boxes made from pulp, rather than recycled paper, for supply to local meat processors and farmers.

The Queensland facility is seen costing some 5 billion yen ($42.9 million), with full-scale operations starting this October. Equipment will be added in stages, raising capacity to between 3 million sq. meters and 4 million sq. meters a month as early as 2019.

Oji already produces pulp cardboard boxes in Sydney and Melbourne, and adding the new plant will boost Australian capacity by 50%. Pulp cardboard is more breathable than cardboard made from recycled paper. It thus withstands humidity better, making it more sanitary and better for shipping food.

Oji anticipates robust demand for the packing material. With a free trade agreement between Australia and China having taken effect in December 2015, Australian exports of such farm products as beef and fruit are climbing.

Base paper for the cardboard will be supplied from a company in New Zealand that Oji acquired with the public-private Innovation Network Corp. of Japan in 2014. The base paper will be processed into sheets, printed and assembled into boxes at the new plant.

Oji aims to increase its Australian market share from a few percent to more than 10%. The local supply of pulp cardboard is limited, with some major Australian paper companies choosing not to produce the material because of the difficulty of sourcing pulp and other reasons.

The majority of Oji's cardboard plants in Southeast Asia and Oceania use recycled paper as a raw material. Sales in the company's industrial materials business, which includes cardboard, total some 600 billion yen, accounting for around 40% of group sales.

The overseas sales ratio came to around 28% in the year ended March 2016 -- a figure the company aims to boost to 35% in the year ending March 2019. Oji will also invest in increasing the efficiency of facilities that produce pulp abroad. Within three years, it intends to spend 10 billion yen in New Zealand and 15 billion yen in Brazil to upgrade aging facilities. The aim is to enhance competitiveness by lopping 10% off production costs.

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Join Jim Thompson on the 2nd Annual Papermakers Mission Trip to Guatemala, 22 - 29 July 17. Build houses, talk about the pulp and paper industry. For more information, email jthompson@taii.com with "Guatemala" in the subject line.