Tipco scales down investment plans

Trust International Paper Corp. (Tipco), the country’s biggest producer of newsprint, had to scale down its business plans as the lower-than-expected safeguard measure slapped on imported newsprint was not enough to justify huge investments for its facility.

These additional investments were supposed to be poured into Tipco as part of its commitment when the government imposed a definitive safeguard measure of P980 per metric ton on imported newsprint, which was reportedly causing “serious injury” to the domestic industry. These investments were also meant to “facilitate positive adjustment to import competition.”

Tipco executive vice president Edgar Pataroque reported Wednesday that the biggest of the nine projects aimed at upgrading the equipment and machinery at its facility was put on hold.

Some of the projects were delayed due to reasons that were said to have stemmed from outside factors, while most projects were on track for completion based on the timetable provided by the company.

Specifically, the replacement of the existing 1,000-kilowatt HC pulper with a 500-kw drum, which would require Tipco to shell out an additional investment of P156 million, was shelved.

“This project was put on hold because of the big amount, (but) it doesn’t mean that we will not continue. We will assess the market situation. If the market improves, we might proceed with the project. This project was replaced by other projects that are more cost effective,” Pataroque said.

The planned installation of spreader roll, which required P10 million in additional investment, was also shelved and replaced with another project that would generate more returns and savings.

Pataroque stressed that despite the lower safeguard measure and the sluggish state of the global newsprint industry, the company remains committed to pursue its planned projects to become globally competitive, as it had proposed under its adjustment plan.

“The challenge of all newsprint mills around the world today is to stay alive until such time that the supply and demand gets back to its equilibrium…(As it is) A lot of players have been forced to close down… There have been reports that the two biggest exporters of newsprint to our country are also experiencing financial difficulties,” Pataroque said.

The Department of Trade and Industry issued last year an order imposing a definitive safeguard measure of P980 per metric ton on imported newsprint.  This amount, however, was much lower than the P2,470 per MT recommended by the Tariff Commission.

For the second and third years of implementation, the safeguard duty would be further liberalized and reduced to about P800 per MT and P640 MT, respectively. The said adjustments, however, would still be subject to a review to determine whether there is a need to further change the amount.