TOKYO -- Japan's biggest paper trader, Japan Pulp and Paper, is set to launch a recycling business in India, collecting and selling used paper.
The company will establish a used-paper collection facility near the western Indian city of Mumbai by year's end at a cost of nearly 100 million yen ($920,000). It plans to build several more in the next few years.
Collected paper will be sent to local paper mills for making corrugated cardboard and white paperboard used for wrapping foods.
The facility will be able to separate different kinds of paper, then compress and pack it for shipment. Initially, the business will collect paper from local printing companies, separate it at the facility, then pack and transport it to a local white lined paperboard factory.
In the future, the company plans to collect used corrugated cardboard for sale to companies that remanufacture the cardboard.
As India's economy grows, so does demand for recyclable paper. By tapping into this market, Japan Pulp and Paper hopes to boost trading volume in the next few years to some 40,000 tons, with annual sales of about 1.2 billion yen.
The company's Indian operations kicked off in 2012, when it acquired a 49% stake in KCT Trading, a Bengal-based paper trading company.
Demand for white paperboard is growing along with the country's population. The material is mainly used in food and confectionery packing. Corrugated cardboard for packing auto parts is also in demand.
The increasing need for used paper has not seen a corresponding rise in infrastructure for collecting and recycling it. In 2015, the percentage of used paper collected for recycling was 28%, far below Japan's 79% and China's 46%. This has forced manufacturers to rely on imported paper.
Online shopping -- now exploding in China -- has driven the need for more shipping boxes, thereby boosting demand for used paper to make corrugated cardboard. Japan Pulp and Paper thinks the expected growth in corrugated cardboard and white paperboard production in India will prompt local paper mills to purchase used paper.
The company is also expanding to other overseas regions. In 2016, it opened a used-paper facility in Phoenix, located in the U.S. state of Arizona. It is the third such facility on the West Coast.
The company aims to double the consolidated pretax profit of its resources and environment segment, which includes the used paper business, to 1.3 billion yen in the year ending March 2020 compared to fiscal 2016.