Turning Straw into Gold – Investment in Straw Pulp Mills


I want to talk to you about why investing in agricultural fiber pulp manufacturing is necessary and makes good financial sense. I am not an investment professional, so why would I be so bold as to say this? Here are my lucky seven reasons why:

  • Every paper trade magazine I have read, for years, regularly features sustainability as a priority for competitiveness. So the market wants alternatives.
  • Packaging use is increasing everywhere, at about 3%pa, and the supply of recycled fiber is tight.
  • Printing and writing grade papers are 39% of global paper production and, even though use is shrinking in North America and Europe, it is still mountains of paper and growing in developing countries, so getting market share is worth pursuing.
  • Access to forests identified as key for carbon storage, climate mitigation and biodiversity will become increasingly difficult as global commitments to address climate change and biodiversity are enacted by governments and through corporate purchasing policies.
  • Over 800 of the world’s large paper & packaging purchasing corporations have made commitments to reduce the negative impacts their paper and packaging has on the environment.
  • Multiple new technologies to manufacture pulp for paper, packaging and viscose with agricultural fibres are now available, many of which are substantially cleaner (up to 70% less energy use and 90% less water use) and have a lower CAPEX compared to conventional wood mills.[5]
  • Those who can supply price and quality competitive pulp with real green credentials will be the winners in the paper field because market success is about price and quality, but sustainability is the key factor that clinches decisions.


Billions of dollars are currently being invested in pulp and paper manufacturing around the world. Most of that is going into conventional wood-based pulp and paper facilities that are exacerbating global climate, water and biodiversity problems. With so many customers looking for environmentally preferable pulp and paper options smart investors interested in capturing market share would do well to familiarize themselves with the non-wood pulp ventures that are either currently in construction or looking for financing. In my opinion, those ventures will be quickly capturing market share once they start producing at commercial scale.


According to a report from Allied Market Research, the global green packaging market generated revenue of $132 billion in 2015 and is expected to reach $207 billion by 2022. The sector grew at a CAGR of 5.41 percent from 2016 to 2022. The food & beverage segment accounted for more than 60 percent of overall share in the applications segment.[1] Dell is already using agricultural residue fibre paper supplied by Taiwanese-based YFY Jupiter for packing tablets and computers.[2]


Given the clear environmental benefit of well-designed and planned agricultural fibre mills and the social benefit to rural communities some government agencies are developing interesting measures to facilitate investment in ag fibre/straw fibre pulp mills. In Pakistan the IFC “facilitated provision of a US$90 million guarantee by MIGA to Stora Enso for investment in Packages’ paper and board subsidiary, BPSL” for a wheat straw and recycled pulp and paper mill of approximately 271,400 tons per annum. Packages sells to major clients in Pakistan such as Unilever, Colgate, Nestle, P&G and Tetrapak.[3]


The Washington Economic Development Finance Authority (Washington State, USA) put up an offering of $133,600,000 in tax exempt bonds to help finance Columbia Pulp’s 150,000 T/pa wheat straw mill (under construction as I write this). These bonds were offered by Goldman Sachs and were over-subscribed five-fold when they went for sale in July 2017.

Justin Goldstein, who managed the bond offering for Goldman Sachs, remarked “We had strong demand from investors for the Columbia Pulp project financing transaction in the US municipal bond market. Columbia Pulp’s project features new technologies designed to cost effectively convert non-wood fibers into market pulp.” He recognized that the work that Canopy has done to develop the market and the shifting desire for sustainable products has had a positive impact on investor interest. “Information regarding customer activity and interest in the special sustainable nature of the products expected to be produced by the project formed a very helpful part of the overall story that generated a high level of interest in the financing from investors. As the market develops for sustainable non-wood fiber pulp and paper products, we expect the special nature of the products, and the customers that buy it specifically for that reason, to form an increasingly important part of the credit story that attracts investors,” said Goldstein.


According to UkrPapir, Ukraine will require investment in the order of $2 billion (including the construction of up to 10 new production facilities) to establish a viable long-term straw-to-paper program.[4] Canopy’s market survey of just 180 corporate pulp and paper purchasers found unmet market demand for 1.4 million ton/year of agricultural fibre paper (ten mills worth). We have corroborated with one of the largest paper brokers in North America and one of the world’s largest non-wood pulp manufacturers that there is likely a market for over 100 non-wood pulp mills production (at 150,000 T/pa per mill) in North America alone.


There are a number of different technologies available. Looking at available information for the Washington State wheat straw mill currently under construction the projected cost of that unbleached wet-lap mill is about US$200 million. My conversations with other mill ventures indicates that adding brightening and drying capacity adds about another 30% in building costs. The benefit of brightening and drying is flexibility to export and applicability for a wider array of paper types. If these projections prove out in the final construction and operation of the Columbia pulp mill, which is slated for completion in December 2018, it is significantly cheaper than a similar sized conventional wood pulp mill.


Adapting to changing conditions is basic to survival and even better, is foundational to thriving. Conventional wood-based paper manufacturers and investors may have too much attachment to “the way it’s been done for a hundred years” to recognize the value of investing in non-wood pulp for paper. Fortunately, there are investors that:

  • Are interested in building infrastructure that deals with sustainability at relevant scales to address the scale of the problems;
  • Recognize the convergence of green market demand and greener technologies and;
  • Like being on the cutting edge.


Pulp and paper is a massive, highly segmented sector producing everything from unbleached kraft pulp to security papers to viscose/rayon for dresses. Canopy is reaching out to the investment community to familiarize them with both the opportunity and the necessity of shifting our paper sourcing from wood fibre to straw. It’s big. It’s bold. It’s good.

by Canopy Fibre Solutions Strategist, Valerie Langer

Article revised, March 21, 2018


[1] https://www.packagingstrategies.com/articles/90260-packaging-outlook-2018-paperboard-packaging-overview

[2] http://www.silicon.co.uk/workspace/dell-packaging-wheat-straw-green-144287

[3] https://books.google.ca/books?id=kGALDAAAQBAJ&pg=PA62&lpg=PA62&dq=wheat+straw+paper+investment&source=bl&ots=TP6YFSrisN&sig=76XoVRIx_DnNzVfs8pECtGQi6Uo&hl=en&sa=X&ved=0ahUKEwjB5_7z0uDZAhVQ-2MKHb9mAHw4ChDoAQg0MAU#v=onepage&q=wheat%20straw%20paper%20investment&f

[4] https://www.ifc.org/wps/wcm/connect/ee2a5a0044aba21bb175bdc66d9c728b/Straw_to_Cellulose_Eng_2013.pdf?MOD=AJPERES

[5] As indicated I am not an investment professional. The construction and investment costs are based on publicly available projections by companies that are in financing or construction mode in North America. Naturally any investor would need to do their own due diligence.