A Chinese paper company will study the feasibility of building a $1.3 billion pulp mill in Arkansas as the state's governor completes a trade mission to Asia.
Sun Paper, based in Shandong province and employing more than 10,000 globally, is considering an Arkansas site for what would be the company's first facility in North America. Sun Paper is expected to make a decision on the new plant by May.
Arkansas Governor Asa Hutchinson was scheduled to conclude a trade mission to China and Japan on Tuesday. On Monday, he joined Hongxin Li, chairman and founder of Sun, in signing a letter of intent between the company and Arkansas economic development officials for the possible development of a fluff pulp mill, whose products would be used in baby diapers and other sanitary items.
Patrick McCarthy, director of the Center for Paper Business and Industry Studies at the Georgia Institute of Technology in Atlanta, said fluff pulp is a raw material that can be dried and shipped.
"China's middle class is expanding annually, and the market for these items in China is expected to maintain a sustained growth. A question then is whether China is buying this capacity not to supply the domestic (U.S. market), but to supply the world and, in particular the Chinese market," he said in an e-mail.
McCarthy said China has shut down some of its "… old polluting mills and is building state-of the-art mills".
The Arkansas Business website said it first reported on the proposal in 2013, and previous reports indicated that the pulp mill could employ 350 in one of two south Arkansas towns: Arkadelphia or Camden. Other sources later suggested Crossett as a possibility.
Camden has an abandoned International Paper Co site and bountiful water supply, and Sun Paper also has a joint venture with IP to produce high-quality ivory board for liquids and food packaging; Arkadelphia has quick access to Interstate 30, Arkansas Business reported.
In 2002, Arkansas voters passed Amendment 82 to the state Constitution, whereby the Legislature could approve the use of up 5 percent of general revenue for incentives to bring in economic projects.
If the mill is built in Arkansas, Sun would not be the first Chinese paper company in the U.S.. Last year, Shandong Tranlin Paper Co Ltd said it would invest $2 billion over five years to establish its first U.S. manufacturing operation, in Chesterfield County, Virginia. It is expected to generate 2,000 new jobs by 2020. The investment represents the largest Chinese investment and job-creation project in Virginia history.
