Masisa plans to add capacity and value

The Chilean Masisa group, already with board mills in five countries, aims to boost its current 300,000m³/year Brazilian capacity to feed the market's voracious appetite for MDF. Masisa plans a new 350,000m³/year mill in Brazil's southernmost state of Rio Grande do Sul (RS) state, with likely start-up late next year. This April, when WBPI visited Masisa do Brasil, the project was awaiting the all-important environment agency green light and the formal Masisa board go-ahead. A supplier order for the main line equipment was expected to be placed by June, according to Pablo Rossler, production director of group subsidiary Masisa do Brasil Ltda. Always the scrupulous planner, Masisa already has forest plantation land in the state, where last year it bought, and is planting, another 3,000ha to feed the proposed mill being sited in Montenegro. It has also secured long-term supply contracts with a number of third party wood providers. So far, RS has escaped the fierce battle for land raging further north, especially in Paraná and São Paulo states, between expanding wood pulp and panel producers, power generators, and land-hungry soya and sugar cane growers spurred on by the global 'clean fuel' revolution. But, as panel makers move south to vie with giant pulp companies like Aracruz to scoop up potential affordable forest land, a battle there too seems just a matter of time. Masisa do Brasil, based in Curitiba, Paraná state, operates its existing Valmet (Metso)/Küsters MDF line alongside Brazil's only OSB line in Ponta Grossa. The decision to look south, outside Paraná, for its next mill was prompted by the group's need for raw material, admits Mr Rossler, who will run the new mill too. Estimates put the likely consumption of wood by the new MDF line at around 600,000 tonnes/year so every effort is being made to boost the yield of local forest resources and to cut the costs of shipping wood to the mill. Some plantation is being switched to fast-maturing eucalypt, while the 76ha Montenegro site was chosen partly for its ease of communications, with road, rail and river access to wood sources. It is understood Masisa considered locating its second Brazilian panel plant in the deep south of RS near the port city of Rio Grande, closer to the Uruguayan border. This would have offered an abundant local wood resource, but panel freight costs would have been too high. Montenegro, near the state capital Porto Alegre, could ship logs by river from islands in the giant Lagoa dos Patos lagoon. The RS plant is expected to be virtually identical to Masisa's latest Chilean project, due to launch a 2.75m-wide Siempelkamp press-equipped MDF line with 350,000m³/year capacity by June. With MDF demand growing steadily in Brazil over the past two years, and with few capacity expansions planned, Masisa has been doing everything possible to raise the output of its Ponta Grossa line. It was kept running with barely a halt for holidays and maintenance, said Argentine Pablo Rossler. The line, which manufactures mostly 15-18mm thick standard MDF for Brazil's furniture industry, includes a 33m long, 2.75m wide Küsters continuous press. A number of upgrades and modifications since 2004 have increased line capacity from its original 240,000m³/year up to 300,000m³ this year. In mid-2005, Masisa installed a second Metso refiner, raising fibre throughput from 20-33 tonnes/hour. An investment of one million US dollars was also made to expand wood preparation by installing two new chip screens. Like other MDF manufacturers, Masisa aims to grow its margins through pushing its value added product sales: The company invested around four million US dollars to add a second Wemhöner melamine laminating line and today is surfacing more than two thirds of its board capacity. Even so, it still supplies a proportion of raw board to customers who paint it themselves. Two years ago, Masisa faced a problem when it was unable to obtain sufficient ready-impregnated overlay paper for laminating because of a rash of new laminating lines installed by other Brazilian producers. It has since invested in its own three million m²/month Vits impregnator, which is proving itself with an output of some two million m²/month. Some prepared papers were shipped to Chile to supplement Masisa's needs there. One major innovation was the company's new embossed-in-register finished board range, 'Masisa Nature', with laminate paper revealing the wood grain pattern. The two designs, offered in six colours and launched in January, already represent 15% of laminate production. Upgrading its customer service, the firm introduced a section applying a peel-off protective polythene film to the faces of dark coloured melamine board. This manual process, turning out around 2,000m³/month, was due to be automated, said Mr Rossler in April. Masisa is proud of the quality of its MDF panels, not least because it claims to have stolen a march on its regional competitors in manufacturing 100% E1 board. The Brazilian firm is also a regional leader in the manufacture of OSB with its big 350,000m³/year Dieffenbacher continuous press line in Ponta Grossa. Since its OSB launch, Masisa has created a new market, not only taking on plywood in some areas, but also through a range of innovative products using the board. To start with, Masisa relied heavily on sales to a booming North American construction market, with around 70% of its output exported there in 2004-5. At one point, output from a tongue-and-groove line at Ponta Grossa, supplying product for US flooring, was providing 80% of the US sales, recalled Mr Rossler. But Masisa, which initially set out to develop a Latin American OSB market, anticipated the slump in US housing starts and falling OSB prices with its growing range of local niche products. Furniture parts, heavy-duty packaging and pallets and construction products have all contributed to the alternative marketplace. In the case of furniture, Masisa created a successful niche supplying board for sofa frames and claims one sofa maker set up a plant reliant on its OSB. This May, it was due to launch a fresh product in Brazil - two-side high pressure laminated OSB for fitted kitchen and closet furniture, both water and termite resistant, according to commercial director Jorge Grandi. Other local products it has developed include the low priced 'tapume' panel for building site hoardings; the 22mm thick, 3-5m long OSB 'Eco-tabua' planks to replace solid wood used for table tops, construction walkways and concrete column form; and low-water-resistant UF resin panel for indoor furniture. These three represented 50% of OSB sales early this year. While Masisa's OSB is certainly making inroads in Brazil and its surrounding countries, last year showed exports beyond the region still represented 51% of total sales. Earlier this year, it was shipping around 10,000m³/month of board to China and Europe, including Latvia and Poland. "What we need now is to change the profile of our OSB sales. We are trying to increase sales of OSB 'Form' (a film-faced concrete moulding product) and come out of low margin products," said Mr Grandi. He played down the future for general OSB export sales to China and Europe and suggested Masisa is not confronting plywood head-on but following a new product route. In April, Masisa was running its Dieffenbacher line at around 80% of capacity and demand was set to push it up to full production during May. So, OSB seems gradually to be taking root in Brazil and it is clear Masisa has been studying the possibility of building a second line for the panel in the region. Meanwhile, the case for more MDF capacity is clearly made and the group will soon have its next Brazilian plant running.