Oji Paper to reopen Nantong paper mill in China following fierce protest that leads company to cancel plan to build pulp-effluent pipeline to sea; incident has 'shed light on business risk in China,' says industry official

TOKYO , July 30, 2012 () – Oji Paper Co. said Monday it will reopen its Nantong factory in the Chinese province of Jiangsu after operations were suspended following a major weekend protest over a waste drainpipe project.

Around 5,000 people took part in a demonstration at the factory, the biggest of the Japanese paper manufacturer's 10 plants in China, with residents expressing health concerns about the project to lay a 100-kilometer pipeline to discharge waste from the inland plant into the sea.

The protest that started Saturday has subsided by Monday and safety of the factory's operation is now ensured, Oji Paper said.

"The impact (of the suspension) on its business is almost none" because the suspension will be limited to a short period, an official said.

An industry official, however, said the latest incident "shed light on a business risk in China." Oji Paper could review its strategy in China, industry sources said.

Oji has been expanding its presence in China and other emerging economies where it is seeing demand for its paper products rise, since having seen paper demand falter in Japan.

The Nantong factory is the company's biggest operation in China where it plans to invest eventually around 200 billion yen. It was a major project that Oji hoped to take advantage of in building a foothold to establish itself as an Asian enterprise based in Japan, said a ranking Oji Paper official.

The factory started operations in January with around 850 employees. It primarily produced printing paper with an annual capacity of 400,000 tons. Oji Paper was planning to raise the capacity eventually to 1.2 million tons but the recent economic slowdown has forced it to use only 70 to 80 percent of capacity.

Waste water from the factory is currently discharged into the Yangtze River after being purified. Oji Paper was planning to discharge waste water into the sea through a pipeline going to be built by Nantong city.

The paper company has withdrawn its plan in the face of fierce protest by citizens amid growing awareness about environmental issues.

Oji Paper said discharged water "should pose no problem because it is processed to meet Chinese standards."

Nantong is close to Shanghai, China's economic hub, and many Japanese companies have set up operations. More than 100 companies have factories there, according to the Japan-China Economic Association.

Chemical and biotechnology company Toray Industries Inc. moved into the city in 1994. An official said, "We can't tell what will happen in China. We've installed a Japanese at the head of our factory to keep in touch with our head office."

Teijin Ltd., which is producing textile products at a factory in the city, said, "The demonstration this time doesn't have any impact but we've taken steps to respond to a contingency event."

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