July 31, 2006

New Boiler to Be Built at Nippon Paper Chemicals (Gotsu Works)
- Heavy Oil Consumption Reduced by About 85% at Gotsu Works -

Nippon Paper Group, Inc.

Nippon Paper Chemicals (President: Toshio Inoue), a member of the Nippon Paper Group, has decided to build a new coal-fired boiler at Gotsu Works (Gotsu-shi, Shimane Prefecture). The amount of investment will be 5.3 billion yen, and completion of new boiler is expected in September 2008. When the new boiler goes into operation, the two existing oil-fired boilers at the works will be stopped. The consumption of heavy oil at the works is to be reduced about 42,000 kiloliters, delivering significant gains in energy cost.
Gotsu Works of Nippon Paper Chemicals has obtained stable profits from Dissolving pulp (*1) and Functional chemical products (*2) businesses. Today, it is the only works in Japan that produces dissolving pulp, and the company assumes an important position in each business.
However, as heavy oil is being used mainly at the works as fuels, the recent surge in crude oil prices has curtailed profits. As such, cost reduction through fuel replacement became an urgent task.
At the Nippon Paper Group, deviation from oil fuels forms the mainstay of the Second Mid-Term Business Plan that started in April this year. To date, the Group has decided to build eight new boilers that use biomass, waste fuel and other materials at mills of Nippon Paper Industries Co., Ltd. and Nippon Daishowa Paperboard Co., Ltd.
Construction of the new boiler, which would be the ninth, should further reduce consumption of heavy oil by the Group, and consolidate the source of revenue for future development of the works.
*1 Dissolving pulp
The pulp that has been purified chemically using sulfite salt; it serves as the main material for rayon, cellophane and others.
*2 Functional chemical products
The chemical products that effectively utilizes wooden ingredients; include lignin-related products (used primarily as concrete admixture), processed pulp products (used for civil engineering, feeds, foods, medicine and cosmetics) and fermented products (used for foods).