Smurfit-Stone: The Paper Trail to China

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What kind of investment has this represented for the company?

We've invested about $25 million in the last couple of years in this enhanced sort-system technology that we talked about. We continue to see opportunities in a number of urban environments [for additional investment and strategic partnerships with waste collectors].

I order some books online, and they show up in a corrugated box. I throw the box out. Take me through that box's journey.

So that corrugated box would be collected curbside under a recycling program, or it could be picked up with other refuse and recovered at a downstream waste-recycling operation. The box would be baled, sent to the dock, and shipped to China in a container that brought over goods from China on the first leg of its journey.

The bales would be distributed through China into the mill system there, where it would be repulped and made into new containerboard. Repulping is the beginning of the manufacturing process that produces containerboard, which is the material that goes into the manufacture of corrugated containers or boxes. The mills would make new corrugated boxes, which would then likely go in a shipping container to the U.S. with some product that was made in China.

How important will recycling and export be to your business going forward?

We think [the improved sorting technology] has the capability to help the industry achieve the 60% target recovery by 2012. The statistics would suggest that every 1% growth in the recovery rate represents about a million tons of recycled fiber. So if we look at it from that standpoint, there's certainly the ability to divert a lot of tonnage out of landfills and back into the recycling business.

From a sustainability standpoint, there's a tremendous benefit to diverting recycled fiber from landfill back into the system. When you just look at methane gas and things like greenhouse-gas emissions coming out of landfills, that's a very significant issue globally and certainly in North America. We try to look for any opportunity to divert product out of landfill back into a more productive form.

Also, from a business perspective, it's a critically important part of our growth strategy. So it's important on two levels: the environmental and the strategic. We see this as a very exciting business for us going forward.