(Yicai Global) Jan. 14 -- Jingxing Paper will invest in a pulp mill in Malaysia to process imported US waste paper and supply its Chinese plant since the Chinese government started banning waste imports last January.

The company will pay MYR2 (USD0.24 cents) to two Malaysians, Teng Kim Chuan and Mazlan bin Harun, to buy all their shares in Selangor, Malaysia-based Greenovation Industries, which the pair set up on behalf of Jingxing Paper, which will thereafter increase the target's registered capital. 

It will invest in the local production base which mainly produces recycled pulp through the target company, the papermaker based in Pinghu in China's eastern Zhejiang province said in a recent statement.

The project will unfold in two phases, with the ultimate goal to achieve annual output of 800,000 tons of recycled pulp and 600,000 tons of base paper, Jingxing Paper announced, but without disclosing investment amounts.

The statement cited the growing pressure the company will come under as the Chinese government gradually tightens limits on waste paper imports as the grounds for the firm's investment, adding that the plant will export all pulp to China first to meet the needs of its own production and sell the excess there as well.

Jingxing Paper's current mill lies in one of China's most developed regions, where industrial land is scarce and environmental pressures are high, so it has scant space for expansion, per the statement. 

The company will raise its investment after the project goes into production to increase base paper output to break through its China-side bottleneck while also eventually using it as a bridgehead from which to expand into overseas markets.

Editor: Ben Armour