The Future of Commercial Kraft Lignin Depends on Partnerships, Not Price

One of the greatest misconceptions surrounding kraft lignin is that it is merely a byproduct or waste product of the pulp industry. Nothing could be further from the truth.
Kraft lignin is a deliberately recovered raw material that requires a substantial capital investment, not to mention substantial operating expenses.

Kraft lignin producers (pulp mills) are exceptionally good at their core business, which is producing pulp. Their shareholders expect them to maximize returns from pulp production while operating safely and efficiently. Granted, executives in the pulp and paper industry would gladly entertain investments in lignin if a satisfactory return is expected. Unfortunately, commercial kraft lignin has often been treated as a low-cost commodity, leading many pulp executives to conclude that the investment is not worthwhile.

It has been my experience that many commodity lignin customers approach lignin purchasing with one primary objective: obtain the lowest possible price. This is especially true with the Chinese, who have the capability and know-how to purchase and consume large volumes of lignin. That purchasing philosophy may work well for mature commodities where numerous suppliers compete in an established market, but it has not worked well for kraft lignin buyers.

With well over a decade of commercial lignin sales experience, I have been asked countless times where the lignin business has prospered, and where it has failed. I do not share this type of information. However, I do feel a responsibility to assert that the businesses that have prospered have been those in which the producer and consumer have viewed one another as strategic partners. A sustainable industry cannot exist unless both producer and customer earn attractive returns. Without that foundation, neither party succeeds.

 Dale Mitchell