HONG KONG/JAKARTA: China’s huge appetite for paper is fuelling pulp mill expansions and accelerating the loss of forests in countries such as Indonesia, a global research institute said.

David Kaimowitz, director-general for the Centre for International Forestry Research (CIFOR), told Reuters large pulp mills were being built without lenders, such as the World Bank, checking that the proposed mills had enough raw material.

That often led to the destruction of virgin forests as new mills sought cheap supply sources to meet production targets.

“It’s really shocking how little people have been looking into the wood supply issue,” he said from Indonesia as CIFOR released an eight-year study into the world pulp industry.

The study looked into 67 pulp mill projects as CIFOR expected investment of $50 billion to $60 billion in the sector in the next 10 to 15 years after about $40 billion was spent in the past 10 to 15 years.

“The Chinese market is driving a lot of growth in global pulp and paper. And after China — 10 to 15 years down the line — we can see India may be a similar story,” Kaimowitz said.

The study said pulp mills, such as Asia Pulp and Paper and Asia Pacific Resources International Ltd. from Indonesia, often overestimate what was available from timber plantations.

Both denied any wrongdoing.

“The company is a fully sustainable operation,” Asia Pacific Resources International Ltd. president A. J. Devanesan said in a statement.

Chris Barr, CIFOR policy scientist, calculated that Chinese demand for paper and paperboard would hit 68.5 million tonnes in 2010, up from 48 million in 2003.

China, the world’s number-two paper producer after the United States, would need to cover a large part of its need from abroad, in part also due to a logging ban at home.

“China’s growing demand will exacerbate current pressures on natural forests and provide added incentives for illegal logging,” Kaimowitz said, adding it was likely to source also from Brazil or Indonesia where forest governance was weak.—Reuters