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This startup is making paper out of stone, not trees

President eyes IPO by 2020, with paper demand set to double.

Stone tablets were one of the earliest writing tools used by man before paper. One Japanese entrepreneur now plans to take things full circle by making paper out of stone.

Nobuyoshi Yamasaki’s venture TBM Co. makes paper from limestone, a rock it proclaims is “almost inexhaustible.” He says it’s the answer to concerns over deforestation and water shortages, with world demand for paper set to double by 2030.

“I want to end my life as an entrepreneur by creating a company that will last for hundreds of years,” says Yamasaki, a former used car salesman who left school at 15 and began his career as a carpenter.

“Our material will play an active role in many places as the world faces population growth and water shortage,” Yamasaki said in an interview at TBM’s headquarters in Tokyo’s Ginza.

To make a ton of regular paper requires 100 tons of water, TBM says, while its Limex paper is made without water. In place of 20 trees, it uses less than a ton of limestone, as well as 200 kilograms of polyolefin. The five-year-old startup recently raised an additional 1 billion yen ($9.1 million) from an existing backer, and aims to list its shares by 2020.

Stone Age

TBM gets most of its revenue from business cards. Its version of the salaryman’s ubiquitous companion has a slick face as if laminated, and is much harder to tear or bend than paper cards. TBM’s paper is so durable and moisture-resistant it can be written on underwater, and has just signed a deal to make menus for more than 400 sushi restaurants run by Sushiro Global Holdings Ltd. across Japan.

Inspired on holidays by European architecture that had stood for hundreds of years, Yamasaki was searching for a project that would similarly enable him to leave behind a legacy. In 2008, he encountered paper made from stone in Taiwan, and decided to create his own take on the technology.

Commercial production started in June 2016 at a plant in Miyagi, one of the regions devastated by Japan’s 2011 earthquake. “It’s been nothing but hardship,” Yamasaki says. “The plant opened in February 2015 but we didn’t even have business cards to sell until last June. Through that time we’re paying for raw materials, electricity, salaries. But when we first made a business card where the ink didn’t run when touched, everyone was amazed.”

Ants and Elephants

Yamasaki’s goal is to transform his venture into an enterprise generating 1 trillion yen in revenue through the mid-2030s. Yamasaki plans to sell or operate a hundred or more plants worldwide in limestone-rich, water-poor regions such as Morocco and California. But the road ahead is long.

“Paper is cheap and hard to sell,” says Yasuhiro Nakada, an analyst at Mitsubishi UFJ Morgan Stanley Securities Co., whose coverage includes paper products. “Making paper from wood chips involves planting trees, which can be carbon neutral, so I’m not sure how much appeal this will have” from an environmental perspective.

TBM currently employs about 80 staff and targets 1 billion yen in sales this year, a fraction of the revenue at major Japanese paper producers. Yamasaki describes the situation as one of “ants and elephants.” His next step is a Japan plant with an annual 30,000-ton capacity by 2020.

© 2017 Bloomberg

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Mark Swanepoel

Mark Swanepoel

Axiomatic Consultants
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