Sojitz holds a 51 per cent stake in the 1.5 million-USD joint venture while Vinafor holds the remainder.

The wood chip factory will be located in an industrial park near Cai Lan port in Ha Long City in Quang Ninh northern province and is expected to start operation by the end of October. The factory is estimated to have an annual output of 300,000 tons of wood chips, which are used for paper manufacturing.

Sojitz, which started producing wood chips in Vietnam in 1994, aims to increase its production capacity at the new joint venture and its two other existing joint ventures in Vietnam by 50 per cent at about 900,000 tons per year. The Japan company also plans to sell the wood chips as pulp material to Japanese paper manufacturers, including Oji Paper Co.

Meanwhile, Sojitz will invest 300 million yen per year to plant acacia trees on 3,000 hectares of Vietnam land each year. In seven years, the company will have planted enough trees on 21,000 hectares to cover two-thirds of materials needed for its wood chip production.

For the remaining one-third needed, the company plans to provide for free 1.5 million to 2 million tree seedlings to local farmers every year. Sojitz will then buy back the matured trees in five to seven years.

For the time being, Sojitz will procure trees from local forestry companies.