Fortress Paper's dissolving pulp mill in Thurso, Quebec, at 95% of capacity in last three weeks as ramp-up after complicated conversion project continues to make progress, company's specialty cellulose CEO Vinall says

Diane Keaton

Diane Keaton

LOS ANGELES , November 15, 2012 () – Fortress Paper Ltd.’s dissolving pulp (DP) mill in Thurso, Quebec, has been producing at a rate of 95% of capacity for the last three weeks and is making good progress toward reaching full capacity, Fortress Specialty Cellulose Inc. CEO Peter Vinall told Industry Intelligence Inc. this week.

For the third quarter the operating rate was 80% if excluding the announced September annual maintenance shut, he said, noting that this was up 10% quarter-over-quarter. An industry analyst’s research note saying that the Thurso mill’s operating rate was 58% in the third quarter “is completely wrong,” Vinall said.

The maintenance shut was extended by two days for unplanned work on a recovery boiler, for total downtime in the third quarter of about 10 days, he said.

“The ramp-up is going well,” he said. “Thurso is coming along very well. Starting up a complicated conversion is not easy.”

Thurso underwent “a very comprehensive retrofit aiming for maximum throughput,” for the purpose of targeting a premium pulp, which “takes quite a while to stabilize,” but the mill is seeing substantial improvement with every quarter, including improving its cost position, he said.

“We are a lot closer” to full capacity than a quarter ago, Vinall said. “We have been running at close to capacity for extended periods.” For the mill to deliver its rated capacity of 200,000 tonnes a year, it needs to have an overall operating efficiency of 90%, he noted.

The recovery boiler repair involved fixing a leak, located in a sensitive area, which was caused during the rebuild when the mill was converted from kraft pulp to DP, Vinall said. The mill has two “relatively new” recovery boilers, one manufactured in 1985 and the other in 1990, he said, describing one as in fine shape and the other as okay.

Fortress Paper includes not only the Thurso mill but also its Dresden mill, which produces specialty papers and its Landqart mill, which produces security paper products. The company has been in an unwanted spotlight since the release of its third quarter results, on Nov. 2, showing that it had a net loss of C$18.9 million, compared to a C$7.2 million loss a year ago, with overall sales for the three mills down 13.1%. But Vinall said the DP sales were up.

However, the commodity DP market hasn’t cooperated lately, with prices having dropped to US$900/tonne or below, various sources have told Industry Intelligence. Vinall said the under-$900/tonne price is for lower-quality DP from newer entrants into the field.

Fortress Paper noted in its third quarter results that DP markets softened during the third quarter because of weak textile demand and the increased supply of DP from the new entrants.

On Nov. 5 investors responded to Fortress Paper’s overall third quarter performance--not just that of the Thurso mill--by knocking 40% off the value of the company’s shares.

In an interview with the Montreal Gazette, Fortress Paper CEO Chad Wasilenkoff, said the market had “unfairly punished” the company for the technical delays regarding the conversion of the Thurso mill. He said most of the mill’s 2013 production is pre-sold and that operating costs should average US$800/tonne and that the global dissolving pulp price should settled around the low US$900/tonne level.

The Nov. 15 Montreal Gazette article is published in full on the Industry Intelligence website.

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