Fortress Paper to idle Thurso, Quebec, dissolving pulp mill for about 10 weeks starting Dec. 22 due to market conditions, says China's interim duty on dissolving pulp and market pricing for NBHK pulp make it unfeasible to produce those grades currently
VANCOUVER, British Columbia
December 17, 2013
– Fortress Paper Ltd. ("Fortress Paper" or the "Company") (TSX:FTP) announced today that it will be taking market downtime at the Fortress Specialty Mill (the "FSC Mill") in Thurso, Québec. The recent imposition of an interim duty by China's Ministry of Commerce ("MOFCOM") on the import of Canadian dissolving pulp into China has made it uneconomical for the FSC Mill to continue producing dissolving pulp at this time and the current market pricing for northern bleached hardwood kraft (NBHK) pulp is not sufficient to warrant production. The Company anticipates it will take approximately 10 weeks' market downtime at the FSC Mill commencing December 22, 2013, during which employees at the FSC Mill will be encouraged to take their holidays. This market shutdown will also reduce the scheduled June 2014 maintenance shutdown and allow the Company to manage its dissolving pulp inventory build-up which resulted from the volatility and uncertainty in pricing in the short term dissolving pulp market.
Chadwick Wasilenkoff, Chief Executive Officer of Fortress Paper, commented: "As a result of a thorough evaluation of the current economics at the FSC Mill, the board of directors of Fortress Paper has determined that the fiscally prudent action is for the FSC Mill to take approximately 10 weeks' market downtime, subject to prevailing market conditions. This will result in a reduction of the cash burn based on current market prices and the current preliminary duty that has been imposed. During this downtime, we will continue to implement various operational improvements that will bring our overall cost structure down, as well as proactively focus on preventative procedures to enhance the FSC Mill's productivity and reliability when it resumes operation." Mr. Wasilenkoff further added, "We still have confidence in the future pricing and prospects for dissolving pulp as the market adjusts to the impact of the duty and future growth demands."
About Fortress Paper
Fortress Paper operates internationally in two distinct business segments: dissolving pulp and security paper products. The Company operates its dissolving pulp business at the FSC Mill located in Canada, which has expanded into the renewable energy generation sector with the construction of a cogeneration facility and is in the process of expanding production into NBHK pulp. The Company is also seeking to expand its dissolving pulp capacity with the acquisition of Fortress Global Cellulose Mill located at Lebel-sur-Quévillon, Québec, which the Company is evaluating to convert into a dissolving pulp mill and re-start the cogeneration facility. The Company operates its security paper products business at the Landqart Mill located in
Switzerland, where it produces banknote, passport, visa and other brand protection and security papers, and at its high security production and research facility located in Canada, where it
manufactures optically variable thin film material.