Posts Tagged ‘dissolving pulp’

Fortress Paper Updates Status of Dissolving Pulp Production

Posted: Monday, June 11th, 2012

Fortress Paper Ltd. (“Fortress Paper” or the “Company”) (TSX:FTP) is pleased to announce that it has ramped up production of dissolving pulp at its Fortress Specialty Cellulose Mill to an average of approximately 92% of final targeted capacity during the last 10 days and have averaged approximately 83% over the last 4 weeks. The mill commenced production of dissolving pulp at the end of 2011 and has been steadily improving its production efficiency and technical capabilities. Following initial delays, we recently took scheduled periods of downtime to eliminate process constraints. These have proven successful and the ramp-up to full capacity continues to improve. The dissolving pulp being produced is meeting customer specifications and shipments to viscose customers located in China are increasing in volume.

Chad Wasilenkoff, Chief Executive Officer of Fortress Paper, commented: “We are pleased with the ramp-up of dissolving pulp production at our Fortress Specialty Cellulose Mill and the quality of the product. With our continually increasing production of dissolving pulp as well as process optimization, we are well on our way to achieving management’s forecasted top quartile cost structure once our Cogeneration facility is fully operational. We expect our dissolving pulp segment to provide a meaningful contribution to our financial results as the year progresses.”

Sources: MarketwireFortress Paper

Fortress Paper Updates Status of Dissolving Pulp Production

Posted: Tuesday, January 17th, 2012

Fortress Paper Ltd.  (“Fortress Paper” or the “Company”) (TSX:FTP)  is pleased to announce that it has ramped up production of dissolving pulp at its Fortress Specialty Cellulose Mill to approximately 60% of final targeted capacity since it announced production of dissolving pulp had commenced on December 5, 2011. The ramp up of production continues substantially as planned and we expect meaningful improvements in the short term followed by smaller productivity gains as we approach our targeted production capacity. Our dissolving pulp is meeting customer specifications and after aggregating inventory, customer shipments commenced in the final week of December.

Chad Wasilenkoff, Chief Executive Officer of Fortress Paper, commented: “We are extremely pleased with the speed at which the ramp up of dissolving production is proceeding at our Fortress Specialty Cellulose Mill and are focused on achieving our planned production capacity as soon as possible. With the shipment of our first orders, we have demonstrated our ability to successfully produce dissolving pulp that meets the stringent specifications of our customers.”

SOURCES: Fortress Paper Ltd., and Marketwire

Fortress CEO Discusses High Tech Forestry Sector On BNN

Posted: Thursday, July 14th, 2011

Fortress Paper Ltd. CEO Chad Wasilenkoff appeared on the Business News Network this week to talk about the resurgence of the Canadian forestry sector thanks to diversification of products and forward thinking attitudes in the industry.

The forestry sector has “gone through a couple of challenging decades,” he said on Tuesday. “So we now need to change that sector and drive forth with new innovation and cutting edge technology to remain globally competitive.”

In the past, the forestry sector was mainly concerned with just wood and pulp. Changing that direction is what is allowing the forestry sector to thrive once again, said Wasilenkoff.

Echoing some of the themes found in an article recently published in the Vancouver Sun and the Windsor Star, Wasilenkoff said today’s foresty sector is now driven by high-tech initiatives, focusing on areas such as biochemistry, genetics, computer modeling, satellite imagery, and digital processing – among others.

The industry now is “more of a biorefiner,” Wasilenkoff said. “We’re taking the wood, we’re breaking it down to the molecular level and extracting as many products as we can to get as much value out of that wood as possible.”

Wasilenkoff also spoke about the Bio-Pathways project – a government sponsored initiative to further research and development in the sector – as well as his own company’s plans for the future with their dissolving pulp mill located in Thurso, Quebec.

Watch the entire video HERE

SOURCE:
BNN: “High Tech Forest Sector”
BNN: “Saving The Forestry Sector One Innovation At A Time”

Future of Canada’s Forestry Sector is Renewable

Posted: Wednesday, July 6th, 2011

by CHAD WASILENKOFF

Push aside dated notions of our global forestry sector as dominated by lumberjacks focused solely on logging trees and processing the wood. Today’s forests are increasingly high-tech with employees skilled in biochemistry, genetics, computer modeling, satellite imagery, and digital processing.

Today’s bio-economy is a dynamic global market that mirrors a paradigm shift to products that originate from natural renewable sources. Mills that have focused on processing timber and pulp are beginning to diversify into bio-energy, bio-chemicals and bio-materials which include wood fibre and biomass that is converted into renewable fuel, food additives, non-toxic chemicals, solvents, plastics, textiles, and other products.

The International Council of Forest and Paper Associations, (ICFPA), which represents the global forest and paper industry, champions the role of our global forest sector as a central, thriving player in our new bio-age. The international forest and paper industry is committed to the principles of sustainable development and ensuring that the environmental, social and economic benefits of our natural resources are available to current and future generations. Studies have shown that by repurposing the chemicals and bio-materials extracted from trees, we can tap into a potential global market estimated at around $200 billion.

The global forestry industry is a vital benefactor to our world’s sustainable development. The worldwide forestry sector supports thousands of communities as a supplier of millions of jobs across the globe. The forestry sector prides itself on its use of renewable raw material and record of sustainable forest management and application of cleaner technologies in an increasing number of mill operations. More and more mills across the world are converting their wood residues into heat and power for their own operations with most of the sector’s energy coming from waste biomass with some facilities already acting as net sources of green power. With its strong reliance on biofuels, maximum recycling rates and the storage of carbon in its wood and paper products, our global forestry sector is at the forefront of the renewable era.

The forestry sector is finding new life in innovative and creative solutions that are not only helping the once struggling industry turn around, but also helping to usher in a green movement. After two years of work by FPAC, FPInnovations, and the Canadian Forest Service (CFS) of Natural Resources Canada, a new program called the Bio-pathways Project was set into motion this year with the goal of revitalizing the Canadian forestry sector. The project looks outside of traditional uses for wood, lumber, pulp and paper in an effort to create new jobs and sectors with a more sustainable future for the country and its citizens. New, innovative products include bio-active paper – paper towels than can indicate contamination; nanocrystalline cellulose composites that can replace materials in aircraft; wood-based textiles (such as rayon); and cross-laminated timber – a technology that produces strong beams and panels for construction products.

As the CEO of a security and specialty pulp and paper company, we are in the process of transforming Quebec’s Thurso mill from a traditional pulp mill to a specialty dissolving pulp operation. Dissolving pulp, a chemically refined bleached pulp of pure cellulose fibers extracted from trees that are used to produce rayon, is a popular cotton substitute in China and other markets. With our Quebec facility, we are transforming an under-utilized asset which struggled for market-share in the low-value add commodity marketplace. The evolution to dissolving pulp from traditional pulp metamorphoses the mill into a globally competitive, low-cost producer with a sustainable and profitable long-term future.

The future of the forestry sector is here today and it offers a bold, innovative, profitable and environmentally conscious path for the industry. Our global concern to reduce greenhouse gas emissions leads us through the forest to invest in renewable energy technologies that use wood fibre. As more forestry firms invest in technologies to increase their reliance on biomass for fuel versus fossil fuels, we drive the future of the forest sector to develop new biotechnologies, new jobs and greener prospects.

As our global forestry sector expands and leads the way to produce new and innovative bioproducts, we will experience greatly enhanced employment opportunities and financial returns than from traditional stand-alone mills. By incorporating new technologies into existing mills, we can ensure that these integrated operations will utilize all parts of the trees and extract the most value possible to ensure an environmentally friendly, sustainable, and profitable future.

About the Author:
As Fortress Paper’s Chairman, Chief Executive Officer and Director, Chadwick Wasilenkoff, oversees the company’s production of security and other specialty papers. Based in Vancouver, Canada, Wasilenkoff is an established entrepreneur with extensive capital markets experience specializing in the resource industry and currently serves as a director with various publicly listed companies.

SOURCE:
Vancouver Sun: “Future of Canada’s Forestry Sector is Renewable”
The Windsor Star: “A Renewable Forestry”
International Forest Industries: “Future of Canada’s Forestry Sector is Renewable”
The Post-Journal: “Future Of Global Forestry Sector Is Renewable”

Fortress Paper Enters Into Dissolving Pulp Supply Agreements

Posted: Monday, October 4th, 2010

Fortress Paper Ltd. (“Fortress Paper” or the “Company”) (TSX:FTP) is pleased to announce that it has, through a wholly-owned subsidiary, entered into dissolving pulp supply agreements with two producers of viscose fibre (rayon) products located in China, for the delivery of an aggregate of approximately 84,000 air dried metric tonnes (“ADMT”) of dissolving pulp per annum at a purchase price based on prevailing market prices in China, subject to a minimum price of US$1,200 per ADMT and a maximum price of US$1,600 per ADMT. The pulp supply agreements are each for a term of five years, with Fortress commencing the supply of dissolving pulp in the third quarter of 2011.

Dissolving pulp will be supplied by the Fortress Specialty Cellulose Mill which is planned to have an annual production capacity of more than 200,000 ADMT upon its completion, which is expected to occur in mid-2011.

Chadwick Wasilenkoff, Chief Executive Officer of Fortress Paper, commented: “These dissolving pulp supply agreements will provide a hedge against potential volatility in future dissolving pulp prices which we believe should provide greater normalized operating results in this segment.”

About Fortress Paper

Fortress Paper is a leading international producer of security and other specialty papers and products. Fortress operates three mills, the Landqart Mill located in Switzerland, the Dresden Mill located in Germany and the Fortress Specialty Cellulose Mill located in Quebec, Canada. Fortress Paper’s security papers include banknote, passport and visa papers and its specialty papers include non-woven wallpaper base products, and graphic and technical papers. Fortress Paper’s pulp business includes NBHK produced at the Fortress Specialty Cellulose Mill with plans to convert this capacity into dissolving pulp production along with the construction of a biomass based cogeneration plant.
This press release contains certain forward-looking statements that reflect the current views and/or expectations of Fortress Paper with respect to its performance, business and future events, including statements regarding Fortress Paper’s planned conversion of the Fortress Specialty Cellulose Mill into a dissolving pulp production facility, the expected production capacity thereat, and expected financial results of the pulp supply agreements. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business and the industry and markets in which the Company operates. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, risks relating to the ability of Fortress to complete the conversion of the Fortress Specialty Cellulose Mill, that the specialty cellulose operation will not be successful or profitable and will not meet anticipated production capacities, that the purchasers will not fulfill their obligations under the pulp supply agreements, changes in the market, potential downturns in economic conditions, fluctuations in the price and supply of raw materials, foreign exchange fluctuations, labour relations, regulatory requirements, reputation, competition, dependence on major customers, and other risk factors listed from time to time in the Company’s public filings. These risks, as well as others, could cause actual results and events to vary significantly. Accordingly, readers should not place undue reliance on forward-looking statements, which are qualified in their entirety by this cautionary statement. Fortress Paper does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.

THE OTTAWA CITIZEN: “The Future Looks Fluffy”

Posted: Wednesday, September 1st, 2010

Driven by the imperatives of globalized economics and digital technology, Ottawa’s pulp-and-paper heritage has been reduced to a remnant.

The forestry industry that built the Ottawa-Gatineau economy appears to be on its last legs.

Hammered by the Internet’s growing grip on personal communications, the rich Canadian dollar and intense competition, the forestry industry continues to slash operations in the hopes of finding a smaller, profitable core.

The industry, which employed 5,000 people just 20 years ago, today has dwindled as Domtar-Eddy mills in Ottawa, an AbitibiBowater mill in Gatineau, a Smurfit-Stone mill at Portage, and Domtar mills in Cornwall slashed staff and finally closed. Fewer than 1,200 jobs remain, focused on a few niche markets far removed from the newsprint and lumber products that drove the industry for 150 years.

Next to go could be 200 jobs at Papier Masson, a newsprint operation in the east end of Gatineau, which was founded James Maclaren, a pulp and paper pioneer, and later owned by Noranda.

White Birch Paper of Connecticut, Papier Masson’s current owner, has hired Lazard Freres, the New York private banker that helped sell Nortel assets, to find new owners for three mills in Quebec and one in the U.S.

White Birch, operating under bankruptcy protection since February, opened the doors to prospective bidders last month.

The threat is there will be no bidders and that some mills will close in a major restructuring, adding to the thousands of lost jobs in the industry.

Certainly, the relentless march of the Internet into every corner of human communications is destroying demand for newsprint, telephone directories, copying paper, books, magazines and glossy printed advertising across the Western world.

The result is that mills that employed thousands and drove the industry for more than 80 years are being sold for less than $3 million each.

One huge AbitibiBowater mill in Thunder Bay sold for just $100,000 because of environmental cleanup issues.

The recently upgraded machinery in four former AbitibiBowater mills sold for just $5 million — not much more than scrap value.

The real value now is in the land, including about 40 acres controlled by Domtar in the heart of Hull across the Chaudière Bridge and Chaudière Island into Ottawa.

However, while the Ottawa regional industry is in deep trouble, new profitable product lines are emerging and demand for older products is rebounding, at least temporarily.

The trouble is that most of the Ottawa regional mills are too big or too old to be revived. With governments taking a hands-off approach — after spending billions bailing out GM and Chrysler — bankruptcy courts will decide the fate of underfunded pension plans, unpaid severance and struggling suppliers.

The federal government finally rolled out a $170-million investment program this week, too late for most Ottawa companies.

“The forestry industry employs more people in more places across Canada than the auto industry, but governments have turned their backs,” said Kim Ginter, a vice-president of the Communications, Energy and Paperworkers union.

“Many mills are competitive, but need investment. We still have the best source of fibre in Canada, but, once the mills go, it will be very hard to get them back.”

For the few survivors, there could be light at the end of the tunnel.

After years of declining sales and heavy losses, sales of many forestry products companies rebounded in the last six months.

It wasn’t much, just two per cent in the case of Domtar and other companies, but it surprised analysts and had business leaders and bankruptcy monitors scratching their heads. They had expected declines of at least two per cent.

Sales of AbitibiBowater rose 2.6 per cent between April and May, though the wounded newsprint giant is mired in bankruptcy.

Even before it shut the huge Gatineau mill this spring, AbitibiBowater had slashed newsprint production by 3.4 million metric tonnes or 32 per cent since 2007. It also sold off $940 million in assets, including $615 million in a Quebec power company.

A surprised bankruptcy monitor reported last month that White Birch sales were not significantly hurt despite the stigma of defaulting on loans and pension obligations and seeking court protection from creditors.

Sales at Papier Masson were 18 per cent higher than the monitor predicted for the June quarter, and the White Birch cash burn was 70 per cent lower than forecast.

The reason is basic economics: Deep, permanent cuts to production mean that prices jump with the smallest improvement in sales. While demand for newsprint continues to fall, the deep production cuts of the 2008-2009 recession were deeper than immediately necessary.

The result is the price of pulp was more than 50 per cent higher in the June quarter from a year earlier, and Domtar is running hard in a bid to keep up.

Domtar chief executive John Williams told an industry conference: “If you look at tissue, if you look at toweling, if you look at printing and writing, in the geographies where we are selling, those markets are actually growing. So we see a long-term pretty positive trend for pulp.”

His company converted a Massachusetts mill from newsprint pulp to fluff pulp.

“We currently sell 150,000 tons of fluff pulp, (and) we’ll move up to 444,000 tons (by December 2010.)

“If you take fluff pulp, it’s largely used in diaper markets and in the incontinence marketplace. That’s a very fast-growing market both in developed economies and developing countries because of the demographic.”

Fluff pulp doesn’t have the brawny feel of the traditional products like lumber and newsprint that defined the industry and Stompin’ Tom Connors is unlikely to add a new verse about fluff pulp or air-laid superabsorbent paper to Big Joe Mufferaw, his ballad celebrating the Ottawa Valley logger and raftsman, but fluff pulp is immune to the Internet.

Glatfelter, a Pennsylvania specialty paper producer that makes tea bags and labels, bought the Concert Industries plant near the Gatineau airport in January for $246.5 million. It employs 285 people making super-absorbent paper sold to companies like Procter & Gamble and Johnson&Johnson.

It is primarily used in feminine hygiene products, a market that is growing about five per cent annually as the combination of growing prosperity and a huge young population opens new markets.

Farther east in Thurso, the moribund Fraser Pulp mill, once owned by James Maclaren, is being revived after it was closed a year ago. Fortress Paper is converting the mill to produce cellulose used in rayon, a cheaper, more environmentally-sound alternative to cotton.

“The forest products industry will continue to decline and there will be more pain,” Fortess founder Chad Wasilenkoff said.

“But there are still specialty niche production operations available at attractive prices which can yield good profits.”

While buying the Thurso pulp mill makes sense, he said that buying newsprint mills in North America did not. “This is still an industry that is profitable only about one year in 10.”

The share price of his company has quadrupled in the last year in part because of two profitable mills in Europe that produce paper for the banknote and wallpaper industry.

Better still is the Kruger Products mill on Rue Laurier next to the Museum of Civilization. For much of its 70-year history, it had a water tower with a White Swan logo that made it a landmark.

Today it is the sole survivor of the E.B. Eddy-Domtar mills, which, for 160 years, stretched from the Museum of Civilization site to the Chaudière Bridge and onto Lebreton Flats.

Three Kruger papermaking machines roar around the clock, turning out Spongetowels, Scotties and White Swan industrial towels.

Kruger employs 475 people at the mill and another plant in Hull that processes and packages the material.

It is spending $4.8 million with Quebec government assistance to capture lost steam, reduce operating expenses and reduce the carbon footprint of machines that have been running for 60 years.

With backing from governments, companies like Domtar are investing in new technology to make operations cleaner, greener and more efficient.

Domtar is investing $32 million in new technology to create nanocrystaline cellulose used in optically-reflective films, high-durability varnishes and bioplastics.

The biggest problem for the North American newsprint mills is they are situated in the wrong places.

There is growing demand in developing countries, but newsprint is heavy and expensive to ship. This spring, Canadian newsprint sales to Asia tripled, with two-thirds of the business in India, as buyers stepped aggressively into markets to rebuild inventories depleted during the recession.

No one expects this trend to continue, however. The newsprint industry is still bracing for reductions averaging four per cent annually in demand.

“The paper industry is not going to die,” says Martine Hamel of the Pulp and Paper Products Council. “It faces major challenges, which will mean it will continue to get smaller and focused on different products.

“But the decline will eventually level off and we will still have an important industry and significant employer.”

By Bert Hill for The Ottawa Citizen. September 1st, 2010.

SOURCE:
The Ottawa Citizen: “The Future Looks Fluffy”

The Ottawa Citizen: “Sniffing Out Hidden Value”

Posted: Wednesday, August 18th, 2010

For contrarian Chad Wasilenkoff, a nose for overlooked potential led him to a pulp mill in Thurso. Bert Hill reports for The Ottawa Citizen.

OTTAWA — From golf courses to art auctions and old mill towns, value can hide in unexpected places.

Just ask Chad Wasilenkoff, the 38-year-old chief executive officer of Fortress Paper Ltd.

When he was a child in Calgary he built a savings account fishing golf balls out of ponds and buying and selling video games, BMX bikes and other popular products he found in want ads.

He learned market timing. He and a friend snapped up Robert Bateman prints for a few hundred dollars each at a deserted auction in the middle of a Calgary snowstorm and sold them for more than $1,000.

That might seem a long jump from Fortress’ latest coup — a mothballed pulp plant in Thurso that, for generations, was the bane of the capital region because of its smelly rotten-egg emissions.

The mill, which stood empty for a year because of the forest industry collapse, is now back in production. The 300 employees are producing hardwood pulp, suddenly profitable because of a strong — but likely temporary — increase in demand in Asia.

Early next year, it will start producing dissolving pulp to feed the developing world’s demand for rayon used in clothing.

Though Thurso has yet to produce the new pulp, Wasilenkoff said he got “multiple overtures” during a recent business trip to China from investors who wanted to buy the whole mill or a minority stake.

He said textile industry customers are lining up to negotiate for the specialized pulp with starting offers he considers surprisingly high.

With all the production likely to be committed soon, he is looking to convert other mills. There are no other suitable mills in the Ottawa area, but “we are searching the planet for more of these opportunities,” he said.

Wasilenkoff said he plans to stay in dissolving pulp, unless an attractive offer comes along.

“We are in this for the long haul. But money talks and at the right price, everything is for sale.”

Fortress shares have quadrupled this year as investors discovered the magic of a tiny profitable player in an industry still covered with red ink. The firm just snapped up $44 million in a new stock offering.

Trading at $28 this week, the company now has a market capitalization approaching $400 million.

Wasilenkoff owns 23 per cent of the Vancouver-based company.

The rapid acceleration of the stock from below $10 in January has some analysts worrying.

TD Newcrest analyst Sean Steuart downgraded the stock to “hold” from “buy” this week, although Fortress beat his sales and profit forecasts for the June quarter.

With the price up 31 per cent in less than a month since he put on the buy recommendation, Steuart took action because of concern that the stock valuation is running ahead of underlying business.

“Management has earned our benefit of the doubt, but there are several major projects on the go right now.

“We would prefer the company deliver on current capital expenditure plans before looking at additional expansion opportunities.”

Wasilenkoff says he is a contrarian. When the investing public is chasing the latest hot stocks and investment ideas, he looks elsewhere.

It was a philosophy he learned the hard way: He read weighty analyst reports during the technology boom and lost heavily when prices collapsed.

It is a philosophy that has allowed him to benefit from buying gold, copper and other assets when prices were deeply depressed. It takes nerve and patience to stay away from the herd.

He also learned never to fall in love with an asset. If his analysis said the prices had passed sustainable levels, as it did with uranium and a stake in Cameco, he sold and the market eventually followed.

Now he has embraced the pulp and paper industry, a business loved today only by bankruptcy lawyers.

Canada is rapidly shedding a world-class industry that for 90 years supported tens of thousands of jobs and billions of dollars in global sales.

Governments, which rushed to bail out the auto industry, are taking a hands-off attitude to the forestry industry, its unemployed workers and underfunded pension funds.

Mills across Ontario and Quebec that would cost billions to replace are selling today for a few million dollars each. An empty Thunder Bay mill recently sold for just $100,000. Production machinery is being sold for scrap or shipped abroad.

“There are a lot of smaller mills that were considered too uncompetitive to survive against the big mills,” Wasilenkoff said.

“But markets have changed. Now there is opportunity and good profit margins in the small mills with the right products and technology.”

He doesn’t see the traditional newsprint, photocopying or related pulp markets recovering soon in North America.

But mills with profitable specialty products have a future.

He tried to buy the former Concert Industries mill in Gatineau, which makes air-laid paper used in diapers and incontinence and feminine hygiene pads. Glatfelter, a small specialty Pennsylvania producer of everything from labels to tea bags, won the asset.

Fortress owns a wallpaper plant in Germany and a bank-note plant in Switzerland, where it is investing to expand production.

Wallpaper must be due for a turnaround because it has been out of fashion so long, particularly in North America.

But in eastern Europe demand continues to grow though assets are depressed.

Fortress bought a mill in Germany that makes dry-strippable paper, a profitable niche.

“We spent less than $5 million but now it is generating $3 million a month in business.”

The latest coup was the former Fraser Pulp kraft mill in Thurso, originally a key part of the old James Maclaren and Noranda empires.

It makes hardwood pulp, a market commodity that has been losing ground steadily to softwood pulp.

The mill closed in June 2009 when Fraser Pulp tumbled into bankruptcy protection, laying off hundreds of employees.

It appeared headed for the scrap heap, like other older mills in Ottawa, Gatineau, Cornwall and Portage du Fort.

Fortress bought the old mill — with buildings, land and machinery worth $45 million — for just $3 million.

It embraced a plan, promoted in the local community,

to generate electricity from biomass for sale to Hydro-Québec.

Fortress will spend $153 million converting the mill to dissolving pulp production. Investissement-Québec is providing a $102.4-million loan, to be combined with

$25 million in federal tax credits and other incentives. When it opens, it will be second-largest of its kind in the world, behind only a plant in Brazil.

Wasilenkoff got a great deal on the enormous digester tubes and other sophisticated equipment needed to make dissolving pulp. They will arrive by barge next month.

Russia shut off exports of pulp logs in a move that stranded a Stora mill in Finland.

Fortress bought the machinery for $3 million, or less than 10 per cent of replacement costs.

The company is also enjoying the luck of a sudden pick up in pulp demand and prices. Global demand has snapped back from the 2008-2009 recession. With production permanently reduced by many permanent closings, prices have jumped 50 per cent in the last year.

When Fortress hired 300 former employees and started production in late May, it caught the new market demand.

Wasilenkoff does not expect the prices to hold because the global industry is only profitable one or two years every decade.

But he believes the prices will hold up until it completes the conversion next year.

With a strong push from the Thurso products, Fortress adjusted profits jumped almost 60 per cent to $4.3 million in the June quarter and sales rose 22 per cent to $60.5 million compared to a year earlier.

SOURCE:
The Ottawa Citizen: “Sniffing Out Hidden Value”

Globe and Mail: “Quebec Mill Sees New Life In Rayon Market”

Posted: Friday, August 6th, 2010
fortress accumul 788601gm a 300x237 Globe and Mail: “Quebec Mill Sees New Life In Rayon Market”

The first shipment of industrial equipment, some of which is seen here being taken along a road in Finland, is scheduled to arrive in Thurso, in western Quebec. SOURCE: The Globe And Mail

For the town of Thurso, Que., a shot at economic renewal is literally arriving on massive barges in the Ottawa River.

Next month, the first shipment of bulky industrial equipment from Finland is scheduled to arrive in Thurso, in western Quebec. It will be used to transform the town’s hardwood pulp mill into a facility that makes a key ingredient used in the manufacture of rayon, which is seeing big spikes in demand in Asia and elsewhere.

“We’re looking forward to seeing those barges arrive,” said Thurso Mayor Maurice Boivin.

Vancouver-based Fortress Paper Inc. (FTP-T24.880.532.18%) bought the three digesters and other specialized processing equipment from Finnish company Stora Enso Oyi Cellulose Inc. as part of its bold strategy to convert the Thurso mill from pulp used to make paper – a declining market – to dissolving pulp used to manufacture rayon, a product with a bright future.

The man behind the strategy is Fortress chairman and chief executive officer Chadwick Wasilenkoff, a 38-year-old contrarian investor who seeks out opportunities in overlooked or depressed sectors, like the forest products industry.

“There isn’t enough dissolving pulp to feed the market demand for rayon,” Mr. Wasilenkoff said in an interview.

Rayon is a substitute for cotton (it has similar characteristics but is more breathable and absorbent) and is well-positioned because of the shrinking global supply of cotton as growers switch to less-expensive crops, he said.

“Everything just aligned” to make the conversion of Thurso possible, he said.

Fortress, which also makes banknotes and security papers as well as wallpaper, paid $1.2-million to financially beleaguered Fraser Papers Inc. for the mothballed Thurso mill. It is up and running again, producing hardwood pulp until the conversion to dissolving pulp is completed in about a year.

Fortress is investing $153-million in the transformation of the mill, including the building of a co-generation plant. Investissement Québec is providing a $102.4-million loan, and there is another $25-million or so in federal credits and other financial incentives under the green infrastructure program.

Mr. Wasilenkoff said he just returned from China, where he was overwhelmed by the demand for dissolving pulp from rayon producers.

The Thurso mill, which employs 300 people, is expected to produce 200,000 tonnes a year of dissolving pulp and he anticipates very tidy margins, given that the spot price for the commodity is in the $1,650-a-tonne range and total cost for production and delivery should come in at about $600.

“I like sectors that are out of favour – that are older, more mature – so I can get these kinds of opportunities,” says Mr. Wasilenkoff. In 2006, he bought Swiss-based Landqart AG, a venerable security-paper firm that is the exclusive maker of the Swiss franc and also provides euros to 10 European Union member states.

At the same time, he had been on the alert for a pulp mill in the financially strapped forestry industry, looking for something he could buy cheaply and then convert to take advantage of the booming rayon market.

A bargain-hunter, he said he bought the 12-year-old Finnish equipment for $3.8-million.

BY: Bertrand Marotte for The Globe And Mail. Tuesday, July 27, 2010.

SOURCE:
Globe And Mail: “Quebec Mill Sees New Life In Rayon Market”

Leaders Magazine: “Making Money and Wallpaper”

Posted: Tuesday, June 29th, 2010

An interview with Chadwick Wasilenkoff, Chairman, Chief Executive Officer, and Director, Fortress Paper Ltd.

Editors’ Note: As Fortress Paper’s Chairman, Chief Executive Officer, and Director, Chad Wasilenkoff oversees the company’s production of security and other specialty papers. Most recently, Wasilenkoff was the Chief Executive Officer and Director of Titan Uranium Exploration Inc. from July 2004 to July 2006 and an independent private equity investor from October 2002 to January 2004. From 1997 to 2002, Wasilenkoff was an investment advisor and financial planner at Canaccord Capital Corp. He has a Bachelor of Arts degree from The University of British Columbia.

Company Brief: Fortress Paper is a leading international producer of security and other specialty papers and pulp. The company operates three mills: the Landqart Mill in Switzerland, the Dresden Mill in Germany, and the recently acquired Fortress Specialty Cellulose Mill in Thurso Quebec, Canada. Fortress Paper’s security paper includes banknotes, passport, and visa papers and its specialty papers include non-woven wallpaper base products and graphic and technical papers. Its specialty pulp business currently includes NBHK and the mill is undergoing a conversion to dissolving pulp for the textile industry in Asia. As an extension of its security papers business, the Landqart Mill has been actively developing and marketing innovative paper-based security products.

What did you see in the market that made you feel Fortress Paper would be successful?

My background is as more of a contrarian investor, so I always start from the bottom up. I was looking at the forestry sector – everything else was taking off, but this was still in a steady decline and had been for 12 to 15 years. So I evaluated pulp companies and commodity paper companies, and found these two niche paper mills that were world class in what they did. They had growth industries in both of their core products, but what they lacked was a strong and focused management team and growth capital. So that’s how we built the company.

What is produced at each of the mills?

Our German mill, located just outside Dresden, specializes in a non-woven wallpaper base. Most wallpapers are traditionally made from a regular kraft pulp, and that is what leads to the problem of trying to remove the paper. Because of that, the industry was going through challenging times. It had been in about a 10 to 12 decline, it has since steadied and been fairly stable and mature. The reason for that stability is because the industry got together and created this non-woven product where we put synthetic fibers into the paper. With those synthetic fibers, we get the strength characteristics and it becomes dry-stoppable. So now, once you’re able to pull a corner away, it comes off in one pull. While the overall wallpaper market is stable, this non-woven product is growing within it at about a 15 to 20 percent per annum growth rate, and we currently represent 50 percent of the world production of non-woven wallpaper.

The other mill is our Landqart mill, based in Switizerland, and it specializes in high-security paper. What we’re best known for is the banknote side of things. We’re the sole maker of the Swiss Franc, which is the industry standard – it is the currency by which all international banks measure themselves. It has more security features than any other currency in the world and one of the lowest counterfeit rates. It has never had a professional counterfeit attempt against it.

We also make the Euro for about 10 different countries, passports for dozens of countries, the entry visa sticker for India and China, and brand protection for companies like Rolex.

Our latest acquisition, Fortress Specialty Cellulose, was a shut down NBHK Mill in Thurso Quebec, Canada. We put together a plan to purchase the mill and convert it to a higher margin product, dissolving pulp, which is primarily used for producing rayon in Asia. Most of the financing for the $153 conversion was provided by the Quebec government.

What impact is new technology having on counterfeit issues?

Probably the biggest change in the global counterfeiting market has been the advancement of color photocopier standards. Now anybody can go onto eBay and buy regular home officer equipment and do a half decent job of counterfeiting. A lot of money goes into research and development and new technologies to try to make it as difficult as possible for these counterfeiters. Unfortunately some of these products are too successful and they get commercialized. For instance, the hologram that you typically find on a banknote, you can now buy holographic wrapping foil, and with a fairly rudimentary stamp, create your own hologram with that denomination on it. So while it was a spectacular feature when it began, it is slowly losing ground. They are now continuing to work on holograms to try to improve them, to make them a lot more complex and difficult.

What are your key priorities over the coming year to make sure the growth continues and the brand remains strong?

When I bought the company, I had a three-stage long-term plan: stage one was to change and focus on hiring and retaining good management; the second stage was dealing with internal or organic growth, and leveraging off our existing assets; the third stage was going external, so now it’s more of a focus on mergers and acquisitions.

In our industry, especially on the banknote side, cost is probably fifth or sixth on the list for national banks. It’s reputation first and foremost. It’s and industry that is not going to shift over to low-cost production regions. It’s just too important of a product worry about coming from a low-cost environment. So it’s about reputation, quality, new innovative products, high-security measures, and staying ahead of the counterfeiter. It’s such an important product that they’re willing to pay for a new world-class innovative technology and security feature. We’d like to find small companies that have these great products but can’t break into the banknote industry because it is so conservative. A lot of the printers or papermakers have been around for more than 300 years, so nobody wants to take a chance on a little supplier. We can take a small company that has a world-class product, and acquire it or do a joint venture or at least enable the security of that particular product, and we can launch it under our umbrella, giving it the reputation.

Do you see yourself in this business for the long term?

We have a lot to accomplish with Fortress Paper and one of our biggest challenges today is our share price. While our stock is currently undervalued, we are working to ensure that our shares trade closer to the industry averages that will enable us to make creative acquisitions that increase our reach and technological acumen. At some point in the foreseeable future, I am likely to relinquish the CEO title but stay on Chairman and a happy shareholder.

From Leaders Magazine, Volume 33 Number 3.

BC Business: “Outside The Box Business Strategies”

Posted: Tuesday, June 29th, 2010

When life deals you pulp, you make cellulose. Learn how to recognize business opportunities, then reach out and grab them.

Any business needs a coherent strategy if it hopes to succeed. However, in a climate where marketplace and financial changes are becoming ever more rapid, clinging mindlessly to a strategy can be a recipe for disaster. Simply put, companies today must be more agile in their thinking to take advantage of business opportunities that may present themselves.


The Problem

North Vancouver’s Fortress Paper Ltd. has carved out a good and growing business niche since it began in 2006. That’s when CEO and chair Chadwick Wasilenkoff bought separate paper mills in Germany and Switzerland to produce specialty papers: security paper used in banknotes, passports and visas; and specialty papers such as non-woven wallpaper-base products and graphic and technical paper. But in 2009, the crushing downturn in the overall forestry industry threw an opportunity at Wasilenkoff that would move the company in a completely different direction. He had to decide: should Fortress stick with successful execution of a strategy or take advantage of an opportunity?


The Solution

Wasilenkoff has always approached business as an investor instead of as a manager, and so he applied solid investment principles in order to reach his decision. One of the primary ones, he believes, is that “it’s better to be lucky than good.” 


When Toronto’s Fraser Papers, which made printing and publishing papers, became a victim of the recession and filed for creditor protection in June 2009, Wasilenkoff started looking at its assets, especially Fraser’s shuttered hardwood pulp mill in Thurso, Quebec. The mill drew Wasilenkoff’s interest because it had the perfect technology for an idea he’d been playing with for some time: the conversion of hardwood pulp to dissolving cellulose, a commodity that was being sought by Asian textile producers. As the price of cotton soared, Asian textile companies wanted to replace it with rayon, which is derived from dissolving cellulose. 


Wasilenkoff decided the opportunity was too good to pass up and went for it. He formed a subsidiary that obtained the Thurso mill for the fire-sale price of $1.2 million. After a $153-million conversion, it will switch from producing northern bleached hardwood kraft (NBHK) pulp to dissolving cellulose. 


Wasilenkoff brought Quebec on board by providing jobs for union workers who had been laid off since the mill closed. The Quebec government was only too happy to lend him the funds needed for the conversion. Also, the Quebec and federal governments were willing to help fund a green 25-megawatt co-generation power plant fueled with wood waste and other biomass. 


The mill will begin turning out dissolving cellulose in 2011, but in the meantime Fortress also got lucky. The NBHK market, which was in a severe downturn, turned up because of factors such as the Chile earthquake and a strike in Sweden. Suddenly, the plant that was closed because of low NBHK prices was turning a profit that will continue during the conversion.


Lessons

• Get out of the groove. People tend to get caught up in groupthink. Wasilenkoff could see an opportunity because he takes a contrarian and long-term view of his and other industries. 


• Think like an investor. Fortress earlier moved into wallpaper because a new method had appeared that made it profitable. Wasilenkoff determined that the Thurso mill was low risk and high return. 


• Don’t drink the Kool-Aid. Look at everything around you from many angles. Wasilenkoff was able to make his decision because Fortress wasn’t a typical forest products company, which is usually concerned more with cost-cutting than its product mix.

By Tony Wanless for BC Business. July 7, 2010.

SOURCE:
BC Business: “Outside The Box Business Strategies”