Posts Tagged ‘Specialty Cellulose’

Fortress Paper Announces New Appointments

Posted: Monday, April 23rd, 2012

Fortress Paper Ltd. (TSX:FTP) (‘Fortress Paper” or the “Corporation”) announces the appointment of Andre Boucher as Chief Operating Officer of Fortress Specialty Cellulose Inc., a wholly-owned operating subsidiary which produces dissolving pulp.

Mr. Boucher has over 30 years of industry experience in the specialty cellulose sector including 24 years at Tembec Inc. where he was the General Manager of the Temiscaming dissolving pulp mill. Mr. Boucher was responsible for overall mill optimization and development of specialty products, including a full range of acetate and other specialty pulps. Most recently, Mr. Boucher was General Manager of Ethanol Operations for Suncor Energy Inc. where he developed the facility from concept to an efficient operating mill.

Chadwick Wasilenkoff, Chief Executive Officer of Fortress Paper, commented: “Andre brings a wealth of experience and technical talent to Fortress Paper at a time when we are growing our dissolving pulp business. We feel his mill optimization and unique experience in transitioning a viscose-grade dissolving pulp mill to a specialty-grade dissolving pulp mill will further enhance our already strong specialty cellulose team. Andre’s addition provides us with more flexibility as we balance our key personnel between Thurso and our other strategic projects.”

In addition, Fortress Paper is pleased to announce that Marco Veilleux has been promoted to Vice-President, Business Development and Strategic Projects of Fortress Paper from his former role as Chief Operating Officer of Fortress Specialty Cellulose Inc. Mr. Veilleux was an important member of the executive team which managed the successful staffing, startup and conversion to dissolving pulp at the Fortress Specialty Cellulose Mill. Mr. Veilleux will focus on special and strategic projects, manage risk and compliance matters and will assume other key corporate responsibilities within Fortress Paper.

SOURCES:  Fortress Paper Ltd., Marketwire

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 Paper Commences Start-Up Phase at Fortress Specialty Cellulose Mill

Posted: Thursday, November 24th, 2011

VANCOUVER, BRITISH COLUMBIA-(Marketwire – Nov. 24, 2011)

Fortress Paper Ltd. (“Fortress Paper” or the “Company”) (TSX:FTP) announced today that it has initiated the final stages of the conversion project at its Fortress Specialty Cellulose Mill. The mill has commenced its start-up phase with final process testing, which will include cold and hot water trials, together with the testing of safety systems scheduled to occur over the coming days. Production of dissolving pulp beginning with wood chips cooking is expected to commence shortly thereafter.

The minor delay in the scheduled completion of the conversion project has resulted from: (1) the previously announced unexpected walkout in October of construction employees of contractors engaged by the Company; (2) the extra time subsequently required upon the return of the workers to fully ramp-up construction activities at the site; (3) completion of identified improvements to infrastructure relating to buildings, supports and the chip tower inter-connection; and (4) implementation of enhancements to the mill’s safety and control systems.

Chad Wasilenkoff, Chairman and Chief Executive Officer of Fortress Paper, commented: “We look forward to the imminent production of dissolving pulp, which will signify an important milestone in the history of Fortress Paper. We believe that the implementation of supplemental process control testing will provide for a more efficient ramp-up to commercial production.”

The completion of the conversion project is currently materially on budget, with the exception of costs resulting from the unexpected walkout of construction workers which remain to be quantified. The cogeneration project at the Fortress Specialty Cellulose Mill is proceeding substantially on schedule, and is expected to be completed in the third quarter of 2012.

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 specialty pulp produced at the Fortress Specialty Cellulose Mill, which is currently in the process of converting this capacity into dissolving pulp production along with the construction of a biomass based cogeneration plant.

This news 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 the timing of completion of its conversion project and the commencement of dissolving pulp production. 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 potential disruptions to production and delivery, regulatory requirements, changes in the market, potential downturns in economic conditions, fluctuations in the price and supply of required materials, foreign exchange fluctuations, labour relations, 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.

SOURCES:

Fortress Paper Ltd.

Marketwire

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”

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”

Pulp Growth Ain’t Pulp Fiction – Embracing New Opportunities

Posted: Monday, June 28th, 2010

While “pulp fiction” may resonate with the hearts and minds of people, the wood pulp business sector sometimes results in a “hollow” response. While readers would not be able to turn the pages of their pulp fiction books or enjoy their cotton and rayon clothing without their wood pulp brethren, the pulp sector is often looked upon as sleepy.

Yawning all the way to the bank

While the pulp sector may appear quiet, the market players are “yawning” all the way to the bank. “Between 2002 and 2006, world exports of wood, pulp and paper products grew at an average annual rate of 10.6%,” reports Global-production.com Inc., a business economics consultancy. Despite the volatile economy, the upward price trend in market pulp continues across the world.

“The fundamentals of the pulp market continue to be very strong,” reports PulpWatch, a leading provider of business information and consultancy services to the international pulp and paper industry. “Pulp prices increased by $30-50/t in May, and are set to reach new records in Europe and North America in June. Producer inventories reached record lows in April, and consumer warehouses are similarly bare. European paper demand and order books have improved and prices for most grades are moving upwards, albeit at a slower pace than fiber prices.” This is currently a temporary cyclical high, but we will be getting out of this old product in approximately one year.

As a contrarian investor, I keep focused on industries widely considered to be depressed with an eye on purchasing world class assets at deeply discounted prices. My company recently paid $1.2 million to Fraser Papers for a facility in Quebec with an insured replacement cost of $851 million in assets. We are converting this operation into a specialty dissolving pulp operation. Dissolving wood pulp is chemically refined bleached pulp composed of pure cellulose fibers extracted from trees. Dissolving pulp is the major source for the natural cellulose used in the production of rayon.

Rayon – a very promising future

I believe rayon demand is at a tipping point around the world. The declining global production of cotton is insufficient to meet global textile industry demand; particularly with the rapidly expanding middle class in China and India. Industry analysts indicate that the rayon market has grown at 7% globally and over 10% in China for the last 5 years. Rayon is typically blended with other fibers and can logically displace the cotton shortfall. Rayon has high uniformity which leads to significant improvements in productivity in spinning and textile plants.

Rayon demand has revealed a gap in supply. Total dissolving pulp capacity in late 2007 was 2.4 million tonnes according to the CCF Group (China Chemical Fibers & Textiles Consultancy). Expansions and conversions with plants in Brazil, South Africa and Canada added 0.6 million tonnes of dissolving pulp capacity in 2008, but closures of many higher cost dissolving mills resulted in limited capacity to fill the increasing demand.

A specialty producer

Driven by overall textile demand and increasing preference for rayon over cotton, over one million tonnes of additional rayon capacity (dissolving pulp customers) was built in China in 2009 and an additional 0.5 to 0.7 million tonnes in China is planned to start-up in 2010. There is a current shortfall of approximately 0.5 million tonnes in annual rayon supply which is expected to continue during the next several years.

Rayon, derived from wood pulp, is a textile made from cellulose whose future is looking very promising which is why we sought to invest in this sector. With our Quebec facility, we are transforming an asset which was previously underutilizing its potential by operating as a high cost producer into a specialty product producer which is low-cost and globally competitive. Over 90% of the existing mill equipment is ideally suited to produce high quality specialty cellulose for the rayon textile industry.

The consumer advantages of rayon are clear as it is woven into soft, absorbent and comfortable fabric which supports vibrant colors and wears well. Rayon is one of the most widely used fabrics in the world which can be blended with man-made or natural fabrics. For many centuries, people have relied on plants and animals, such as silkworms, sheep and buffalo, to provide the materials needed for clothing. In our 21st century world, we look to technology and chemistry to create our fabrics. Rayon, dubbed “laboratory’s first gift to the loom” is widely considered to be one of the most versatile and economical man-made fibers available.

–Chadwick Wasilenkoff, Chairman & CEO of Fortress Paper Ltd.

SOURCE:
RISI: “Pulp Growth Ain’t Pulp Fiction – Embracing New Opportunities”

Fortress Paper Appoints Key Dissolving Pulp Managers for the Conversion of its Thurso Mill

Posted: Thursday, June 3rd, 2010

VANCOUVER, BRITISH COLUMBIA–(Marketwire – June 3, 2010) – Fortress Paper Ltd. (TSX:FTP) (“Fortress Paper” or the “Corporation”) announces the following appointments at its wholly-owned subsidiary, Fortress Specialty Cellulose Inc. (“Fortress Specialty”): Peter Vinall as President and Chief Executive Officer, Vincent Byrne as Vice President, Technical Development and Donald Deer as Projects Leader. In addition, Fortress Specialty has added Pierre Monahan to its Board of Directors.

In announcing the appointments, Chad Wasilenkoff, CEO of Fortress Paper commented: “We are very pleased to have someone of Peter Vinall’s extensive experience and track record joining our team. His appointment brings a wealth of experience in running some of the largest dissolving pulp mills in the world and he has a talent for building strong teams and leading business transformations. With Vince Byrne, Donald Deer, Marco Veilleux and Pierre Monahan, we will have an experienced team in place to implement our business plan at the Fortress Specialty Cellulose Mill.”

Peter Vinall commented: “Having recently relocated back to Canada, I am excited to now join the Fortress team and lead the conversion of the Fortress Specialty Cellulose Mill into a high quality specialty cellulose mill. The Mill has good access to fibre supply and a reputation for high quality NBHK production which will continue with the restart which is underway. Our aim is to leverage these strengths and transform the asset base with extensive technological upgrades and a state of the art cogeneration facility with the goal of becoming a low cost producer and industry leader in the specialty cellulose sector.”

Mr. Vinall has approximately 30 years of experience in the pulp and paper industry and was the former President of Sateri International Pulp Group, a global leader in the specialty cellulose business. Prior to joining Fortress Specialty, Mr. Vinall held the position of President and Chief Executive Officer of AV Group where he led the conversion of an NBHK pulp mill to produce dissolving pulp. Mr. Vinall obtained an MBA from Tulane University, New Orleans, and a B.E in Mechanical and Electrical Engineering from Monash University, Melbourne, Australia.

Vincent Byrne has over 30 years of engineering, operations and process optimization experience focused on commodity and specialty pulping processes. Most recently he acted as VP Technical and Engineering at AV Group where he led the development of the conversion of one of their New Brunswick mills into a dissolving pulp operation. Mr. Byrne obtained a B.Sc. in Chemistry from Massey University, New Zealand.

Donald Deer has approximately 40 years of engineering and construction experience in Canada and has managed in excess of $1 billion in capital spending for several major corporations including Tembec Inc. Most recently, Mr. Deer was responsible for construction and completion of the conversion of one of AV Group’s NBHK mills into a dissolving pulp operation. Mr. Deer also has recent experience designing cogeneration and energy optimization projects. Donald Deer has a B.E in Electrical Engineering from Queens University, Ontario and is a member of Professional Engineers Ontario.

Pierre Monahan is a highly experienced senior board member and executive director. Mr. Monahan was formerly the CEO of Alliance Forest Products Inc. and Executive Vice President of Bowater Canada Inc. during which time he oversaw its integration with Alliance Forest Products Inc., an acquisition valued at approximately $1 billion.

In addition Fortress announces that the former Operations Director of Fraser Paper’s Thurso Mill, Marco Veilleux, has been appointed Chief Operating Officer of Fortress Specialty Cellulose. Mr. Veilleux has led the Thurso operation since 2007 having developed his career in a series of operational and technical leadership roles in the pulp and paper sector in Eastern Canada. He was instrumental in initiating the cogeneration project and ensuring the Thurso assets are well positioned for the transformation. Mr. Veilleux has a B.Sc. in Chemistry from the University of Sherbrooke.

About Fortress Paper

Fortress Paper is a leading international producer of security and other specialty papers and products. Fortress Paper 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 will include NBHK with the re-start of 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 news 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 relating to its plans to re-start, convert and build a biomass based cogeneration plant at the Fortress Specialty Cellulose Mill. 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 Corporation operates, including assumptions relating to the Corporation’s ability to successfully implement its business plan in respect of the Fortress Specialty Cellulose Mill; that the Corporation will be able to receive all required approvals and complete construction of the cogeneration facility; and the expected effects of the cogeneration facility on the business of the Corporation. 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, that the Corporation will be unable to implement its business plan in respect of the Fortress Specialty Cellulose Mill as planned or at all; that the Corporation will be unable to receive all necessary approvals to begin construction of the cogeneration facility; and those risks relating to 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 Corporation’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 and information, 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.

SOURCE:
Fortress Paper Ltd.