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Mercer Studying Dissolving Pulp Option for Two Mills

New York, New York, USA, 28 February  2011 -- Mercer International has completed a preliminary feasibility analysis for its Zellstoff Celgar mill in British Columbia, Canada, and Stendal mill in Germany with respect to enhancing their operations and margins.

The preliminary analysis identified the possibility that the mills could become "swing mills," producing northern bleached softwood kraft (NBSK) pulp, as they currently do, or dissolving pulp, depending on market conditions. The estimated capital cost for this option would be USD 30-40 million per mill.

Dissolving pulp is used to produce rayon, a textile fiber, among other things.

The study notes that the scale, technical age, and regional wood pricing would allow Celgar to be a first quartile cost producer of dissolving pulp. The project would take about 16 months to complete, with no expected effect on NBSK production, expect a three-week shutdown near the end of the project.

Mercer states that it would most likely implement the project at only one of the two mills. Mercer expects to make a final decision in mid-2011 about the conversion.

As part of the final technical and feasibility study, the company is implementing a process to select which mill and the timing of the project. The Celgar mill's use of a continuous digester could be a technical limitation for the project.

"Dissolving pulp is experiencing a very robust market, and while a pullback in pricing is expected, the long-term outlook is quite promising," said Jimmy S.H. Lee, president and chairman of Mercer. "This opportunity is only possible because of our large, modern mills."

"We believe that we will be able to take further advantage of the excess energy produced from dissolving pulp to increase our power generating capacity and enhance electricity revenues," he added.


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