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Tembec to Spend CAD 190 Million on Boiler Upgrade

Montreal, Quebec, Canada, 11 October 2011 -- Tembec will proceed with a CAD 190 million boiler replacement at the Temiscaming specialty dissolving pulp mill, according to James Lopez, president and CEO. The cogeneration project will substitute a new boiler for the three aging low-pressure boilers currently in use at the site.

In addition to improving productivity and uptime, the upgrade also will permit the facility to sell 30-40 MW of incremental green power to the Quebec provincial electric utility.

Lopez also announced a possible 30,000 metric tons/year capacity expansion for the specialty pulp mill. He cautioned investors at a conference in New York that the expansion is not approved yet, "but all the signs are looking very, very positive for the project."

The replacement boiler for the Temiscaming cogeneration project will be sized to accommodate the capacity expansion. The expansion also is considered "green" because it will generate another 10 MW of electricity for export to the provincial grid.

Anticipated completion for the cogeneration project is December 2013. It will be financed in part by a previously-announced CAD 75 million loan from the Quebec government, at what Lopez says is "substantially better than market cost." Lopez anticipates a four-year payback for this project.

The CAD 100 million capacity expansion would see the 11 original digesters replaced with 10 new stainless steel vessels. The project is expected to be complete in 2015, and would have a 2.4 year payback.

Tembec's strategic capital expenditures plan also calls for almost CAD 200 million in upgrades to its facilities across the country. Lopez says the company's sawmills, in particular, have not had the benefit of technological upgrades in recent years.

Overall, CAD 343 million in capital expenditures is earmarked for Tembec's specialty dissolving pulp business over the next five years. "This is by far the most solid business that we have, with the brightest future and the best, most stable margins," said Lopez.

Tembec is a producer of lumber, pulp, and paper, with operations in Canada and France.


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