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$18M infusion for Thurso pulp mill

The Thurso pulp mill is hoping for a second life with the approval by Hydro-Québec of a cogration project using wood waste to produce electricity for the state-owned utility.

Vancouver’s Fortress Paper Inc. will invest just $18 million of its own money for the $153 million conversion of the mothballed Thurso pulp mill near Gatineau, Que., analysts said Monday.

Fortress, best known for its cotton-based banknotes, security papers and wallpapers, announced the Thurso deal on March 19. Thurso initially will resume making hardwood paper pulp and the mill will then be converted to production of dissolving pulp, a highly-refined product used in viscose rayon cloth manufacture.

Fortress is paying about $3 million cash to the bankrupt Fraser Papers Inc. for the Thurso assets and will put up $15 million for the conversion program.

It will get a $102 million ten-year non-recourse loan from Investissement Quebec, the province’s industrial financing agency, $15 million from the issue of 7 per cent convertible debentures to an unidentified Quebec institution, $10 million from the Federal Green Transformation Program and $15 million from the Green Infrastructure Fund.

Dissolving pulp sells at a big premium over hardwood and softwood pulps for papermaking and global demand is strong and inventories low.

“Fortress’s timing is just right because it faces declining demand for banknotes with the spread of electronic transactions and the switch to polymer or plastic banknotes from the traditional cotton-based material,” said Paul Quinn, analyst with RBC Capital Markets. Also wallpaper markets are slack because of the recession.

The converted Thurso mill will have annual capacity of 200,000 tonnes of air-dried dissolving pulp and also a 25MW co-generation unit to reduce power costs.

Source:  The Montreal Gazette

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