This is the second part of an interview with BörsenRadio Network AG conducted on July 20th, 2010. Alfonso Ciotola is speaking about the company’s mill in Landqart, Switzerland which produces security and specialty papers such as banknotes. He is explaining what makes the “banknote of the future” so special and how this is supposed to deter counterfeiting.

As manager you have to travel a lot. What does your week look like?

I spend about 50% of my time in our Landqart mill in Switzerland, where we produce banknote paper, about 30% here in Dresden, and the rest elsewhere. We have built very strong management here in Dresden, which is able to represent me well.

Let’s talk about your other mill. I’m holding the “banknote of the future” in my hands, that’s exciting. It doesn’t have value yet but it’s a glimpse into the future. It has transparent holes, what are they for?

Those aren’t holes, but transparent windows. Central banks have been wishing for banknotes with transparent windows for a while, because they are really hard to copy. Together with the Swiss National Bank, for which we are the sole provider, we developed a technology. This technology allows us to create a material which contains two layers of banknote paper and a polymer in the middle, and to embed those transparent windows.

Is this still a dream of the future or will it be our real money soon? How often do central banks actually renew banknotes?

These aren’t dreams of the future. We’ve already installed the machine in Switzerland, and we have concrete projects not only with the SNB but with other central banks which will allow us to introduce this product to the market probably 2011/2012. So you’ll have this product in your pockets within the next two years. Central banks nowadays tend to take banknotes out of circulation earlier and develop new series with new security features, in order to prevent counterfeiting.

Is this new technique forgery-proof, or is it simply too expensive for counterfeiters?

It certainly is a very complicated process, which you need a complicated machine for. But even more complicated is the technology to produce the windows. You have to punch holes, as you called them, into two 35g thin paper layers and make sure that they are overlapping 100%.

How big is the business volume of this mill?

In Landqart we have a turnover of 85 Million Swiss Franc. With a new investment that we are going to do this year, we will bring the production capacity of banknote paper to a much faster machine, so we have to position the company on at least the same EBITDA level as Dresden.

Would you make a prognosis for the capital market? Do you know already from the forecast how big the turnover will be 2010?

I think it depends a lot on the development of the commodity prices. We have a very good workload here in Dresden and in Landqart as well, and I think we can expect at least the same as last year.

SOURCE: BörsenRadio Network AG

After discovering irregularities in the quality and production of banknote paper, security paper maker De La Rue has suspended production of banknotes at their printing plant in Overton, Hampshire for the time being.

Though no specific details have been provided, the company said last week that the paper used for making banknotes was not being printed on par with company standards.

“It is apparent that some paper production has failed to meet certain quality specifications,” a spokesperson said in an article written for the UK’s Sky News.

The company produces banknotes for 150 countries around the world but has not confirmed that any “inferior” banknotes have made their way into circulation.

The quality of paper can play a big role in ensuring the security of a banknote in order to prevent it from being counterfeited. Unlike writing paper, for example, banknote paper is produced from different types of pulp blends.
Thus, cotton based banknote paper has a unique feel different from other papers. This feel is considered to be a trigger, leading people to know whether or not the banknote is fake.

Banknote paper is also the first place producers go to include security features. Intaglio printing (raised printing) is embedded on the paper allowing consumers to instantly recognize whether a banknote is genuine by simply examining its tactile functions.

Details about how long the plant was producing inferior paper are not known. Other banknote producers around the world are not reporting any problems with the quality of their outputs.

In addition to banknotes, De La Rue also supplies security documents such as passports, authentication labels and fiscal stamps, but has not said there was a problem with these products.

SOURCES:
Sky News: “Printing Error May Undermine Banknotes”
This Is Money: “Banknote Production Suspended Due To Paper Flaws”
Polymernotes.org: “Mould-made cotton bank note paper and plastic substrate alternatives”

A new series of Scottish banknotes celebrating Scotland’s heritage, people and culture took home for award for Best New Banknote at the International Association of Currency Affairs (IACA) Excellence in Currency Awards last month.

The banknotes are not only complete with a rich pictorial history, they are also specially designed for the visually impaired using vibrant colours, different izes, bold fonts and raised bars to help in the identification of the note.

The new series – which was released by Scotland’s Clydesdale Bank – also contains a number of important security features such as a distinguishable watermark, a security thread visible when the note is titled, a see-through emblem on the bottom of the note, microprinting, UV markers, and a latent image.

The series also earned the award for Best Currency Public Education for the bank’s year-long media initiative leading up to the launch of the series earlier this year.

The Bank of Mexico’s Pixelating Watermark won the award for Best New Security Feature while De La Rue’s Depth Image and Magic Verifeye received both runner up awards.

The IACA awards – which some have deemed the “Oscars of the Currency Industry” – have been taking place since 2007 with the goal of promoting and recognizing excellence in currency production, processing, management and distribution.

Aside from the awards mentioned above, the IACA also distributes awards for Best New Coin or Coin Series, Best New Currency Innovation, Best Currency Website and Outstanding Achievement/Lifetime Achievement Award.

The next IACA awards will take place in October 2011 in Singapore.

SOURCES:

Counting On Currency: “2010 IACA Currency Awards”

Currency Affairs: “Excellence In Currency Awards”

The Committee of Scottish Clearing Bankers: “Current Banknotes: Clydesdale Bank”

Dr. Alfonso Ciotola, President of Fortress Paper Ltd. was interviewed last week by German radio channel BörsenRadio Network AG.

Why did you decide to produce non-woven wallpaper?

The trend in the wallpaper industry is obviously going from traditional wallpaper to non-woven wallpaper, because non-woven wallpaper has specific technological characteristics: high dimensional stability, good dry strippability, abrasive resistance, and good colour retention.

How many tons of wallpaper per year do you produce in Dresden?

We produce 45,000 tons non-woven wallpaper annually.

How big is this market? And where are those wallpapers going?

We estimate the market somewhat between 85,000 and 90,000 tons annually, and it’s growing. Last year it was temporarily slack because of the recession, but the unequivocal trend in this market is that the use of traditional wallpaper is declining, which creates many opportunities to sell the new products.

Is the crisis over? Is it going upward again?

2009 might not have been a good year for the paper industry, but it was a good year for Dresden, because despite the worldwide recession we were able to open new markets in Russia, the Ukraine and China, where the demand for non-woven wallpaper has increased.

What commodities are you using?

To produce paper you need pulp. However, to produce non-woven wallpaper you also need important synthetic fibres, polyester fibres, what gives the material the characteristics I mentioned earlier.

Why have the commodity prices so considerably increased?

This year the pulp prices have risen because the demand of pulp has increased in Europe and in China. There has also been a shortage because several pulp mills were shut down over the past years, and there was the earthquake in Chile. Chile is a very important producer of eucalyptus pulp.

Is the price expected to remain high, and will your profit margin decrease?

The margin has not been sinking so far, but it might go down slightly in the second half of the year. We have been able to counterbalance the increased costs with a higher productivity, because we highly invested in Dresden over the past years. We converted our paper machine from 250 meters per minute up to 400 meters per minute, which means a 50% higher production capacity. This certainly is a good basis to keep cost under control.

How much of the business volume does Dresden make up across the group?

We generated €80 Mio. last year, which was 60% of the volume across the group. We just finalized a new acquisition in Canada over the past months, which doubled our revenue across the group, but I’m assuming Dresden will still contribute 30 to 35%.

How profitable is Dresden?

Because of the investments we have made, the increased productivity and the focus on high-end products for the wallpaper industry, we obtained an EBITDA of 18%, which is a good result for the paper industry.

Click here to listen to the interview in German.

This article is part of a continuing series that looks at security features in development for the security paper industry.

It’s not a connection you can make everyday, but some leading cancer research could also prove to be an important development for the security paper industry.

Quantum dots are a discovery of nanotechnology (much like the recent research on butterfly mimicry as a security device) and are showing how the most miniscule elements are leading the way in security devices.

The tiny dots are engineered individual crystals that emit intense light and they double as semiconductors. The conducting characteristics are closely related to the size and shape of the individual crystal meaning that the smaller the crystal, the more energy is needed to “excite” the dot. Because each the crystals aren’t uniform, each dot is unique and shines a variety of colours when “excited” by something like a UV light. This is one of the predominant benefits to the quantum dots because whereas fluorescent dyes and watermarks can only display a single band, quantum dots can display a whole range of colours providing each item with a unique “barcode.”

One of the amazing things about these nanoscale dots is that they were not solely developed as a security device. Researchers at the National Institute of Standards and Technology (NIST) have developed “water-soluble” quantum dots to aid in biological research. Bright, stable, and tiny, these quantum dots “are engineered to attach themselves to particular proteins [and thus] have become a popular research tool in areas such as cancer research for detecting, labeling and tracking specific biomarkers and cells.”

Outside of the medical research, some companies have already begun the process of developing inks and paints for security and anti-counterfeiting measures that can be applied to surfaces like paper, plastic or metal. However, according to Vicki Singer, senior consultant for corporate development at Life Technologies – a California-based company that makes quantum dots – whether or not banks are interested in this technology for banknotes or other security devices is a secretive affair. Whether or not anyone is actually using quantum dots on banknotes already is even more secret.

SOURCES:
Evident Tech: “Quantum Dot Applications”
John Mongillo: “Nanotechnology 101”
“Quantum Dots”
Lab Spaces: “Microwave Synthesis Connects With The Quantum Dots”
Canadian Business Magazine: “Counterfeit Cat-and-Mouse”

Researchers from the Fraunhofer Institute for Applied Polymer Research are developing new ways to use fluorescence as an enhanced security feature for banknotes

The security paper industry is no stranger to the use of fluorescence. Often used in banknotes, fluorescence provides a unique security device that can only be revealed under ultra violet (UV) lights.

On the Canadian $20 bill, for example, the words “Bank of Canada/Banque du Canada” glow red and yellow on the bill’s left side when placed under UV lights. Similarly, a security thread on the US $100 bill containing the text “USA 100” glows red under UV lights. Numbered panels printed in fluorescent ink on Indian rupees can also only
be detected under UV lights.

Scientists from the Fraunhofer Institute for Applied Polymer Research, however, are finding new ways to use fluorescence in way that is not only new and revolutionary, but also more secure.

Instead of adding individual fluorescent devices on one specific part of the banknote, researchers at Fraunhofer are testing ways to add fluorescent dyes to the entire banknote.

To understand how this research may prove to be revolutionary, you first have to understand how fluorescence works.

Professor Julian Gray of the Georgia Mineral Society explains:

“Minerals are composed of atoms, which in turn contain electrons at specific energy levels. Ultraviolet light is an energy source. When we shine an ultraviolet lamp on a mineral that fluoresces, the atoms that make up the mineral absorb energy from the light by moving electrons to higher energy levels. However, the electrons cannot remain in this unstable, excited state. When the energized electrons return to the original lower energy level, they give back the difference in energy by emitting visible light. This is what causes the mineral to produce light. As long as the ultraviolet lamp energy source is on, electrons are continually jumping from lower to higher energy levels and back, in the process producing the wonderful fluorescent colors that we see. If the mineral only produces light when ultraviolet light is shining on the mineral, this is called fluorescence.”

When it comes to security devices, typically only one or two mineral dyes are used to create the feature. Since various dyes react to different properties, the researchers at Fraunhofer decided to add multiple dyes to the whole banknote producing “an individualized marker” that is “exceedingly difficult to imitate.”

Moreover, because the mixture of dyes is a not only unique (and presumably one that will be kept secret) but is also relatively minimal (just a few parts per billion), researchers assert that it will be “virtually impossible to decode the type and quantity of the dye additives thus making the product counterfeit proof.

Because the dye is added to the entirety of the banknote, counterfeiters cannot remove the feature. Whereas fluorescent spots can – in theory – be removed from a secure document, say researchers, this feature permeates the entire material and is “itself a component of the identification label.”

Beside counterfeit protection, the process is also suitable for an effective quality assurance, such as with coatings: With the aid of various dyes, manufacturers can monitor the chemical composition, degree of dryness and the thickness of the coat during the production process.

Dr. Andreas Holländer, one of the scientists at Fraunhofer, says if this fluorescent security device is adopted by the security paper industry, the key to its success will be the creation of dye mixtures specific to individual products so a standard solution for products across the board would be highly discouraged.

“One reason for the high degree of security of our technology is precisely because there are only material-specific solutions,” says Holländer.

SOURCES
Nanowerk: “Brilliant Counterfeit Protection”
Science Learning: “UV and Fluorescence”
Bank of Canada
Banknote.org: “USA Banknotes’ Security Features”
Reserve Bank of India: “Fluorescence”
Georgia Mineral Society: “Fluorescence by Julian C. Gray”

The Central Bank Counterfeit Deterrence Group (CBCDG) is a group of 31 central banks and note printing authorities that investigates emerging threats to banknote security and proposes solutions for these threats.

Consisting of members from countries around the world including Canada, the United States, Australia, Sweden, Germany, Japan, France, Greece the United Kingdom, the CBCDG also supports and deploys technologies that deter the use of digital equipment – such as colour photocopiers and ink jet printers – to counterfeit currency.

A recent article written by Antti Heinonen, the Principal Advisor for the European Central Bank and a member of the CBCDG, details these technologies as having a dramatic “paradigm change” on the banknote industry saying these “new threats triggered the development of new security features” in banknotes.
Enter the Central Bank Counterfeit Deterrence Group, a group that was first put into practice in 1992, and was initially formed as a governing body to help G10 banks deal with increased counterfeiting due to colour copying. Under the moniker Special Study Group on Modern Reproduction Technologies (SSG-2), the group began working within the colour copier industry to develop techniques and technologies to prevent successful forgeries.

As we wrote earlier this month, one of the first big steps for the CBCDG was the development of anti-counterfeiting software – Counterfeit Deterrence System (CDS) – added to programs such as Adobe Photoshop that would generate an error message if a user attempt to scan banknotes. The group also lobbied printer manufacturers and copier manufacturers to include the same software upgrades, resulting in misprints or blank pages if banknotes were copied.

Today, the CBCDG not only works with banks but also with law enforcement agencies to recognize counterfeiting trends and provide solutions.

Working very closely with the technology sector, the CBCDG closely monitors new developments in digital technology in order to stay one step ahead of counterfeiters.

Of course, an easy step to preventing fake bills can be as simple as public education. “Informing and educating the general public and professional cash handlers about banknote security features,” writes Heinonen, is now a necessity for central banks.

SOURCES:
Counting On Currency: “Counterfeit Deterrence – Beating The Criminal Element”
Central Bank Counterfeit Deterrence Group: “FAQs”
“Central Bank Counterfeit Deterrence Group”
Global Paper Security: “How Computer Software Can Prevent Counterfeiting”

Chadwick Wasilenkoff, CEO and Director of Fortress Paper Ltd. has been nominated by Ernst & Young for Entrepreneur Of The Year 2010.

The firm recognizes high-achieving entrepreneurs who make a difference in the global economy Canada’s most successful entrepreneurs improve the quality of life for people across the globe.

“This year’s exceptional Pacific finalists all share a commitment to innovation, an inherent ability to spot opportunities and the perseverance to keep trying,” says Fred Withers, Director of the Entrepreneur Of The Year Awards for the Pacific region. “They have the ability to help drive the economic rebound and propel growth throughout Canada and beyond.” According to a recent Ernst & Young publication, A world of opportunity: Entrepreneurial perspectives on the impact of globalization, entrepreneurs have been quick to seize opportunities presented by the opening of new markets.

Fortress Paper CEO & Director Chadwick Wasilenkoff did just that when he formed a new company who jumped on an opportunity to transform a near-bankrupt pulp mill in Thurso, Quebec into a specialized pulp mill that will begin making dissolving pulp and targeting the textile industry (dissolving pulp is used to make rayon) by 2011.

In the meantime, however, the mill has continued to make NBHK pulp, and at precisely the right time.

“The NBHK market, which was in a severe downturn, turned up because of factors such as the Chile earthquake and a strike in Sweden,” wrote Tony Wanless in an article for BC Business. “Suddenly, the plant that was closed because of low NBHK prices was turning a profit that will continue during the conversion.
”

In addition to forming this new company – Fortress Specialty Cellulose – Fortress Paper remains a world leader in specialty and security papers.

The Entrepreneur Of The Year award recognizes high-achieving entrepreneurs in Canada and around the world who drive growth, transform industries and build communities.

The names of the Pacific winners will be announced at a gala banquet in Vancouver on September 28, and the overall winner will represent the region at the national banquet in Toronto on November 17.

SOURCE:
Ernst & Young celebrates Pacific finalists for Entrepreneur Of The Year 2010

It may sound like something straight out of the crime-drama CSI, but scientists in Brazil and the US are developing a method of identifying “fingerprints” on banknotes in order to spot counterfeits.

The process is done using what chemists call a “mass spectrometric technique” that can detect the authenticity of a banknote in seconds.

This technique allows analysts to recognize the chemical makeup of the banknote by identifying individual structures of the note’s particular molecules.

The “fingerprint” is determined by conducting tests on the molecules. By vaporizing a sample, and breaking the sample down into ions with the help of a laser beam, distinct patterns emerge in the mass-to-charge (m/z) ratio of the particles. Studies of authentic banknotes will reveal that multiple samples contain the same m/z ratios, while fake banknotes reveal a different set of distinct markets that is noticeably different.

Obviously, this is not a security feature that the average citizen will be able to employ, but researchers say this mode of identification could help speed up investigations at forensic laboratories that are bogged down with increasing forgery cases. Though this process sounds complex, the identification of a fake note using the mass
spectrometric technique only takes seconds.

In addition to being used to detect counterfeited currency, Brazilian researchers are working together with the Brazilian Federal Police and banknote manufacturers to find ways of adding unique chemical signatures to bills, either as an ink splotch, an invisible stamp, or a bar code.

SOURCES:
RSC.org: “Revealing Fake Money”
“Matrix-Assisted Laser Desorption/Ionization”
“Mass Spectrometry”

VANCOUVER, BRITISH COLUMBIA–(Marketwire – July 7, 2010) – Fortress Paper Ltd. (“Fortress Paper” or the “Company”) (TSX:FTP) is pleased to announce that it has completed its previously announced bought deal offering (the “Offering”) of 1,739,000 common shares of the Company (the “Offered Shares”) at a price of $23.50 per Offered Share for gross proceeds of $40,866,500. The Offering was conducted by way of a short form prospectus dated June 22, 2010 through a syndicate of underwriters led by Dundee Securities Corporation and included Jennings Capital Inc., Raymond James Ltd. and TD Securities Inc.

Fortress Paper intends to use the net proceeds of the Offering to finance certain capital expenditures relating to its Fortress Specialty Cellulose Mill in Thurso, Quebec and its rebuild of papermachine number 1 at its Landqart Mill in Switzerland, and for working capital.

The securities have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from registration requirements. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States.

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 intended use of proceeds raised from the public offering of its common shares. 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. 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 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.

For more information, please contact
Fortress Paper Ltd.
Chadwick Wasilenkoff
604-904-2328
info@fortresspaper.com
www.fortresspaper.com