Fortress Paper is planning a second pulp mill conversion to dissolving pulp, this time targeting the mothballed Lebel-sur-Quevillon mill in northern Quebec owned by Domtar.
A wholly-owned subsidiary, Fortress Global Cellulose Ltd., has signed an asset purchase agreement to acquire the buildings, equipment, and ancillary property for the nominal amount of $1. The company intends to spend $222 million to convert the Lebel-sur-Quevillon NBSK mill to a dissolving pulp operation with an associated co-gen facility.
The mill will have an annual production capacity of approximately 236,000 air dried metric tonnes (ADMT) and is expected to be completed in late 2013. The LSQ mill would significantly increase Fortress Paper's annual dissolving pulp production capacity, to more than 437,000 ADMT, initially targeting viscose fibre (rayon) products. The company's other dissolving pulp conversion, at Thurso, Que., came on stream in December 2011. Chad Wasilenkoff, CEO of Fortress Paper, made the announcement in this small northern Quebec town, accompanied by Quebec Premier Jean Charest.
"This project demonstrates the insight and perseverance of the Quebec government and Fortress Paper in developing a unique opportunity which has been latent for several years, but when completed will revitalize the community of Lebel-sur-Quevillon and the surrounding areas of Northern Quebec," said Wasilenkoff.
The mill has been closed since 2005.
The closing of the deal is contingent on, among other things, Fortress Global achieving a collective agreement with the unionized employees of the mill, and a satisfactory fibre supply arrangements.
Investissement Quebec has agreed in principle to grant Fortress Global a loan of up to $132.4 million.