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Fortress Paper to relaunch Domtar plant as rayon-pulp mill

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Fortress Paper Ltd. (FTP-T) plans to transform yet another old Quebec forest-products mill into a facility that makes pulp used in the production of rayon instead of paper.

The Vancouver-based company said Tuesday it has struck a deal – valued at $232.7 million – to relaunch Domtar Corp.’s (UFS-T) old pulp mill in Lebel-sur-Quévillon, in Quebec’s Abitibi region.

The Quebec government is providing a $132.4 million, 10-year loan through its agency Investissement Québec.

Fortress president and chief executive officer Chad Wasilenkoff made the announcement in the town, accompanied by Quebec Premier Jean Charest, who touted the project as part of his massive economic development plan for northern Quebec, dubbed Plan Nord.

The old Domtar mill has been shut for more than six years and is now to get a new lease on life by producing dissolving pulp used in the manufacture of rayon, a product that has been in huge demand especially in Asia.

The project is the second such endeavour by  asilenkoff in Quebec, after the transformation two years ago of a mothballed hardwood pulp mill in Thurso to pulp-for-rayon.

The mill in Thurso was acquired from Fraser Papers Inc.

Wasilenkoff is betting that global demand for rayon – a substitute for cotton – will continue to rise, in part due to a shrinking supply of cotton.

Shares of Fortress soared Tuesday on reports of the plan to restart the Domtar pulp mill.

Wasilenkoff said in a statement that the acquisition of the Lebel-sur-Quévillon mill is a key step in Fortress Paper’s plans to become a world leader in the production of dissolving pulp, used to make rayon and other materials.
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