Tembec to Invest $25.7 Million In Its Matane, Quebec Pulp Mill

Jan. 11, 2011 - Tembec said that it will invest $25.7 million towards environmental and energy upgrades at its high-yield pulp mill located in Matane, Quebec.

According to Tembec, funding will come mainly from the Federal Government and the Province of Quebec, with $18.9 million related to black liquor credits earned by the company under the Canadian government's Pulp and Paper Green Transformation Program and $6.3 million from the Agence de l'efficacita energetique's Heavy Oil Consumption Reduction Program.

The pulp mill project has two main components. The first, with an estimated cost of $23.9 million, is a new anaerobic treatment facility to treat effluent and collect the methane gas produced in the treatment process, allowing it to be used as a bio-fuel for drying the pulp produced at the site.

With an estimated cost of $1.8 million, the second component involves the installation of an electric boiler that will replace the current heavy oil fuelled boiler.

The combined effect of the two components will result in the elimination of all heavy oils and the vast majority of the light oils currently used as a fuel source for the generation of the mill's various process steam and drying requirements, Tembec said.

They will also result in a significant improvement in the mill's cost structure, with EBITDA projected to increase by $6 million on an annual basis, beginning when the project is completed in mid-2012, the company addd.

"This investment will result in a significant reduction in costs for Matane and will allow the mill to be competitive in global markets for years to come," said Yvon Pelletier, executive vice president and president, Specialty Cellulose and Chemical Group.

James Lopez, Tembec's president and CEO, said, "Tembec is grateful for the support shown by the Province of Quebec and by the Federal Government. Minister Normandeau and Minister Paradis saw the potential offered by these projects and were diligent and effective advocates on behalf of the mill and the region. We thank them for their efforts."

SOURCE: Tembec