Mercer Announces Project to Boost Pulp and Energy Output at Stendal Mill
Jan. 20, 2012 - Mercer International Inc. today announced a project ("Project Blue
Mill") to increase production and efficiency through debottlenecking
initiatives including the installation of an additional 40 MW steam
turbine at its Stendal mill.
The debottlenecking which, among other
things, requires the new turbine in order to enhance and efficiently
utilize steam production, is designed to increase the mill's annual
pulp production capacity by 30,000 ADMTs to approximately 675,000
ADMTs. The new turbine is also expected to initially produce an
additional 109,000 MWh of surplus renewable energy for sale at premium
"We are very pleased with this project," said Jimmy Lee, President and
CEO. "The project allows us to maximize the value from the wood that we
process at Stendal, increase production and efficiency, provide a
backup generator on the first turbine and reduce energy costs during
maintenance periods and expand power generation.
"We currently expect
the project, in addition to enhancing mill operating results, to
deliver approximately EURO7.5 million (U.S. $9.8 million) of additional
annual power revenues."
"The project is in line with our group's overall
focus on enhancing revenues from the production of green energy and
other by-products at all of our mills. We believe that our generation
and sale of surplus renewable energy and by-products give Mercer a
competitive energy advantage over less efficient mills and provides us
with a stable revenue source unrelated to pulp pricing. Based upon our
overall 2011 production and sales, after giving effect to Project Blue
Mill, on a consolidated basis, we currently expect Mercer will produce
about 760,000 MWh of annual surplus renewable green energy and generate
approximately EURO65.5 million (U.S. $84.5 million) of associated
revenues therefrom. Since our energy production is a by-product of our
pulp production process there are minimal incremental costs and our
surplus energy sales are highly profitable."
Project Blue Mill will require approximately EURO40.0 million in
capital expenditures over about 21 months. The project is eligible for
EURO12.0 million of non-refundable German government grants and the
Stendal mill has secured a new EURO17.0 million five year amortizing
secured term debt facility, of which 80% will be government guaranteed.
The facility is non-recourse to Mercer.
The balance of the project will
be funded through operating cash flow of the Stendal mill and up to an
aggregate of EURO8.0 million in pro-rata shareholder loans from Mercer
and its minority partner.
Project Blue Mill is currently designed to be
completed and start to generate power revenues in or about September,
The Stendal mill is a state-of-the-art, single-line NBSK pulp mill
situated near the town of Stendal, Germany with a current annual pulp
production capacity of approximately 645,000 ADMTs.
Mercer International Inc. is a global pulp manufacturing company.
SOURCE: Mercer International Inc.