Mercer International to Sell Electrical Power from Celgar Mill

Dec. 9, 2008 - Mercer International said that its proposal submitted under BC Hydro and Power Authority's competitive bioenergy call for power has been selected by BC Hydro and that it is in the process of finalizing an Energy Purchase Agreement (EPA) with BC Hydro for the sale of electricity from its kraft pulp mill near Castlegar, British Columbia in Canada.

"We are delighted that our Celgar mill has been selected in BC Hydro's Phase 1 Bioenergy call for Green Power. Once finalized, this EPA will allow us to improve our operational efficiency by capturing the energy value of waste wood being moved through our facility," said Jimmy S.H. Lee, president and chairman of Mercer International.

Under the agreement, Mercer will supply a minimum of approximately 238,000 Megawatt hours (MW.h) of electrical energy annually to BC Hydro over a 10-year period.

Mercer expects to begin deliveries of power in the first quarter of 2010.

Earlier this year, Celgar began upgrades to its generation facilities, which will include the installation of a 48 MW condensing turbine, that will bring Celgar's installed generating capacity up to 100 MW.

"The construction of the turbine and associated upgrades in the mill are on time and on budget and all necessary environmental permits have been received. This contract will be a major milestone for us in our strategy to maximize by-product revenue from our pulping operations and a major step for Celgar to achieve EBITDA margins more in keeping with its European competitors,'' Lee added.

The Celgar mill produces approximately 480,000 ADMTs per year of NBSK pulp.

SOURCE: Mercer International

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