Fortress Paper Says China's Antidumping Duty on Dissolving Pulp Costing Thousands of Jobs

Currently, the dissolving pulp exports from Fortress Specialty Cellulose to China remain subject to a 13% duty

Oct 16, 2014 - Fortress Paper Ltd. said that the antidumping duty imposed by China's Ministry of Commerce (MOFCOM) on dissolving pulp imports to China from Canada, the United States and Brazil has remained unchanged since its imposition. As a result, the dissolving pulp exports from the Company's wholly-owned subsidiary Fortress Specialty Cellulose Inc. (FSC) to China remain subject to a 13% duty, which would cost FSC approximately $20 million annually in lost revenues.

According to Fortress Paper, in Canada, the impact of the duty has put thousands of jobs in the dissolving pulp industry at risk, including over 300 jobs at the Fortress Specialty Cellulose Mill in Thurso, Québec. Further, the 23.7% duty imposed on new dissolving pulp mills in Canada has effectively frozen expansion in the once-growing industry, including the company's indefinite suspension of the dissolving pulp conversion project at its Fortress Global Cellulose Mill located in Lebel-sur-Quevillon, Québec.

In the long-term, the Company and Canada will lose out on this forestry sector compared to nations not impacted by the MOFCOM duty, Fortress added.

In a press statement, Fortress said, "The Company continues to evaluate its options in response to the antidumping duty, as the Company's management believes the duty was determined in a manner contrary to international law. Specifically, management believes that China's domestic dissolving pulp industry, which petitioned the investigation into dissolving pulp imports, suffered no injury as a result of imported pulp.

"The Company submits that MOFCOM should reconsider its determination due to the commercial reality that dissolving pulp was not being dumped into the Chinese market from Canada and that the duty has not had any positive effect on the local price. In light of the significant adverse economic impact of the duty on the dissolving pulp industry in Canada and the communities which depend on Canada's dissolving pulp mills for employment and economic growth, management has been urging the Government of Canada to petition the Chinese government directly, on behalf of the Canadian dissolving pulp industry, to equitably resolve the dispute.

Chadwick Wasilenkoff, Chief Executive Officer of Fortress Paper, commented: "We trust that the Chinese government will correct the situation as the antidumping duty does not comply with international law and World Trade Organization rules and has not resulted in any positive effect on the local price.

"In light of the negative impact of the duty on Canada's dissolving pulp producers since the duty was first imposed, we continue to petition the Government of Canada to intercede on behalf of the industry to seek resolution with the Chinese government. In the meantime, we continue to mitigate the effects of the duty by undertaking cost-cutting initiatives at the Fortress Specialty Cellulose Mill," Wasilenkoff added.

Fortress Paper operates internationally in two distinct business segments: dissolving pulp and security paper products. To learn more, please visit: www.fortresspaper.com.

SOURCE: Fortress Paper Ltd.