Paper Excellence’s Acquisition of Resolute Has Been Approved
Paper Excellence Group is set to expand in Canada’s forestry industry now that its acquisition of Resolute has been approved. In the past, Paper Excellence has been primarily focused on the Pulp and Paper industry. However, with this new acquisition, there’s a new opportunity to diversify into the lumber sector.
Wood products such as softwood lumber accounted for nearly 45% of Resolute’s revenue from Canadian and US operations in the first nine months of 2022. The acquisition will help Paper Excellence seamlessly expand into this market and grow their operations.
During the first week of January, Canada’s Competition Bureau announced that it had approved the proposed acquisition of Resolute – subject to certain conditions. Specifically, that Paper Excellence’s wholly owned Domtar Corp. division had to sell its pulp mill in Dryden, Ontario and divest Resolute’s pulp and paper mill in Thunder Bay.
Canada’s Competition Bureau stated that these conditions were necessary to prevent Paper Excellence from gaining too strong of a foothold in northwestern Ontario. The agreement also stipulated that two separate buyers will be required for the Dryden and Thunder Bay mills.
This week, Paper Excellence said that is fully committed to its US$1.6 billion bid for Resolute. While lumber prices have slid since the summer, Paper Excellence said it is taking a long-term view. According to a Paper Excellence representative, "We see growth opportunities in the North American market, as housing construction will continue to drive demand for lumber. We also have the resources to convert less-profitable operations to respond to emerging market needs."
Quick Facts About Thunder Bay Mill and Dryden Mill
According to FisherSolve, Resolute’s Thunder Bay mill produces over a half million tons of newsprint and market pulp annually. The mill contains one big 338-inch paper machine and an idled machine, in addition to pulp dryers. The mill’s fiber lines make both mechanical and kraft pulp. In 2013, the mill installed a large 65 MW condensing turbine.
Regarding Domtar’s Dryden mill, FisherSolve reports that it currently has one operating pulp dryer as well as one operating fiber line. The mill produces about 350,000 tons of softwood market pulp.
How Fisher International Can Help You Navigate These New Opportunities
In such a capital-intensive industry, the decisions made, no matter how big or small, can have substantial consequences. Therefore, it is critical for buyers to be informed and understand their competitive position, as well as the mills’ potential, before making any major moves.
Fisher International provides unparalleled business intelligence, combined with expert guidance, for pulp and paper professionals worldwide. We help you make informed and precise decisions faster and more efficiently.
When it comes to these two newly presented opportunities, it’s crucial to be diligent with your decision-making and imperative to have all the necessary data needed. Fisher International can provide you with:
- Resource studies and mill asset benchmarking: Through our proprietary database FisherSolve, Fisher International can access and provide you with substantial data on most of the necessary assets, production, cost, and industry insight needed in abundant detail for every pulp and paper mill and machine in the world. With this information, we can build resource and feedstock studies that can provide rapid and effective insights and answers to clients’ challenges. We can additionally use this information to build mill asset quality benchmarks through the granular detail of any mills’ assets, technical age, and capital requirements.
- Mill cost and viability benchmarking models: Our Viability Module was created to predict the long-term future of pulp lines and paper machines. Validated against several years of historical data on closures and survival, the result expertly evaluates the staying power of a given machine, mill or company. It also serves as a powerful tool for understanding each asset’s strengths and weaknesses.
- Product price forecasts: Fisher-STE Forecasts offer exceptional capabilities for predicting market behavior and the impact of companies’ actions on their markets. Consequently, it affords companies the ability to optimize strategy for income. Through our module, users can build structural simulation models that allow them to estimate the probable impact of various decisions and how those decisions will impact profit. Simulation models are based on system dynamics methods, which are especially suitable for analyzing cyclical commodity markets. Structural simulation models provide tools to link typical hedging decisions to practical business metrics.
- Virtual mills module: The Virtual Mills tool allows you to create a confidential, user-defined mill that can represent any greenfield, brownfield, rebuild or grade change project. All of the inputs can be defined by the client and/or with Fisher consultants’ expertise. The virtual mills are modeled with the same rigor of existing sites. The results – such as cash costs, energy consumption or carbon emissions – can be visualized and benchmarked against existing sites and other virtual mills in FisherSolve.
For more information on the extensive insight Fisher’s consulting services can provide for you regarding this massive opportunity, contact us today.