Mercer International Inc. · NASDAQ:MERC
Mercer International — Canadian Institute's BC Power Conference January 2010
31 slides from Mercer International's conference presentation, Jan 26, 2010
Slide 1: BC's Bioenergy Strategy: Examining Progress and Potential in the Province
BC's Bioenergy Strategy: Examining Progress and Potential in the Province Canadian Institute's BC Power Conference January 2010
Slide 2: Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this presentation contains statements that are forward-looking, such as statements relating to results of operations and financial conditions and business dev
Slide 3: Company Overview
Company Overview Mercer is the largest publicly traded NBSK(1) market pulp producer in the world Operates three pulp mills with 1.46 million ADMT(2) of capacity _________ (1) NBSK = northern bleached softwood kraft (2) ADMT = air dried metric tonnes (3) Stendal is a 74.9% owned facility Rosenthal (G
Slide 4: Pulp producer capacity comparison
X axis Company Comment Botnia Size 1 Sodra Size 2 Mercer Size 3 Ilim Pulp Size 4 Weyerhaeuser Size 5 Canfor Size 6 UPM Size 7 West Fraser Size 8 Billerud Size 9 Tembec Size 10 Stora Enso Size 11 Domtar Size 12 Howe Sound Size 13 SCA Size 14 M-real Size 15 Heinzel Size 16 SFK Pulp Size 17 Clearwater
Slide 5: Mercer Bioenergy Profile
Mercer Bioenergy Profile 1.30 million tonnes Pulp Production 1.43 million tonnes Pulp Production 1.40 million tonnes Pulp Production 2008 2007 2006 With Celgar Green Energy Project In modern kraft mills, pulp production and energy production are positively correlated; more pulp being made means more
Slide 6: Bioenergy in British Columbia Background Information
Bioenergy in British Columbia Background Information Value of Cogeneration - Combined Heat and Power (CHP) Forest Value Utilization & Climate Change Understanding A Kraft Pulp Mill's Production Processes In order to better understand our analysis and perspectives, the following slides provide backgr
Slide 7: Value of Cogeneration - Combined Heat and Power
Biomass Cogeneration, supplying both electricity and heat to an industrial site or community, will use 30 - 40 % less primary fuel than conventional generation. This can represent a reduction of CO2 emissions of up to 50% Value of Cogeneration - Combined Heat and Power 50 50 ELECTRICITY HEAT AND LIN
Slide 8: Cogeneration - Combined Heat and Power (CHP)
Provides the most efficient use of the biomass resource by increasing thermal efficiency from 40% to 85%, eliminating waste Reduces GHG emissions by up to 50% Reduces transmission and distribution losses Jurisdictions such as Europe have long recognized the importance of CHP by only allowing generat
Slide 9: Forest Value Utilization & Climate Change
Climate change has emerged as the most dominant environmental issue of our time Forest Value Utilization & Climate Change Climate change has had tangible impacts on BC's forests The unprecedented Mountain Pine Beetle epidemic killed 620 million m3 of BC's forests Our forests, while damaged by climat
Slide 10: Climate change has tangible impacts on our forests
Climate change has tangible impacts on our forests - best demonstrated by the Mountain Pine Beetle epidemic in BC's forests - but our forests also play a very important role in mitigating this climate change Actively managing our forests not only keeps our forests as a sustainable resource, but limi
Slide 11: Carbon Benefits from Improved Utilization of Our Forests
Utilizing our forest resources more efficiently and more effectively has great potential to help BC achieve its climate change goals By combining forest management techniques, increased substitution and utilization of wood products, and increased use of biofuels, large scale improvements in carbon e
Slide 12: Forest Value Utilization & Climate Change
Historically, logging debris and some sawmill residuals have been underutilized in certain regions of BC This is largely a result of an imbalance between various users in that lower quality fiber production outstripped demand in certain areas of BC's forests Mountain Pine Beetle has accentuated the
Slide 13: Right fiber to the right end-users
Maximum value is extracted from BC's forests when the right fiber goes to the right end-users Lumber Pulp & Paper Specialty Chemicals Transportation Biofuels Electricity Wood Pellets Firewood Lumber Pulp & Paper Specialty Chemicals Transportation Biofuels Electricity / Heat (CHP) Wood Pellets Firewo
Slide 14: Understanding A Kraft Pulp Mill's Production Processes
Wood Chips Washed pulp Wet Pulp Bleached pulp Market Pulp Black Liquor Green Liquor Steam Green Electricity Digester White Liquor Recovery Boiler Recaust. Plant Washer Bleaching Plant Pulp Machine Turbo Generator Green Energy System Kraft Pulp System Understanding A Kraft Pulp Mill's Production Proc
Slide 15: Bioenergy opportunity for NBSK producers
Kraft pulp mills are already the largest producers of Biomass Energy As more jurisdictions pay premiums for green biofuels and electricity, pulp mills have more incentive to increase green production and unlock unrealized value from existing assets Use of cogeneration is far more efficient than a st
Slide 16: Additional Pulp Mill Biorefinery Opportunities
Biomass Residues Gasification Hydrolysis Syngas Fermentation Biofuels Biofuels, Bio-based chemicals Pulpwood & Sawmill Chips Fermentation Biofuels, Bio-based chemicals Lime Kiln Fuel Traditional Pulp Making Process Pulp Sales Roadmap to the Future Additional Pulp Mill Biorefinery Opportunities As ex
Slide 17: BC's Bioenergy Strategy - Overview
BC's Bioenergy Strategy - Overview In January 2008, the BC Government released the BC Bioenergy Strategy It directly supports the BC Energy Plan and is designed to help strengthen the province's long-term economic competitiveness and electricity self-sufficiency, while supporting emissions reduction
Slide 18: BC's Bioenergy Strategy - Overview
BC's Bioenergy Strategy - Overview The Strategy aims to develop BC's bioenergy resources and enhance their economic and environmental benefits by establishing different mechanisms to increase investment and innovation within BC: Provide $25 million in funding for a provincial Bioenergy Network focus
Slide 19: BC Bioenergy Strategy - A Policy Conundrum
BC Bioenergy Strategy - A Policy Conundrum Background The BC Pulp & Paper Industry has always been a consumer of sawmill bark waste, sawdust, sawmill chips and a small amount of standing timber This biomass converts into approximately 7 million tonnes of pulp and paper and 123 million GJ of fuel, wh
Slide 20: BC Bioenergy Strategy - A Policy Conundrum
BC Bioenergy Strategy - A Policy Conundrum Cumulative volume of biomass 0% 100% Low Cost Low Volume High Cost High Volume Biomass Cost/Volume Continuum Not Used Currently Used Low Cost High Cost Market Distortions from Existing Policy European subsidies for pellets have allowed producers in BC to be
Slide 21: Policy must create the right environment
Policy must create an environment that will provide the following: Since the biomass supply is market based, the incentives (electricity pricing) to increase usage must apply equally to both existing and new entrants. Policy must make price incentives as widely available as the market based supply C
Slide 22: BC Bioenergy Strategy
BC Bioenergy Strategy The BC Government's work on climate change policy and the activities carried out by the MoF continue to support the advancement of bioenergy in BC However, the Bioenergy Strategy is somewhat vague and has not been evolving with strategy refinements or public updates The Strateg
Slide 23: BC Bioenergy Strategy
BC Bioenergy Strategy Where on the value chain of Biomass production does BC want to be - a low tech producer of wood pellets or on the cutting edge of liquid biofuel production? Denmark decided it wanted to be a world leader in wind energy, so it provided government funded incentives to stimulate t
Slide 24: Pulp & Paper Green Transformation Program
Pulp & Paper Green Transformation Program A $1 billion federal program whose objective is to improve the environmental performance of the Canadian pulp and paper industry Green Transformation Program (GTP) supports innovation and investments in areas such as energy efficiency and renewable energy pr
Slide 25: Pulp & Paper Green Transformation Program
Pulp & Paper Green Transformation Program The Green Transformation Program will allow for reinvestment in pulp mills, some of which have not been reinvesting over the last few years GTP should act as a catalyst for future private sector investment in mills as well as providing economic benefits for
Slide 26: BCUC Requirement for First Nations Consultations
BCUC Requirement for First Nations Consultations In the 11th hour of the Phase 1 Bioenergy Call for Power, the BCUC determined that it would require First Nations consultations after all of the Call's other processes had already been completed It should be noted that Mercer is supportive of conducti
Slide 27: BCUC Requirement for First Nations Consultations
BCUC Requirement for First Nations Consultations Unintended consequences such as lost jobs could have been avoided if more foresight had been applied and the situation handled differently BCUC could have adopted this requirement for the next Call process, rather than implementing it during the 11th
Slide 28: BCUC Requirement for First Nations Consultations
BCUC Requirement for First Nations Consultations Did requiring First Nations consultation make sense during the Phase 1 Call for Power application process? The Electricity Purchase Agreements that were awarded to these mills under the Call are just contracts that allow these mills to sell products t
Slide 29: Where Do We Go From Here?
Where Do We Go From Here? Achieving BC's climate change and bioenergy goals will require careful analysis and consideration. What should we do? Create a forum where Government and Industry work together to establish the vision and framework for the next steps Create the necessary hosting conditions
Slide 30: Measuring success against future potential
To measure our success, we can examine where we stand currently compared to our future potential Optimize our existing industry We have a pulp and paper industry that annually consumes approximately 28 million m3 of wood and requires approximately 8,700 GWh of electricity Given that our Celgar mill
Slide 31: Where Do We Go From Here?
Where Do We Go From Here? There remains significant bioenergy potential within the wood that BC's Pulp & Paper industry (P&P) consumes which needs to be unlocked in order to turn this industry into a net exporter of bioenergy BC P&P consumes roughly 28 million m3 of wood, yet is still a net consumer
Mercer International — Canadian Institute's BC Power Conference January 2010 on 6ix