Mercer International Inc. · NASDAQ:MERC
Mercer International — Addressing Bioenergy Barriers in BC Workshop (May 2010)
20 slides from Mercer International's conference presentation, May 12, 2010
Slide 1: Addressing Bioenergy Barriers in BC Workshop
Addressing Bioenergy Barriers in BC Workshop May 12, 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: Corporate Overview
Mercer conducts operations through three subsidiaries; two in Germany and one in Canada Mercer operates two of the worlds most modern and the only two NBSK pulp mills in Germany - Europe's largest market for NBSK pulp - and one of North America's largest and most modern pulp mills Corporate Overview
Slide 4: World Class Assets
World Class Assets Mercer operates world-class mills which are some of the largest and most modern in the world Relative age and production capacity provide a competitive advantage Note: Bubble sizes represent market and integrated pulp productions Source: Jaakko Poyry Low production costs Low maint
Slide 5: Mercer Bio-Energy Profile
Mercer Bio-Energy Profile Mercer continues to have significant incremental opportunities for increased green energy output beyond the Celgar Green Energy Project In modern kraft mills, significant amounts of surplus energy is produced Pulp production and energy production are positively correlated;
Slide 6: 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 7: 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 8: 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 9: 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 10: Fibre / Fuel Challenges - A Policy Conundrum
Fibre / Fuel Challenges - 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,
Slide 11: Fibre / Fuel Challenges - Market Distortions from Existing Policy
Fibre / Fuel Challenges - 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
Slide 12: Policy must create an environment that will provide the following
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 13: Historical Perspective - 2005 Celgar acquisition
Historical Perspective - 2005 Celgar acquired by Mercer for US $210 million plus US$ 16 million acquired working capital Celgar at the time: Was a modern mill built in 1993 for C$850 million Had a Pulp capacity of 430,000 ADMT Had a Biomass Electricity Generation capacity of 52 MW Produced 271 GWh o
Slide 14: Historical Perspective - 2005 capital project
Historical Perspective - 2005 Mercer upon acquisition implemented a $28 million capital project designed to: Increase Pulp and Black Liquor Production Improve thermal efficiency Reduce natural gas usage Increase Electricity Generation This project in addition to the highly accretive benefits was int
Slide 15: Review of Results from First Step
Review of Results from First Step: Pulp capacity was increased by 70,000 ADMT's to 500,000 ADMTs Natural Gas usage for thermal use was reduced by half or over 300,000 GJ Electricity Generation increased by over 100 GWh to 374 GWh from the existing generator. Energy Co-Product assets were maximized C
Slide 16: Development of the Green Energy Project began in 2007
Celgar Green Energy Project Development of the Celgar Green Energy Project began in 2007 A number of Project Scenarios were analyzed, one key variable for consideration was: Biomass Fuel Risk: Impacted the size of Celgar's project The current power boiler, historically had operated utilizing only ho
Slide 17: Transformation at Celgar - Green Energy Project
Celgar Green Energy Project Transformation at Celgar - Green Energy Project The C$55 million Celgar Green Energy Project involved: The Installation of a 48 MW condensing turbine bringing Celgar's installed generating capacity to 100 MW A series of steam saving projects to further reduce pulp mill st
Slide 18: The Green Energy Project benefits
Celgar Green Energy Project The Green Energy Project had the following benefits: Over 238 GWh in increased electricity generation increasing Celgar's generation output to almost 600 GWh Further reductions in natural gas use Reduced GHG emissions 75% reduction in sulphur dioxide emissions Reduced com
Slide 19: Celgar Bioenergy Profile
Celgar Bioenergy Profile 2007 With Celgar Green Energy Project The installed generating facilities at Celgar will have the potential for further optimization projects increasing generation by several hundred GWh Future 238,000 MWh/year of renewable power will be supplied to BC Hydro 2009 467,000 ton
Slide 20: Barriers to Bioenergy Development
Several barriers exist in the development of bioenergy production in BC's forest products sector Sector is the most important producer and user of bioenergy, but investment capital is limited and bioenergy production is more expensive than other conventional energy sources Hydro electricity, natural
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