CIBC Whistler Conference A Brief Introduction to Mercer January 2010

Transcription

1 CIBC Whistler Conference A Brief Introduction to Mercer January 2010

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 development activities, as well as capital spending and financing sources. Such forwardlooking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of Mercer. For more information regarding these risks and uncertainties, review Mercer s filings with the United States Securities and Exchange Commission. 2

3 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 Rosenthal (Germany) Stendal (3) (Germany) Celgar (BC, Canada) 325,000 ADMT 635,000 ADMT 495,000 ADMT (1) NBSK = northern bleached softwood kraft (2) ADMT = air dried metric tonnes (3) Stendal is a 74.9% owned facility 3

4 Our Strategy & Purpose Mercer s core purpose is providing fiber, renewable energy and chemicals from sustainable sources, for essential human needs Focus on NBSK market pulp Premium grade kraft pulp that generally obtains the highest price Operate modern, world-class NBSK pulp production facilities Target profitability in all market conditions Limit ongoing capital requirements Improve efficiency and reduce production costs Focus on continuous improvement Focus on energy production Grow assets and earnings Organically and through acquisitions Short-term focus on sustainability of business 4

5 NBSK Market Pulp Capacity By Producer By capacity, Mercer is the largest publicly traded NBSK market pulp producer in the world Sodra Cell Mercer Canfor Pulp Trust Market NBSK Pulp Capacity by Producer Market NBSK Producers Ilim Pulp Domtar Stora Enso (1) Tembec West Fraser Heinzel Metsa-Botnia (2) Weyerhaeuser SFK Pulp ,000 1,250 1, 's Tonnes of Market NBSK Pulp Capacity (1) In 2008, Stora permanently closed 550,000 tonnes of NBSK capacity, it is not clear how this volume is attributed to Stora's integrated and market pulp capacities (2) In Q1-2009, Botnia will permanently close its 450,000 tonne Kaskinen pulp mill. It is not clear how much of this capacity is attributed to NBSK and how much is NBHK Source: Public filings of individual companies 5

6 World Class Assets Mercer versus other top 20 NBSK producers as of Q (includes integrated capacity) Large, modern facilities low capital requirements, high runability State-of-the-art environmental compliance Energy net producers 750 Weighted Average Technical Age 19 years 4Q07 STRONG Mill Capacity, 1,000 mt/a 600 Potlatch Weyerhaeuser Terrace Bay Ilim Botnia Mercer 450 Canfor Södra UPM SCA SFK Heinzel 300 P&T Stora Enso Domtar West Fraser 150 Boise Billerud Catalyst Mondi Weighted Average Capacity 380,000 t/a Note: Bubble sizes represent market and integrated pulp productions Source: Pöyry Forest Industry Consulting 0 30 WEAK Technical Age, Years 5 0 6

7 World Class Assets - Rosenthal Converted to kraft pulp production in 1999 Capacity has increased from 160,000 to 325,000 ADMTs Efficient mill with strong cost position One of the lowest delivered costs to Europe Maintained strong conversion cost position, despite rising input costs 57 MW of installed bioenergy generating capacity In 2009, generated approximately 373,000 MWh of green renewable electricity, with roughly 143,000 MWh exported In 2008, generated 390,000 MWh of green renewable electricity, with 141,000 MWh in exports in 2008 Location has strong lumber supply and is near a central transportation hub, positioning the mill to service important European markets 7

8 World Class Assets - Stendal One of the newest and largest NBSK mills in the world 75% Mercer owned 1 billion greenfield project completed in 2004 Capacity of 635,000 ADMTs per year Economies of scale have allowed for lower conversion costs than Rosenthal 102 MW of installed bioenergy generating capacity Generated approximately 712,000 MWh of bioenergy in 2009 and 692,000 MWh in 2008 Exported approximately 300,000 MWh of bioenergy in 2009 and 279,000 MWh in 2008 Location has strong forest base and is well positioned to service European and off-shore markets 8

9 World Class Assets - Celgar Modern and efficient mill Capacity of 495,000 ADMT per year Mercer s 2007 Blue Goose capital project has exceeded expectations, delivering greater savings per tonne of production In 2007, became a net exporter of electricity Successfully completed an Energy Purchase Agreement to sell 238,000 MWh to BC Hydro under their recent Bioenergy Call for Power Upon completion of the Celgar Green Energy Project in H2-2010, Celgar will have an installed bioenergy generating capacity of 100 MW Generated approximately 360,000 MWh of bioenergy in 2009 and 374,000 MWh in 2008 Excellent location with proximity to fiber basket and ability to service growing Asian and North American Markets 9

10 Mercer Export of Electricity Mercer Electricity Generation and Surplus Electricity Electricity generation Surplus electricity Celgar Green Energy Project 1,800,000 1,600,000 Total Electricity per Year (MWh) 1,400,000 1,200,000 1,000, , , , ,000 1,456, ,059 1,456, ,059 1,401, ,437 1,297, ,411 - Future With Celgar Green Energy Project 1.43 million tonnes Pulp Production 1.40 million tonnes Pulp Production 1.30 million tonnes Pulp Production Bioenergy revenues Grew from 21 Million EUR in 2006 to 31 Million EUR in 2008 an increase of 48% Pulp revenues grew by 11% during the same period Account for 4.5% of 2008 total revenues Growth accelerated by the inclusion of Mercer s German Mills into the German Feed in Tariff System (as of January 2009) and the green electricity supply agreement for Celgar 10

11 Mercer Green Electricity Profile Mercer has installed Bio-Electricity generation capacity at all three mills 102 MW in Stendal, 57 MW in Rosenthal and 52 MW in Celgar (to be expanded to 100 MW in 2010) More than 95% of our energy production is generated from biofuels, all derived from the wood that is processed to produce pulp (mostly Black Liquor) Over 80% of the biomass fuel employed is converted into heat or electricity, to be used internally or to be exported for sale The generation of bioenergy in a pulp mill represents the last stage in the process to maximize the value extracted from biomass Value extraction starts with harvesting the highest value trees for lumber production and the rest for pulp production At a pulp mill, value extraction from the lower quality trees starts by separating the cellulose - for the production of pulp and specialty biochemicals such as tall oil from the other components of the tree which are converted into green electricity 11

12 Understanding Bioenergy Production in a Kraft Pulp Future potential specialty chemicals and transportation biofuels Black Liquor Recovery Boiler Steam Turbo Generator Green Electricity Digester White Liquor Recaust. Plant Green Liquor Green Energy System Wet Pulp Kraft Pulp System Wood Chips Washer Washed pulp Bleaching Plant Bleached pulp Pulp Machine Market Pulp A modern kraft pulp mill is a large scale biorefinery that produces both pulp and excess green energy. These mills have the necessary expertise, infrastructure and potential to be future large scale producers of biomass based transportation fuels and specialty chemicals 12