Report on Cosmopolis Mill - School of Environmental and Forest ...

LDN, 711 112006
Competitive Analysis
Acetate (see Graoh 1)
The most recent Weyerhaeuser competitive analysis is apparently fiom 1999. The
conclusions fiom that analysis might be considered suspect because:
1. The second lowest cost acetate producer, according to the study, was International
Paper Company's Natchez, Mississippi PHK mill and it subsequently closed.
2. The Port Alice mill, a mill with an indicated lower production cost than
Cosmopolis, closed twice since then for lack of profitability and has only recently
restarted with new owners, new government assistance and reportedly with
significant workforce compensation reductions.
3. The Cosmopolis mill gained significant marketshare in acetate through the period
1999 to 2005.
Possible explanations for these apparent anomalies:
1. The Cosmopolis mill invested heavily in automation during this time period and
focused more intently on grade mix simplification. Total mill staffing was
reduced kom about 310 to about 235 people, with what is likely a $30-40lADMT
reduction in costs.
2. European currencies strengthened against the dollar adding, according to
Weyerhaeuser, about $70lADMT to a European producer's cash costs to produce
(paper-grade kr&) pulp relative to US producers.
3. Eastern Canadian producers have also been handicapped by their strengthening
currency- to the tune of about $50/ADMT. Also, serious wood issues have
surfaced in this area.
Cosmopolis Pulpmill Project- Competitive Analysis
Page No. 1