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TWST: What is Mercer International?
Mr. Lee: Mercer International presently is the largest publicly quoted
producer of market NBSK, which is northern bleached softwood kraft pulp.
It operates three facilities, two of which are in Germany and one is in
the western part of Canada. We produce roughly about 1.3 million tonnes
of market NBSK, and we will be growing to about 1.5 million tonnes out
of these three facilities in the next few years. TWST: What are some of the key trends and issues with respect to pulp
and paper? What is the differentiator for Mercer?
Mr. Lee: The differentiation in terms of northern softwood versus the
other types of chemical pulps in the market is that we produce market
pulp from the northern species of softwood. As a result of the climatic
conditions, the fiber tends to be much longer and therefore the northern
softwood is valued by the papermakers as a reinforcement type of fiber
for their paper production. Some of the other grades of pulp are the
hardwood and the southern softwood. The hardwoods have much shorter
fiber lengths and, as a result, are more valued for their bulk and their
optic type of characteristics. The southern softwood is shorter fibered
than the northern softwood and therefore their use is in between the
hard and the northern softwood. Papermakers use a variety of these
different pulp grades in their paper production. The northern softwood
pulp is the strongest pulp today in terms of the wood-based type of
pulps and is found in pretty much all grades of paper production from
printing and writing grades to the lightweight coated, hygiene type of
paper, tissue, etc. What differentiates Mercer from the other
competitors is the fact that we only produce northern softwood pulp. We
are not integrated either downstream or upstream. We do not really
produce a significant amount of paper. We are not integrated into paper
production in any of our facilities nor do we operate sawmills or other
solid wood type of operations, and that's what really differentiates us
from our competitors. The other big producers in the pulp market are
the recent entrants in terms of the southern hemisphere, which produces
market eucalyptus-based hardwood pulp. They have grown very rapidly
because of the rapid growth of these type of trees, but they do not
directly compete with our particular grade and they tend to be more
complementary in regard to the various papermakers' requirements
overall.
Tickers included in this excerpt: MERC
For more information call (212) 952 7433. The
Wall Street Transcript does not endorse any of the comments made by interviewees, and does
not make stock recommendations.
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