With over $2.9B U.S. in revenue from exports of commercial pulp, tissue paper and other forest products in more than 70 countries, Resolute Forest Products (RFP) couldn’t really be faulted for deciding to sit pretty and enjoy the ride of being a Canadian leader in its field.
Yet, that would be too complacent for the company, and particularly for its Senior VP of Pulp and Paper Operations Richard Tremblay, who took to the podium at last month’s Biofor 2020 conference, and in so doing, clearly demonstrated that RFP is much more than a single company, operating key assets in Quebec and Ontario.
First and foremost, RFP considers itself a dedicated and active corporate citizen (as opposed to being reactive). The company generates more than 440MW of electricity at its dams, making it a leader in responsible and sustainable forest management. “75% of the fibre we harvest grows back naturally,” Tremblay notes. “Furthermore, we manage our lumber products without generating any waste. Sawdust and shavings are reused, bark actually fires our power boilers and chips are needed to produce pulp and paper. We are closing the loop.”
Canada’s boreal forest is the best managed in the world, thanks to stringent rules, regulations and oversight mechanisms. “There are more trees ravaged by wildfires or infestation than those that harvested. Our activities actually contribute to maintaining biodiversity,” says Tremblay.
Diversity and R&D
On May 1, 2020, RFP will celebrate 200 years of operations. And while those 200 years mark a tremendous accomplishment, the festivities across the company’s 22 high tech plants and mills, who churn out 2.9B board feet of lumber annually, will recognize that RFP has evolved significantly over the decades. The company has purchased roughly 20 other companies during its lifespan, compelling a constant state of evolution and change. “We are doing business in a highly competitive environment and we have to adapt in order to maintain our market leader position,” Tremblay notes soberly.
RFP recently closed on a deal to acquire three sawmills from Conifex Timber, located in the southern U.S. The mills came with a price tag of $163M, plus working capital; estimated as $13M. With a combined production capacity of 550M board feet, the sawmills, located in Cross City, Florida, and in Glenwood and El Dorado, Arkansas, produce construction-grade dimensional lumber and decking products from locally-sourced southern yellow pine for distribution within the U.S.
The acquisition of these U.S. sawmills is what Tremblay calls, “the right decision at the right time. It will give us immediate scale in an attractive region, with quality assets in a rich fibre basket, close to growing end-markets." The transaction also diversifies the company's lumber production; when operating at capacity, almost 25% of Resolute's production will be in the southern U.S.
Resolute Forest Products is also very active in the specialty papers market, with tissue paper, coffee filter paper and specialized wrapping paper offerings. The company is an integrated tissue paper producer.
For Tremblay, the company’s R&D efforts need to align closely with production diversification and emerging markets. The company recently announced plans to build a commercial facility specializing in the production of cellulose filaments, a new and promising sustainable biomaterial generated from lignin fibre. The facility will be attached to the Kenogami mill, also slated for optimization, for a total cost of $38M.
"Our investment in cellulose filaments represents an opportunity to enter into non-traditional growth markets,” Tremblay says of the investment. “The cellulose filament and Kénogami mill optimization projects will create synergies within our network of operations in Saguenay‒Lac-Saint-Jean."
Cellulose filaments are derived from mechanically-processed wood fibre, without the use of chemicals or enzymes. Manufactured entirely from renewable resources, the process leaves a low carbon footprint and the filaments themselves offer a wide variety of applications and benefits. The filaments can be integrated into a broad range of commercial and consumer products, including transportation, construction and energy, increasing the resistance and durability of those products.
The new $27M project will create eight jobs in the start-up phase, slated for 2021, and a total of 23 positions once the plant reaches full production capacity of 21 metric tons per day. These jobs will be in addition to the 200 existing positions at the paper mill.
The cellulose filaments will be marketed with the help of Performance BioFilaments Inc., a joint venture established in 2014 by Resolute and Mercer International Inc., dedicated to the development of non-traditional applications for cellulose filaments. The extraction technology was developed by FPInnovations Inc., one of Canada's largest scientific forest product research and development centres, of which Resolute is a member.
The project will be funded in part by Quebec's Department of Forests, Wildlife and Parks ($2.5 million), Investissement Québec ($4.2 million) and Natural Resources Canada ($4.9 million).
Tremblay added that Resolute will also invest $11 million to enhance the Kénogami paper mill's short-term competitiveness by modernizing equipment to produce high-grade SCA+ supercalendered paper. The move will allow the mill, which has an annual production capacity of 133,000 metric tons of specialty paper, to access more favorable markets.
Health & safety and environmental impact
Minimizing the impact of its operations on the environment is an objective RFP takes with great responsibility. “In 2011, we announced a 65% reduction in our greenhouse gas emissions,” Tremblay noted. That objective was attained in 2015, but the company decided to go further. “By 2019, we effectively reduced our greenhouse gas emissions by 81%, which has the same effect as taking 1.9 million off our roads.”
The company also prioritizes health and safety in the workplace. For more than a decade, RFP has dedicated itself to policies of ‘zero tolerance’ and it has had a stunning effect. “In 2008, we registered 307 accidents resulting in injuries. Today, that number has been reduced to 35, but that’s still too many,” Tremblay says. The company is striving for zero recorded accidents, with no resulting injuries; a goal Tremblay says is attainable. “So far this year, not a single incident has been recorded in any of our 23 plants,” he notes.
“Our industry is simply bursting with potential. We are only beginning to unlock the power of our renewable fibre. That doesn’t mean that the industry doesn’t have challenges. One of them is a labour shortage. In the next three years, there will be about 1200 new jobs available. We at Resolute are a proactive employer. We recruit First Nations workers and also participate in international hiring programs. Our intention is to become a leader in that field too. We are proud of what we have accomplished and are optimistic and confident in what we will accomplish in the future,’ Tremblay says.
About Resolute Forest Products
Resolute Forest Products is a global leader in the forest products industry with a diverse range of products, including market pulp, tissue, wood products, newsprint and specialty papers, which are marketed in close to 70 countries. The company owns or operates some 40 facilities, as well as power generation assets, in the United States and Canada. Resolute has third-party certified 100% of its managed woodlands to internationally recognized sustainable forest management standards. The shares of Resolute Forest Products trade under the stock symbol RFP on both the New York Stock Exchange and the Toronto Stock Exchange.
Resolute has received regional, North American and global recognition for its leadership in corporate social responsibility and sustainable development, as well as for its business practices. Visit www.resolutefp.com for more information.