The Chinese government is sticking by its previous decision to impose a 13% duty on cellulose pulp coming from Canada, the U.S. and Brazil — a move Vancouver-based Fortress Paper (TSE:FTP) says will hurt business.
China’s Ministry of Commerce (MOFCOM) made the final determination April 3 after it had already announced an interim duty of 13% on dissolving pulp imports.
Fortress Paper said in a release it’s “very disappointed” with the outcome and is evaluating alternatives for its Global Cellulose Mill in Lebel-sur-Quevillon,
Quebec, as the final duty for any unnamed current or future pulp producers would be 23.7%. The government previously set the duty at 50.9%.
“We’re very challenged and pained by the decision,” Fortress Paper CEO Chadwick Wasilenkoff told Business In Vancouver.
“It’s been very obvious and apparent that there’s been preferential treatment given to those mills that have Chinese ownership.”
Although pulp duties for the company’s mill in Thurso, Quebec, will remain at 13%,
Wasilenkoff said the 23.7% duty at the Global Cellulose Mill makes that particular operation economically unviable.
He added an agreement with the previous owner prevents Fortress Paper from producing paper pulp for eight more years, so the company is exploring options such as using the site for energy production or a pellet plant.
Fortress Paper is also considering petitioning the Canadian government to make an application to the World Trade Organization regarding China’s decision.
“To be honest we don’t have a lot of confidence that we’ll be successful in that route,” Wasilenkoff said, adding it’s not in the Canadian government’s best interest to get in a trade war with China over the pulp industry.
Stocks for Fortress Paper were down 4.3% at $3.78 at press time the morning of April 4.
