Fortress objects Chinese dissolving pulp anti-dumping duty

The interim duty applied against the Company's dissolving pulp imports will be calculated at 13% of the CIF price to China and will be payable in cash bonds in respect of prospective imports during the period between MOFCOM's preliminary and final determination. The interim duty applied against the Company's imports is consistent with that applied against other Canadian dissolving pulp importers who responded to the investigation.

The Company is disappointed by MOFCOM's preliminary decision, and believes that the decision represents an unsupported assessment of injury to China's dissolving pulp market and the allegations of 'dumping' activities by Canadian producers. MOFCOM's interim duty will materially harm the business of Chinese viscose fibre producers, which is a significant domestic industry.

As set forth in the report, "China's Antidumping Investigations Against Cellulose Pulp" by prominent Canadian economist Michael Stone, changes in the price for dissolving pulp have largely been driven by factors such as the price of cotton and a globally weak textile fibers market. Furthermore, cost of wood fibre is the largest single input cost in dissolving pulp production, which places Chinese producers at a disadvantage due to their need to import fibre and not as a result of any alleged dumping activities by foreign dissolving pulp producers.

The duty imposed by MOFCOM will be ineffective in reducing wood fibre costs for Chinese producers, and may end up causing significant harm to China's viscose fibre producers.

Chadwick Wasilenkoff, Chief Executive Officer of Fortress Paper, commented: "This is a challenging time for Fortress Paper, but we have prepared for this eventuality and have implemented a strategy which should mitigate the short-term adverse effects of MOFCOM's preliminary determination."

Mr. Wasilenkoff continued, "We wholly disagree with MOFCOM's conclusion that Canadian dissolving pulp producers are dumping exports into China and have expressed this view to MOFCOM in the strongest manner. As a response, we are assessing our legal options and will be working with the Canadian government to have this determination reviewed by the WTO."

Given that MOFCOM's decision is not supported by the facts or the underlying economics, the Company is evaluating its legal options to reverse the preliminary decision of MOFCOM. Fortress Paper will initially have 10 days to submit a response to MOFCOM's preliminary determination. The Company is also preparing further submissions to be made to MOFCOM prior to its final determination and is reviewing the possibility of requesting a public hearing.

MOFCOM's final determination is expected to be made in February 2014, unless the investigation period is further extended. If MOFCOM calculates a final dumping margin lower than 13%, any excess cash bonds paid on shipments during the interim period will be refunded.