FPInnovations, Kruger to build cellulosic filament plant

December 18, 2013, Trois-Rivières, Que. – FPInnovations and
Kruger Inc. have announced a joint project to implement the world’s first five
ton/day cellulose filament demonstration plant at Kruger’s Trois-Rivières paper
mill.

A highly innovative wood-fibre based biomaterial, cellulose
filaments (CF) are expected to have an immediate impact on Canada’s forest
industry due to their capacity to be integrated into other materials and to
their high strength, light weight and flexibility. CF will be used in a wide
range of applications as a lightweight-strengthening additive to produce lower
cost commercial pulps, papers, packaging, tissues and towels. Looking to the
future, CF may be combined with many materials to create high value products
ranging from flexible packaging and films to structural and non-structural
panels in building construction.

“This announcement is a shining example of how collaboration
and targeted investment in research and development can positively impact
traditional markets while leading to the development of innovative new
products,” said Pierre Lapointe, president and CEO of FPInnovations. “Cellulose
filaments are set to become a key element in the transformation of the Canadian
pulp and paper industry enabling the industry to gain a foot-hold in
non-traditional markets while building on its existing manufacturing capacity
in forest-dependent communities across Canada.

“We are very pleased to be part of this groundbreaking
project which will make Canada a global leader in CF production,” said Daniel
Archambault, executive vice president and chief operating officer, Industrial
Products Division, Kruger Inc. “By enabling the Canadian forest industry to
diversify into non-traditional markets, CF production will help protect
existing jobs and create opportunities for new highly qualified jobs across the
country.”

The demonstration plant in Trois-Rivières, combined with a
concurrent national research program involving FPInnovations and industry,
provides a strategic advantage for the production and marketing of this
transformative biomaterial. The plant will operate on a simple and efficient
chemical-free process developed by FPInnovations that uses only
mechanical/refining energy and wood fibres with minimal impact. This, in
addition to the fact that the plant can be built with robust and industrially
available equipment, will facilitate scale-up to a commercial stage, thus
conveying a unique advantage to Canadian companies.

Canada is now well-equipped to compete with global
industries in the USA, China, Finland, Brazil and Sweden to develop the next
generation cellulose-based bio-materials. In addition, FPInnovations’ five
patents on the process and product secure the technology for the advantage of
the Canadian industry while providing conditions to bring this game-changing
technology to commercial reality.

The potential initial market for CF as a strength
reinforcing agent for traditional pulp and paper products is conservatively
estimated at 120,000 tons per year in North America alone. In addition, a
similar-sized, non-traditional market is forecast for thermoplastics,
reinforced plastics, thermosets, adhesives, and non-woven fabric and coatings,
representing a total revenue potential of $500 million per year for companies
that make use of CF.

The $43.1 million project includes funding from Natural
Resources Canada, through the Investments in Forest Industry Transformation
(IFIT) Program, as well as a grant from the Québec Ministry of Natural
Resources, a loan from Investissement Québec, a contribution from Kruger Inc.
and funds from FPInnovations’ pulp, paper and bioproducts industrial members.