Dear Ms. Dozzi, Thank you…

Dear Ms. Dozzi,

Thank you for the opportunity to provide input to the Ministry of Energy, Northern Development and Mines (ENDM) on the Northern Industrial Electricity Rate (NIER) Program. The Government of Ontario’s recognition of a governance model that invites industry engagement, leadership and collaboration will more effectively achieve our shared priority of targeting investment in sustainable economic growth for Northern Ontario while reducing the province’s electricity demand.

Rayonier Advanced Materials (RYAM) is the leading global supplier of high-purity cellulose specialties, lumber, paper, pulp and paperboard products. RYAM has operations in North America and France, including four sawmills and one newsprint mill in Ontario. Our integrated operation in Kapuskasing, Ontario is the cornerstone of these operations. It directly employs over 500 workers in the manufacturing of newsprint for publishers of daily newspapers and commercial printers, as well as controlled bulk paper for mass-market paperback book publishers and commercial printers. RYAM’s Kapuskasing Operation is a foundational economic element of Northern Ontario as it helps to stabilize the operation of smaller sawmills, as well as the livelihood of the local communities, providing good salaries, peripheral business and transportation contracts, as well as municipal tax revenues.

Our facilities have demonstrated tremendous success in reducing their purchased energy and use of fossil fuels over the years as leaders in the generation and consumption of renewable energy, especially through the implementation of projects where government was a key partner through effective program funding support.
We are continually looking for new ways to save energy, which cuts our costs and allows us to reinvest in our operations. Nevertheless, the Kapuskasing facility continues to be a high-intensity electricity consumer due to its inherent equipment and process design.

The NIER Program continues to be a critical element of our operation as it is the primary monetary tool allowing the implementation of energy reduction projects that would not have been possible through normal company capital programing. Since 2010, the facility has implemented a total of 10 projects for a total value of $11.2M resulting in a reduction of 52,700 MWh annually.

Some projects and savings that have recently been successfully completed include:

1. Low consistency refining - 38,140 MWh/year
2. VSD on Effluent Plant Blower - 2,860 MWh/year
3. TMP L1&2 WW Feed Pump VSD- 750 MWh/year
4. PM4 Dryer Upgrade – Phase 2 Steambox Steam Supply - 2,630 MWh/year
5. PM5 Cleaner System Improvements - 3,270 MWh/year
6. High Efficiency LED Lighting Retrofits, 2018 to date - 1,250 MWh/year

The NIER Program has been beneficial to the facility in assisting to reduce our cost of manufacturing to allow Kapuskasing to remain competitive in the energy-intensive and trade-exposed (EITE) North American newsprint market.

Our recommendations for program improvements include:

1. Increasing the rebate program from $20/MWh to $34/MWh (5% inflation for 11 years)
a. The program was last adjusted in 2010 at $20/MWh.
b. The cost of business in Northern Ontario continues to increase above the provincial average.
2. Permanency
a. Certainty on the cost of electricity is key to support our long-term investment planning.
3. Reporting
a. Maintain simple, efficient and well-organized quarterly reporting process.
b. Maintain knowledgeable technical support from ICF.

COVID-19 Market Impact to Operation

The COVID-19 pandemic has caused many challenges in the North American and global newsprint markets which have combined to reduce product demand by 35%. As a result, this has led to direct impacts on our facility and we have been forced curtail our operation from two to one operating paper machines. We do not expect that the global newsprint market will return to prior levels following the recovery from the COVID-19 pandemic.

As a result of the market decline, we have focused a lot of attention in the development of food service bag grades, high brightness grades, and corrugated medium.

One product which has resulted in success that has exceeded our expectations is in the Food Service Bag, branded “ENVIROSMART.” Further details can be found here: https://rayonieram.com/envirosmart/

RYAM is also actively working with Ministry of Natural Resources and Forestry (MNRF) through the Forest Growth Fund to invest in a new peroxide bleach plant, allowing for the diversification of our grade mix and capabilities to improve the sustainability of the operation. We remain focused on the priority and potential associated with the restart of the current curtailed paper machine.

Again, RYAM greatly appreciates the opportunity to present its thoughts and recommendations on this matter. We are grateful for the government’s continued support and we look forward to ongoing engagement with you as the NIER Program details are further refined to ensure industry in Northern Ontario can remain competitive.

In the interim, please do not hesitate to contact me with any questions. You can always be assured of our cooperation and enthusiasm.

Yours truly,

André Ouimette
VP - RYAM Newsprint and Sawmill Operation