PORT HAWKESBURY PAPER FALL UPDATE 2014

Earlier this fall, Port Hawkesbury Paper (PHP) mill and woodlands operations celebrated some important milestones: the successful completion of two years in operations with zero lost time workplace injuries in the mill; and fulfillment of Forest Stewardship Council® (FSC) and the Sustainable Forestry Initiative® (SFI) Inc. certifications in forestry.

We have much to be thankful for as we head towards 2015 and year three, with continued focus on ensuring the mill is the safest, most environmentally friendly and competitive paper production facility in North America. Equally important to us is finding new and innovative ways to be as energy efficient as we can. We are grateful to our highly productive team of employees, whose commitment and professionalism is a key reason that we are able to look to our future with optimism. We are truly appreciative of the support we receive from community members, our colleagues in the municipal, provincial and federal government, and our customers, suppliers and partners.

Economic Study affirms Mill’s impact

In the spring of 2014, PHP partnered with Gardner Pinfold Consultants Inc. to undertake an economic analysis and impact study. The impacts were reported for five indicators: gross value of output, gross domestic product, employment, labour income and taxes. This was the first study that has been conducted since the mill was purchased and reopened in October 2012.

Mill and employees support and participate in over 30 local charitable events

PHP and its employees continue to support many worthy community organizations and activities, ranging from food banks and hospitals to sports teams, sporting events and high school bursaries and literacy projects, to name a few. As well, the Woodlands team’s “Log a Load for Kids” annual fundraiser raised $20,000 for the IWK Hospital in 2014.

Mark Firth presents a donation to members of the Strait Minor Baseball Association to assist with the purchase of a pitching machine.

The report confirms that there are an estimated 1,100 full time equivalent jobs in both the mill and woodlands, and the mill generates about $24 million in direct labour income. This equates to an average of $74,000 per employee, double the average industrial wage in Nova Scotia. Through its direct and spinoff activities, PHP generates over $112 million to the Nova Scotia GDP. Direct activities account for 1% of manufacturing, and in 2013, annual spending in the province exceeded $171.5 million. In addition, PHP spent another $40 million elsewhere in Canada and the U.S. Tax revenues of all types, from both direct and spinoff activities, amount to approximately $23 million annually. This includes personal income tax, taxes on products and production, and municipal taxes.

Beyond the importance of creating jobs at the mill, PHP is equally focused on creating business opportunities, increasing innovation and sharing knowledge, skills training and development, and creating community support.

The mill’s successful restart has also brought confidence to the forestry sector; over $16 million has been spent by Port Hawkesbury Paper harvest and hauling contractors on mostly new, and some used, equipment.

Brent MacInnis, Owner of MacInnis Lumber in Frenchvale, says: “We’ve been really encouraged since the mill re-opened, and they’ve invested in equipment and training programs for a number of contractors. With this comes increasing confidence among many contractors to invest in our own equipment, as well as hiring more employees.” MacInnis Lumber employs 40 and that number is growing.

“Many businesses and families in rural Nova Scotia are glad to see this mill and woodlands running smoothly,” MacInnis says. “While the mill may be physically located in one part of the province, its impact is far-reaching across many counties and sectors.”

To download a summary copy of the report, please visit: http://www.wlinpco.com/PHP_EcomomicImpact_June_2014.pdf

Partnership with Eastern Canada Stevedoring brings increased activity to PHP’s wharf

Our recently formed partnership with Eastern Canada Stevedoring (ECS) is helping expand business activities on the mill’s shoreline wharf on the Strait of Canso. As sole operator of the wharf, ECS is conducting marketing outreach across Canada and the effort is paying off. To date, a number of ships have unloaded and had their cargos transloaded to Atlantic Canada destinations.

This partnership aligns with our focus on creating more opportunity to ensure long term sustainability for the mill. By finding ways to increase revenue and employment opportunities, the whole community will benefit.

The wharf boasts a 9-metre depth, ice-free conditions, warehouse facilities, external storage space and is accessible to the nearby Trans-Canada Highway and rail line.

ECS brings marketing strength and depth of experience in handling dry, liquid and break bulk in the region and across Canada. They have recently worked on such projects as the Exxon Hebron Project in 2013, where they loaded several supply vessels of specialized offshore cargo. In addition, Eastern Canada Stevedoring is a leader in handling all types of project cargo as well as forest products such as wood pellets, wood pulp, newsprint and lumber.

Forest Management Certification – an ongoing commitment to best practices and sustainability

Port Hawkesbury Paper is proud to make some of the world’s best paper right here in our home of Nova Scotia while maintaining the highest standards of forest management practice.

Mill achieves safety milestone

In October, the mill surpassed the two year mark of zero lost time workplace injuries. The company tracks this key metric on a daily basis; it is the measurement of lost time any employee experiences as a result of a workplace injury. This information is also shared daily within the mill, and tracked weekly as a KPI – Key Performance Indicator. In an industrial environment, employees are working in and around heavy and highly technical equipment, moving machinery, steam and electricity. All of these factors increase the level of risk and reinforces the importance of working safely.

“There are many benefits to achieving zero lost time and having a positive safety culture,” says Marc Dube, Development Manager, PHP. “Most importantly, our employees go home safely to their families every day.”

“We’re really proud of our employees. This milestone is significant in that it places the mill in high standing, not only in the region, but across the country, when compared to other large mills,” says Dube.

This important milestone has never been achieved in the history of the mill at Port Hawkesbury (current and previous owners included). Additionally, the mill’s highly skilled workforce boasts a low rate of employee absenteeism (less than 2.5%) and the Strait Area Chamber of Commerce recently presented Port Hawkesbury Paper with the 2014 Excellence in Safety Award.

PHP has recently confirmed successful fulfillment of certifications with the Sustainable Forestry Initiative® (SFI®) Inc. and the Programme for the Endorsement of Forest Certification™ (PEFC) Chain of Custody (COC) systems. Since 2008, the mill has successfully maintained Forest Stewardship Council® (FSC®) Chain of Custody. In addition to the Chain of Custody certifications, PHP’s woodlands and forest management practices are FSC and SFI forest management certified.

PEFC, the Programme for the Endorsement of Forest Certification Schemes is an international, non-profit organization that is primarily made up of representatives of the forest products industry. The PEFC COC follows the rigor of the SFI process and confirms that the company has met European certification requirements.

The Sustainable Forestry Initiative is an independent, nonprofit organization dedicated to promoting sustainable forest management. The SFI forest certification standard is based on principles that promote sustainable forest management, including measures to protect water quality, biodiversity, wildlife habitat, species at risk, and Forests with Exceptional Conservation Value. The standard is used widely across North America, and has strong acceptance in the global marketplace.

Port Hawkesbury Paper’s ongoing certification process encompasses the crown and private woodlands for which it is responsible. It includes the development of a High Conservation Value Forest report, which involves extensive consultation with experts in the fields of ecology, biodiversity conservation, societal needs and values, and First Nations. Experts involved have ranged from university professionals, the Nova Scotia Departments of Environment and Natural Resources, the Ecology Action Centre, Bird Studies Canada, and the Canadian Parks and Wilderness Society, to name a few.

Investments in our woodlands mean investments in our future

PHP’s woodlands workforce has locally employed 400 people. We’ve recently signed more forestry contractors to long-term contracts while investing more than $500,000 in technology upgrades and productivity training for harvesting contractors. PHP has also directly supported and encouraged the investment of $16 million towards purchases of forestry harvesting and hauling equipment.

We’ve increased the proportion of wood supplied from private woodlots (now approx. 50%), and have supported the efforts of the Cape Breton Private Land Partnership, who are engaging woodlot owners and promoting forest management.

Silviculture (forest establishment and forest improvement treatments) completed on private and provincial lands exceeds $4 million per year and helps ensure the sustainability of our resources.

Improved forest road infrastructure and maintenance of existing roads provide access to natural resources for hunters and fishers, recreational users, and outdoor enthusiasts. We are committed to supporting a competitive market for studwood from private woodlots in Cape Breton and we’ve recently negotiated key fibre exchange agreements to supply hardwood and softwood sawmills. The woodlands division currently supplies 50% of biomass (wood waste) to the Nova Scotia Power Point Tupper biomass boiler.

Adding to the use of technology to support our forest planning and operations, we have deployed many FP Dats (GPS navigation and machine performance recording devices) onto forest equipment used by both our Crown land and private wood suppliers. We have also completed a trial with light detection and ranging (LiDAR) to increase accuracy of the forest inventory. LiDAR is a remote sensing technology that measures distance by illuminating a target with a laser and analyzing the reflected light.

Family Day at the Mill

Our second annual Family Day took place on June 14th, with over 200 employees, retirees and their families joining our open house. This year’s event was held at the Port Hawkesbury Civic Centre. Attendees were treated to a barbeque and entertainment festivities for all ages. Our team of barbequers braved the wind and rain to serve up some tasty burgers and hot dogs to the crowd. One of the highlights of the afternoon was the mill tours. A bus took employees’ families and retirees from the Civic Centre to the mill where volunteers led them on a guided tour of our work site. Family day is one of the ways that PHP says thank you to its employees and their families for their hard work and dedication throughout the year.

Family Day 2014

Ron Stern welcomes Suzanne Morrow (our newly hired Finance Manager), her husband Greg and daughter Kate.

Retirees Peter MacIntrye, Harvey Petrie, his wife Patsy and their grand daughters.

LIDAR imagery of Cape Breton Highlands test area.

Energy use reduction

Energy conservation and reduction activities continue to be a key focus at PHP, as reflected by the addition of an Energy Efficiency Engineer to the mill team earlier this fall, providing an additional resource to support the mill’s energy reduction efforts. A mill-wide multidisciplinary energy conservation team is in place, as well as an energy strategy team, comprised of both internal and external expert members. We have successfully completed a number of energy reduction projects in all production areas. Of the 69 projects currently identified and tracked by the energy conservation team, 27 have been completed, 26 are in progress, and 16 are not yet underway. A recent project highlight is the installation of a new Primary Refiner plate design in TMP lines 1 and 2, resulting in a savings of 60 kWh/ADMT, which translates into annual cost savings of approximately $600,000 per year. Lighting optimization projects are taking place throughout the mill, inside and outside of plant areas, with many scenarios being examined for energy and cost-saving opportunities. For example, four of the 16 light standards were turned off in the employee parking lot, which had been lighting areas not in use. The remaining 1000W and 1500W bulbs were replaced with 160W LED flood lights in other areas, resulting in annual savings of $2800.

We continue to investigate prospects such as energy storage, self-generation possibilities (such as wind power, methane production, and turbine use), and enhancing energy import opportunities from other regions, including New Brunswick, Quebec and Maine.

Studying and working with the best bio economy and energy innovators

In our effort to become one of the most energy efficient thermo mechanical pulping (TMP) mills in North America, our TMP staff have initiated a number of studies to develop projects that will see a 20-25% improvement in energy efficiency over the next five years. These include several projects with FP Innovations to improve the mill product quality, finding ways to produce new grades, improving pulp brightness and overall plant energy efficiency. We’ve also partnered with Metso, a world leader in helping companies like ours improve process and performance, and together we are developing some energy-efficiency capital projects. Another partner, KSH, a Canadian consulting, engineering and services company with a global reach and extensive experience in the forest products, is supporting our TMP Line 3 project. We’ve partnered with University of New Brunswick, University of Quebec at Trois-Rivières and the Natural Sciences and Engineering Research Council (NSERC) to study enzymatic treatment of TMP long fiber component.

First Nations Partnerships continue to grow

At PHP, we’re committed to finding more ways of providing employment opportunities for Nova Scotia First Nations community members. This year, we celebrated a successful community partnership that has resulted in the mill’s security services being provided by First Alliance Security of Waycobah First Nation. In addition to a renewed First Nations forest management agreement with Unama’ki Institute of Natural Resources, we are working with the Assembly of Nova Scotia Chiefs to complete an Impact Benefit Agreement that will be supported by all. In the coming months, we will be sharing news of this and other important initiatives under way with our First Nations partners.

About Port Hawkesbury Paper

Port Hawkesbury Paper LP (www.porthawkesburypaper.com) is a forestry operations and paper mill in Port Hawkesbury, Nova Scotia. Port Hawkesbury Paper is one of the most competitive producers of super-calendered paper in North America and ships its products (retail inserts, catalogs, magazines, circulars and coupons) to customers throughout North America and around the world. Over the year, Port Hawkesbury Paper will invest approximately $160 million in Nova Scotia. Port Hawkesbury Paper employs an estimated 1,100 full time equivalent jobs in both the mill and woodlands. Port Hawkesbury Paper forestry operations are the only large forest operations that are Forest Stewardship Council® certified in the Maritimes.

From left to right, current and recent apprentices Cory Julian, Jody MacPhail, Sabrina Julian, Josh Wood, Bruce Jackson, Bruce MacEachern, Evan Marchand, Matthew Touesnard and Ron Beaton Jr.. Missing are Reid Campbell, Scott McNamara and Tyler MacMaster.

Port Hawkesbury Paper 120 Pulp Mill Road PO Box 9500 Port Hawkesbury, NS B9A 1A1 (902) 625-2460 www.porthawkesburypaper.com