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China Announces Preliminary Determination Tariff - Cosmo Statement
On November 6, the Chinese Ministry of Commerce released a Preliminary Determination of their investigation into the prices of dissolving pulp imported into China from the US, Canada and Brazil.  The ministry determined that those imports have economically injured Chinese domestic viscose producers.  Accordingly, they have assigned tariffs to all dissolving pulp companies in those three countries.  Cosmo Specialty Fibers was assigned a tariff of 18.7%, the lowest tariff assigned in the United States.  
While we are disappointed with the preliminary determination, Cosmo Specialty Fibers and CNG have been preparing for the past six months to mitigate the effects of any Chinese tariff announcement.  That mitigation plan is well underway, consisting of a production and sales strategy that is moving Cosmo away from tariff impacts.
We believe further market clarity will emerge from the announcement over the next few days but we are confident in moving forward with our plans.  Our significant cost reduction efforts, increased sales of specialty grades and planned mitigation strategies combine to keep Cosmo healthy and on track to achieve our long term strategic objectives.


Cosmo Specialty Fibers Celebrates Three-Year Anniversary

 

Cosmo Specialty Fibers marked the third anniversary of a reborn pulp mill in Cosmopolis, Washington. Dormant for about half a decade, the mill was purchased by the Gores Group LLC and restored to commercial production capability as Cosmo Specialty Fibers in only six months. Two hundred well-paying jobs were added to an area where unemployment is typically the highest in the state.


Initially, the 140,000 tons of production capacity was almost exclusively viscose pulp. However, Cosmo is currently transitioning over 35% of its capacity to various specialty grades in support of a diverse customer base around the world. The mill was originally designed to make specialty grade dissolving pulp, developing a global reputation for producing the highest-quality softwood acetate for major chemical customers worldwide.    

“The qualification process to sell acetate is never easy, but our mill has an excellent legacy reputation for acetate production, and we were able to bring back former employees who had built that reputation for product quality and reliability. We also carried out international recruitment for added technical strength,” said Mike Entz, CEO of Cosmo Specialty Fibers. “I am really proud of what we have accomplished during the 3 years since we purchased the mill.”

Since production started in May 2011, Cosmo Specialty Fibers has driven down the operating cost per ton by over 50%, reduced its use of fossil fuel to less than 5% and made substantial sales inroads into the higher-margin specialty pulps. “The last few months have positioned us well as we have partnered with Central National-Gottesman Inc. (CNG), which provided us with excellent worldwide sales and logistics, attained PEFC/SFI fiber chain-of-custody certification and achieved record production and cost per ton performance,” added Entz. 

Entz went on to say that Cosmo Specialty Fibers is completing acetate and specialty pulp qualifications with several customers in the next few months, and is also evaluating the potential development of biochemicals from residual streams. “Developing biochemicals and fuels from residual process streams is now a necessary practice in our industry,” said Entz. “We unload our treatment system by diverting residual streams into these new product processes and reduce the effects of pulp market volatility, both of which enhance our financial position.” 

Warren Pullen, CNG's Senior Vice President, Global Pulp Group, added, “Anyone who has the opportunity to visit Cosmo will be impressed by its unique culture and capabilities, outstanding management team and truly dedicated workforce. Mike and his team have instilled a relentless focus on serving customers, producing the finest-quality dissolving pulp and driving down production costs. These actions are well supported by The Gores Group. It is a real privilege for us to be a part of what has been created at Cosmo.”

Tim Meyer, Managing Director of The Gores Group and Chairman of the Board of Cosmo Specialty Fibers added, “The Gores Group recognizes the significant efforts and achievements of the management team which has positioned Cosmo to compete successfully for specialty grade opportunities, particularly acetate. We are committed to Cosmo’s success and its long-term growth and market potential.”

To commemorate the opening of Cosmo Specialty Fibers, the Gores Group commissioned a short documentary on the mill and its value to the local community.

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Cosmo Awarded Fiber Supply Certification
Chain-of-custody certification has been awarded to Cosmo Specialty Fibers from the Programme for the Endorsement of Forest Certification (PEFC).  “PEFC certification allows us to ensure to our customers that the wood fiber we use comes from sources using sustainable forestry practices” says Mike Entz, CEO.
PEFC is the world’s largest, third-party certification system and incorporates both CSA and SFI sustainable forest management systems in its certification process.
“We chose PEFC because they managed to gather a number of really good sustainable forestry standards under one umbrella.  Because we sell our products into a global market, we wanted to be able to assure our customers that our own chain-of-custody fiber processes met a number of regional sustainable forestry standards that would be recognized in their own markets.  PEFC certification allows us to do that.”
Chain-of-custody certification is critical to customers of Cosmo Specialty Fibers in a number of current and potential markets.  This process follows wood fiber from forest, to harvesting, transport, processing and production – right through to the customer.  It is an inventory control procedure to allow CSF to track fiber in order to be assured that it is from forests audited and certified by a third party to be sustainably managed – meaning the forest is ecologically, socially and economically sustainable.
PEFC originated in Europe and has gained worldwide acceptance from recognized certification systems including the Sustainable Forestry Initiative (SFI), American Tree Farm System (ATFS), and the Canadian Standards Association (CSA).  PEFC has achieved compatibility between these independent forest certification systems, and has implemented that umbrella approach worldwide.

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