Can an International Giant in Paper-and-Pulp Milling Retool Itself for a Modern Age?

Mercer International makes the case

In the Stendal mill, the pulp has been bleached and the slurry-like material is dried on a drying machine into sheets, then cut into squares.

Think pulp-and-paper mills and you are bound to conjure up visions of black smokestacks and dirty rivers. But Mercer International is one company successfully changing the industry’s old stereotype. Founded in 1968, the Vancouver-based company runs three of the cleanest and greenest northern-bleached-softwood-kraft-pulp mills in the world: Zellstoff Celgar, outside Castlegar, British Columbia; and Rosenthal and Stendal, in Germany.

Combined, Celgar, Rosenthal, and Stendal produce approximately 1.475 million tonnes of pulp annually. As the sole kraft-pulp producer in Germany, Mercer can deliver to its European customers in days what might take others weeks. Similar time savings are generated by its Western Canada location, which positions the mill for fast turnaround to Asia and North America, with lower transport costs passed on to customers.


The sky’s the limit when it comes to producing sustainable products, says David Gandossi, CFO of Mercer International. “As long as there’s a market for it, we’ll keep increasing our biofuels output.” Here are his thoughts on ways that Mercer is playing a role in greening the planet.

A NEW, RENEWABLE ENERGY: “The energy from our pulp-making process is the ultimate in renewable energy because it creates a usable by-product from waste wood, and does it in an environmentally friendly way.”

BIOPRODUCTS: “We’re shifting the globe’s use of products consumed on a regular basis from fossil fuel to biofuel. We’re contributing to an environmentally good thing. We’re part of the solution.”

SUSTAINABILITY:  “We’re big believers in the triple bottom line: environmental, social, and economic sustainability.”

Mercer’s premium-grade kraft is sought after by many of the world’s largest and most modern paper companies, producing a range of products such as tissue, as well as specialty and premium printing and writing grades. As a result, Mercer is held to the highest standards of both quality and sustainability, and is committed to both.

Mercer’s pulp-making process begins when trees are cut down for lumber. Only about 60 percent of the tree is used, and Mercer purchases the remainder, including the bark, and any imperfect trees that are passed over. “We are buyers of what we call residual fibre—we buy the waste wood,” says CFO David Gandossi. “We then cook [it] in a digester to break down the lignin that holds the wood together.” Fifty percent of what’s left becomes cellulose pulp, which is used to make paper. The remainder is black liquor, which is essentially a biofuel.

Of particular importance is the latter half of that combination. In decades past, the black liquor didn’t have a sustainable use. Today, the biofuel created from the liquor is burned in a recovery boiler to generate heat. In the boiler, water turns to steam, and the steam pressure runs through a turbine to generate electricity. When the pressure is dissipated, the heat is used to dry the pulp, as well as heat water and the factory floors, resulting in a complete waste-to-fuel-to-energy recycling system. Not only does the Celgar plant provide enough electricity for its own use from this process, but it also energizes 25,000 homes—a number Mercer plans to increase continually.

Gandossi asserts that much of the transformation is indebted to the Canadian government and its continuous support. Canada’s Pulp and Paper Green Transformation Program, which provides support for capital projects that conserve and/or produce energy, or that improve environmental impact, was a response to the black-liquor tax credit that the United States started providing American companies. Since then, all Canadian pulp mills have been given a helping hand. “[Mercer] received $57 million, which we used to launch our Green Energy Project, mainly installing a new turbine,” Gandossi says. “Now we have the largest single-line mill in Canada, with an installed generator capacity of 100 megawatts of electricity.”

As the biofuels Mercer produces become more valuable, the company plans to increase their production. “Our vision is that these mills will be true biorefineries and will contribute to the displacement of fossil fuels with a whole variety of products,” says Brian Merwin, vice president of strategic initiatives. “As we go through this transformation and improve profitability, we’ll be able to produce by-products from the pulp-and-paper process that aren’t financially feasible today.”

However, at Mercer, being green isn’t just about the profit. “We live and work in mill towns, and we’re connected with nature all around us,” Gandossi says. “We have friends and family who work in the harvesting and solid-wood sectors. We enjoy the clean water and air, and these values are very important to us.”

As a result, Mercer is strict with its suppliers, adhering to certification and chain-of-custody protocols. “We only accept sustainably harvested, certified wood,” Gandossi says.

Despite such success, Mercer isn’t free of its fair share of challenges. One of the most pressing is the age of its workforce. “The average age in our Celgar mill is around 50, and over the next 10–15 years, we will need to replace expertise in a variety of areas, including certified steam engineers, accountants, pipe fitters, welders, and electricians.” Gandossi says. “This offers a whole host of human-resource challenges, because we compete with other employers with similar trade needs.”

Another challenge is educating the community. With a historic generalization that a pulp mill is a dirty business, it’s important to constantly keep the community informed. “The white smoke coming out of the stacks has been scrubbed so finely that it is mostly steam, and the water coming out of Mercer’s mills is cleaner than the water going in,” Gandossi says. “We also need to continually educate the government so that new policies don’t harm us. Discussion of carbon taxes and other new initiatives, if not done in an understanding way, could have detrimental impacts.”

To support its positive image in Castlegar, Mercer sponsors parades, music in the park, open houses, and mill tours. “We try to be as transparent as we can. We have around 425 employees, and there are many indirect jobs that depend on the mill. We pay almost half of the city’s annual budget in taxes,” Gandossi says. “We also pump the water for the city, drawing the water out of the river and providing the pressure to pump it into the houses through our equipment. We hope people understand our commitment and dedication to the community.”

In addition, Merwin has been working with the transportation industry to lower Celgar’s carbon footprint. He recently succeeded in getting industry approval to increase the volume of wood chips transported in the trucks by 15 percent, and he is working with suppliers to convert long-haul truck fuel to natural gas, which, he says, has a lower carbon footprint than diesel.

When viewed on the horizon, the veneer of Mercer’s mills might still conjure the image of a heavily polluted industry. But inside, the mills are helping reinvent how an industrial process should be carried out, moving perceptions to a healthier, more vibrant world.