Mr. Chair and members of the committee, it's an honour to appear before you today. Unfortunately, we can't be there in Ottawa with you, but we are still pleased that we can join you by videoconference.
Fortress Paper Limited, for those who don't know, is a holding company based in Vancouver. Today we have three major investments in three companies. One in Switzerland, making banknote and security paper, and the two are dissolving pulp mills in Canada, which I'll cover shortly.
The history of Fortress Paper has been to target the higher-end product, the higher-value product. If you look at the history of our investments they've mostly been in higher-margin types of product and, definitely, the dissolving pulp going into textiles, fibre has been a target of the company since late 2009-10. We also have other opportunities down the road, which I'll cover shortly.
As was explained by some of our colleagues, we're starting from a paper pulp mill. The base is our paper pulp process, but we take it to the next level. We take the cellulose from the wood and purify it and ship it mostly to Asia to be transformed into rayon.
We'll cover some of the very interesting comments that were made earlier. The rest of the components, which are lignin and hemicelluloses, are used today mostly for energy purposes, but a lot of work is being done to use hemicellulose that is produced from our process and converted into other higher-value products.
Why textiles?
The growth in textiles is much higher than that of global GDP. In 2014 the market was about 93 million tonnes, and in 2016 it is forecast to be 101 million tonnes.
If you look at the type of fibre that makes up the textile fibre market, you will see that 67% is synthetic fibres, polyester mostly, and the other large portion is cotton. As some of you may know, cotton has plateaued and its availability will be decreasing down the road. Rayon is there to pick up the slack, the opportunity, and it's growing much faster than the other fibres. It is a growing market with a lot of potential down the road.
Fortress bought assets in Quebec in 2009. The first was the Fortress Specialty Cellulose mill in Thurso Quebec. It was converted to dissolving pulp in late 2012, has a capacity of 200,000 tonnes, and it can go back to paper pulp. It's not what we want to do, but it can if a really depressed market does occur. The conversion of dissolving pulp and the construction of a cogeneration facility on the site was done with a significant investment of over $300 million.
We also have another company in Quebec, called Fortress Global Cellulose in Lebel-sur-Quévillon,, where we invested up to $40 million. The business model we developed for that mill was to turn it into a softwood dissolving pulp operation. It would have been one of the lowest-cost softwood dissolving pulp mill in the world. Unfortunately, this project was stopped last year following the implementation of the import duty on new products by China, on new capacity coming into the market. That duty is 23.7% on new assets being built in Canada. That project is no longer on the map.
We talked about the different programs that have been put in place by the federal government since 2008, and we've been involved in most of them, and we can say that there have been some excellent programs—and still are—but one of the first ones that came in the depressed period of 2008-10 was the pulp and paper green transformation program. It was an excellent program, flexible and easy to access, and it generated significant investment and increased the competitiveness of the sector. Many of the mills today that are still here producing and creating jobs have used that program.
The other program, as you know, that's still in place is the IFIT program, and as Dr. Gray was mentioning earlier, so much work has been done in the last five to ten years to develop new products that the demand for IFIT is beyond its funding capability. There's about 10 times the demand for IFIT funding. So there is a lot of good potential for ongoing development in the industry.
We also want to thank the federal government for the ongoing support to R and D to help the transformation of our industry.
Fortress has invested significantly in the secondary transformation of the industry, and I like some of the comments that were made earlier, and we'll be aligned with some of them. One hundred per cent of our production is exported to Asia, with much of our dissolving pulp returning to Europe and North America—and we didn't talk to each other before the call to make our speeches similar—and it comes back in the form of non-woven napkins, wipes, and textile products that are displacing non-environmentally-friendly fibres such as polyester and cotton.
Tertiary industries can be developed in Canada and should be encouraged and supported. There is potential to develop tertiary products in Canada today. The Fortress Speciality Cellulose Mill is a good example of the integrated model promoted by FPAC a few years back and is part of the future of our industry: a dissolving pulp mill with a cogeneration facility and a neighbouring successful hardwood lumber company. The potential exists to develop the integrated model further by expanding into biomaterial, biochemical, and bioproducts, eventually supplying a fibre-producing unit for the high-end textile industry here in Canada.
Canada needs to support and develop the environment for further innovation to take place and new products to see life. We need to attract new players in our industry such as textile, chemical, food, and pharmaceutical companies. We must communicate and educate Canadians and the world that future products will likely be made from renewable resources, and one of the most practical renewable raw materials is wood.
Fortress fully understands the importance of tertiary industry development in Canada. Tariff barriers such as the import tax imposed by China on dissolving pulp produced in Canada since 2013 have caused significant financial harm to our company, and also halted a $300-million investment project in Lebel-sur-Quévillon, Quebec.
We have investment strategies but lack financial capacity and support. One of our thoughts is, is the government ready to facilitate such new product development and innovation in Canada by creating an easy-to-manage development fund for green products?
Thank you for your time, and I'm looking forward to some of your questions.