Shares of Fortress Paper (TSE:FTP) fell more than 6 percent in early trading Thursday after revealing that China's anti-dumping duty imposed on dissolving pulp imports from Canada, the US and Brazil has remained unchanged since the introduction earlier this year, and will contribute to substantial lost revenues as a result.
This means its dissolving pulp exports from subsidiary Fortress Specialty Cellulose to China remain subject to a 13 percent tax, which would cost the company about $20 million in lost revenues per year, it said.
Fortress highlighted that the duty has put thousands of jobs in the dissolving pulp industry at risk in Canada, including over 300 at its cellulose mill in Thurso, Quebec.
A 23.7 percent duty has also been imposed on new dissolving pulp mills in Canada, which the company says has effectively "frozen expansion in the once-growing industry." Fortress was forced to suspend, for an indefinite period, its dissolving pulp conversion project at its Fortress Global Cellulose mill in Lebel-sur-Quevillon.
"We trust that the Chinese government will correct the situation as the antidumping duty does not comply with international law and World Trade Organization rules and has not resulted in any positive effect on the local price," said chief executive officer, Chadwick Wasilenkoff in a statement released late Wednesday.
"In light of the negative impact of the duty on Canada's dissolving pulp producers since the duty was first imposed, we continue to petition the Government of Canada to intercede on behalf of the industry to seek resolution with the Chinese government."
In the meantime, the company has launched cost-cutting initiatives at its Fortress Specialty Cellulose mill to mitigate the effects of the Chinese tax, and said it continues to evaluate its options.
The duty is the result of China's claims that dumping was harming the country's pulp sector following an investigation China launched in February last year on the importing to China of cellulose pulp originating from Canada, the U.S. and Brazil.
Fortress said it believes that China's domestic dissolving pulp industry has "suffered no injury as a result of imported pulp," and that the duty has not had any positive effect on local price.
Shares were down 6.2 percent at C$2.13 in Toronto as of 10:26am ET on Thursday.