EX-99 2 0002.txt 1 MERCER INTERNATIONAL INC. [Mercer Symbol] NASDAQ - MERCS EASDAQ - MERC www.mercerinternational.com 2 MERCER INTERNATIONAL LTD. MILESTONES 1985 Present management acquired control 1988 Iron Ore royalty stream 1991 Property and Casualty Insurance 1993 Dresden Papier - 7 paper mills 1994 Rosenthal Sulphite Mill 1996 Financial Assets spun off to shareholders as MFC Bancorp Ltd. 1998-9 Rosenthal conversion to 280,000 tpa Kraft Pulp Conversion 3 MERCER SHARE PRICE RELATIONSHIP TO WORLD NBSK PRICES 1993-2000 [Graph showing Mercer share price ($US) compared to pulp price per tonne ($US) from 1993 to 2000] 4 PULP & PAPER OPERATIONS [Map of Germany showing location of operations in Stendal, Rosenthal, Fahrbrucke, Hainberg and Heidenau] 5 OPERATIONS PROFILE [Photograph of a digester at the Rosenthal mill] 6 OPERATIONS PROFILE
Current Status Rosenthal Kraft Pulp 280,000 tpa Operating at Designed Capacity Paper Operations 120,000 tpa Rationalization Stendal Pulp Project 550,000 tpa 25% interest (Greenfield) Progressing on: - Financing - Permit amendments - Other regulatory approvals Option to 51% interest
7 ROSENTHAL OFFICIAL OPENING - JUNE 2000 [Photograph of employees and guests at the official opening of the converted Rosenthal mill] 8 ROSENTHAL START-UP PERFORMANCE [Graph showing ZPR actual operating rates as a percentage of capacity by month of full production after start-up versus reference mill operating rates] 9 ROSENTHAL [Photograph of the Rosenthal mill] 10 ORIGINAL ASSUMPTIONS FOR ROSENTHAL CONVERSION
280,000 tpa Pulp Price (US$) --------------------------------- 520 600 700 --------------------------------- (in 000's) Revenue . . . . . . . . . . . . . . . . 145,600 168,000 196,000 Wood cost . . . . . . . . . . . . . . . 48,533 48,533 48,533 Chemical cost . . . . . . . . . . . . . 12,444 12,444 12,444 Other manufacturing cost. . . . . . . . 6,690 6,690 6,690 Total variable cost . . . . . . . . . . 67,667 67,667 67,667 Overhead (admin, maintenance, etc.) . . 21,436 21,436 21,436 Depreciation. . . . . . . . . . . . . . 25,323 25,323 25,323 Finance cost. . . . . . . . . . . . . . 14,108 14,108 14,108
11 COMPARISON WITH ORIGINAL ASSUMPTIONS FOR ROSENTHAL
Original Cost per ADMT Assumption Q2, 2000 Wood cost 173 161 Chemical cost 44 54 Energy 0 20 ----------------------------------- Total variable cost 217 235 Overhead, Labor, Maintenance 100 95 Finance 50 50 ----------------------------------- Cash cost inc. interest 367 380 Depreciation 90 95 ----------------------------------- Total cost 457 475
12 ROSENTHAL TRADE ADVANTAGES IN EUROPEAN MARKETS [Photograph of bales of Rosenthal pulp] 13 ROSENTHAL TRADE ADVANTAGES IN EUROPEAN MARKETS - All Other Suppliers - Freight costs + Delivery time - North American Suppliers to Europe - Lower Fibre Costs - Language, Time Zones - Smaller Delivery Lots - Common Currency - Local Customer Service 14 FUTURE DEMAND FOR BSKP - Since 1985 BSKP shipment have increased by 3% per annum - Developing Countries are short of softwood tree species. More dependant on market BSKP than mills in North America and Europe - Demand for market BSKP projected to grow 3% per annum to year 2013, an average increase of 650,000 tpa - European demand will account for 35% of this growth, an average increase of 240,000 tpa - Most of the growth in demand for BSKP will be for woodfree and mechanical printing papers and, to a lesser extent, cartonboards Source NLK Associates - market study for Zellstoff Stendal Gmbh - Sept 2000 15 STENDAL SITE [Photograph of future site of Stendal mill] 16 STENDAL PARTNERS - Thyssen Rheinstahl Technik GmbH - A daughter company of ThyssenKrupp Material and Services, a part of the ThyssenKrupp group with 180,000 employees and annual sales of $32 billion - Tessag Industrieanlagen GmbH - Part of Tessag Technische System and Services AG belonging to RWE group with 18,000 employees and annual sales of $2.5 billion - AIG Altmark Industrie AG - The original sponsor of the project responsible for the site acquisition - Mercer International Inc. - Shareholder and project sponsor since December 1999. Projected Stendal pulp mill operator 17 STENDAL PROJECT PULP QUALITY & MARKET PERSPECTIVES - Lab & mill scale trials indicate softwood pulp quality of northern character, comparable to typical southern Scandinavian pulp. - Pulp quality expected to be complementary to Rosenthal Kraft, with superior bulk and surface characteristics. - Synergies with Rosenthal Kraft marketing & sales. Mercer would rank 9th place among world market BSKP producers. 18 STENDAL PROJECT PULP QUALITY & MARKET PERSPECTIVES (CON'T) - World demand for market BSKP is set to increase by annually 650,000 tons for the next 13 years, while capacity will increase by an average of only 175,000 tons per annum. - European paper industry is seeking an alternative supply for TCF market BSKP. - Little additional capacity is considered for 2002 - 2005, particularly in the area of northern softwood pulp producers. 19 CONFIRMED MARKET BSKP CAPACITY AFTER 1999
Additional Country Company Capacity (000 tpa) Date USA Fort James 25 Feb 2000 Sweden Stora Enso 35 April 2000 Canada Canfor -40 End 2000 Finland Stora Enso 60 May 2001 Norway Sodra Cell 40 2001 Sweden AssiDoman 15 2001 China Shandong Rizhao 20 Mid 2001 Finland Metsa-Botnia 190 Mid 2001 ------------------------------------------------------------------------- Total 345
All NSBK except for Shandong Rizhao 20 PROJECTS MOST LIKELY TO IMPACT SUPPLY/DEMAND BALANCE UP TO 2005
Tonnes Start up Hardwoods Softwoods Brazil Aracruz Q3-2002 700,000 VCP Q1-2003 400,000 Cenibra Q4-2002 200,000 Chile CMPC Q4-2005 525,000 Arauco Q3-2005 500,000 USA Willamette Q4-2003 350,000 Asia April - Indonesia 2001-02 1,000,000 China - Thailand - Malaysia Q2-2005 N/A Europe Basic Pulp Latvia Q3-2005 200,000 400,000 Mercer - Germany Q2-2003 550,000 ---------- ---------- 3,875,000 950,000
21 SUPPLY/DEMAND BALANCE 2001 - 2005 INCL. ANNOUNCED PROJECTS [Graph showing available announce capacity, available speculative capacity, capacity utilization and demand by percentage and million tonnes per quarter, respectively, from 1996 to 2005] Source NLK Associates - market study for Zellstoff Stendal Gmbh - September 2000 22 NBSK MARKET PULP PRICES [Graph showing NBSK actual, real price in today's US$ and trend in US$ per tonnes from 1970 to 2000] 23 STENDAL PROJECT - PRE & POST FINANCIAL CLOSE SHAREHOLDER [Pie charts showing Mercer International, TRT/ThyssenKrupp, Tessag INA and AIG Altmark with 24.98%, 32.16%, 32.16% and 10.7%, respectively, pre- financial close and showing Mercer International, TRT/ThyssenKrupp, Tessag INA and AIG Altmark with 50.1%, 21.39%, 21.39% and 7.12%, respectively, post-financial close] 24 STENDAL PROJECT FINANCE SOURCES OF FUNDS AT FINANCIAL CLOSE Under the current plan, Mercer would receive 51% of economic and voting rights of the project with a ? 40m equity contribution [Pie chart showing limited recourse, guaranteed debt at Euro 520m, grants/subsidies at Euro 150m, other equity partners/mezzanine at Euro 40m, Mercer equity contribution at Euro 40m and original consortium contribution** at Euro 40m, with total funding at Euro 790m] * Not finalised: Precise proportions may yet vary ** Thyssen Rheinstahl, Tessag, AIG Altmark Industrie AG 25 STENDAL PULP MILL PROJECT KEY FEATURES - Planned Mill capacity: - 550,000 tpa Northern Bleached Softwood Kraft Pulp - 1,700 tpd MCR - ? 790 million preliminary capital cost - Permit for Optional Expansion up to 610,000 tpa under Application - Both ECF and TCF Fully Bleached Market Pulp (ISP 90 + & 88 respect.) 26 STENDAL PULP MILL PROJECT KEY FEATURES (CONT'D) - State-of-the-art Technology based upon Rosenthal Project Experience, e.g. Low Chlorine Dioxide Charge ECF-bleaching. TCF-Bleaching based on Ozone or PAA. - Permit for 550,000 tpa TCF available, ECF-Permit under Application - Full State Government Commitment & Support 27 STENDAL WOOD SUPPLY [Photograph of pulp log handler] 28 GERMAN FORESTS [Map of German forests, showing locations of Berlin, Stendal and Rosenthal] 29 STENDAL FOREST RESOURCES [Map of Northeastern German forests showing location of Zellstoff Stendal GmbH] 30 STENDAL WOOD SUPPLY
Total Available Supply Cubic meters Chips Existing sawmills 850,000 New sawmills 350,000 Small suppliers 150,000 Beyond region 350,000 ----------- Total chips 1,700,000 Pulp logs 2,450,000 ----------- Potential Total Available 4,150,000 Stendal Requirements Production 550,000 ADMT Pulp x 5.3m3 2,915,000 ----------- Excess Potential 1,235,000
31 MERCER TIMING ON ROSENTHAL PROJECTED STENDAL START-UP [Bar graph showing actual and forecast dollar price from 1973 to 2006 and indicating timing of Rosenthal acquisition, Kraft mill start-up and Stendal projected start-up] Source NLK Associates - market study for Zellstoff Stendal Gmbh - Sept 2000 32 SAFE HARBOR This presentation includes statements which constitute forward looking statements as provided for by the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places and include statements regarding the intent, belief, or current expectations of future operating performance. These statements involve known and unknown risks and uncertainties which may cause the Company's actual results in future periods to differ materially from forecasted results. For a review of these risk factors, please refer to the company's filings with the SEC during the past 12 months.