09/30/2013 12:47 EDT | Updated 11/30/2013 05:12 EST

Fortress Paper considering alternatives for Quebec specialty cellulose mill

VANCOUVER - Fortress Paper Ltd. is looking at alternatives for its specialty cellulose mill in Thurso, Que., as a result of a threatened dumping tariff by China and generally weak market challenges.

The Vancouver-based company, which didn't say what alternatives are being considered for the mill, said Monday that it continues to respond to questions from China's Ministry of Commerce, which announced in February that it's investigating imports of dissolving pulp imports from several countries.

Fortress said no date has been set for China to make a final determination on what penalties will be imposed but the mill's inventory of finished goods has risen due to the company's decision to reduce its transportation and distribution costs during the third quarter.

Fortress (TSX:FTP) also said it's working to resolve minor technical issues to complete required grid tests for a power-generation facility in Thurso.

Before it can deliver power to provincially owned Hydro-Quebec, the cogeneration facility must operate continuously for 100 hours. It has missed the mark so far, operating on two occasions for 71 and 94 hours. Fortress says the issues are not directly related to the cogeneration facility and should be resolved "imminently."

Fortress also says it will submit a tender for a new power supply agreement with Hydro-Quebec for its Global Cellulose Mill in Lebel-sur-Quevillon, Que., to replace one that expired. The new tender request would increase power to 42 megawatts, from the previously approved 34 MW. The company said it continues to explore strategic alternative, seek new partners and obtain financing for the project.