Good afternoon, everyone.
We're here today to continue our study of the renewal of Canada's forest industry. This is a follow-up study to the one done by the natural resources committee and presented to Parliament in 2008. We're hearing from witnesses in different categories and regions of the country about the industry.
Today we have five sets of witnesses with us.
We have, from Meadow Lake Tribal Council Resource Development LP, Ben Voss, president and CEO. Welcome to you, sir. We have, as an individual, Professor Sudip Kumar Rakshit, a Canada research chair in bioenergy and biorefining processes at Lakehead University. Welcome to you, sir. From the faculty of forestry, University of Toronto, we have Dr. Sain, dean and professor. Welcome to you, sir. We have one more individual here with us, from the department of chemistry at McGill University, Mr. Derek Gray.
By video conference from Vancouver, British Columbia, from Fortress Paper, we have Yvon Pelletier, president of Fortress Specialty Cellulose Inc.—welcome to you, sir—and Marco Veilleux, vice-president, business development and special projects. Welcome to you, sir.
Those are the witnesses today.
We will proceed in our usual fashion by hearing first from the witnesses in the order they are listed on the agenda today, and then we'll go to questions and comments from members.
I would like you all to keep your presentations within the seven minutes. We have five presentations and this does take a lot of time. We want to leave ample time for members.
We'll start with the witness from the Meadow Lake Tribal Council, Mr. Voss, president and CEO. Go ahead, please, with your presentation for up to seven minutes.
Thank you very much. Good afternoon and thanks to the committee for the invitation to come forward today as a witness.
Forest renewal and the future of one of Canada's oldest industries is of great interest to the group I'm here representing today, MLTC Resource Development. MLTC stands for the Meadow Lake Tribal Council, as the chair mentioned, which is owned by nine first nations communities in northwest Saskatchewan. MLTC Resource Development is a private equity investment partnership that owns several businesses in Saskatchewan and Alberta. Our largest investments are in forestry, and we also own real estate, hotels, fertilizer distribution, trucking companies, and telecommunications services.
The chiefs and councils of the nine first nations have developed a very positive reputation for having strong governance and clear separation of business and politics. I'm proud to say that as a non-first nations person, it's very humbling to work for an organization that is helping Canada's indigenous peoples make a contribution and earn a stake in the economy and work towards prosperity. There is a key reason why MLTC has been so successful in forestry, and it's because we're owners. We own the mill. We own the forest management company. We own the harvesting, the trucking, and the value-added processing. As owners, we control the natural resource development, the planning, the infrastructure, and we control how the benefits are retained in the region.
At the heart of our business is NorSask Forest Products, a state-of-the art high throughput and technologically advanced studmill facility. We produce 135 million board feet annually and are on track to increase that with ongoing investments in technology and innovation. Our high quality two by four and two by six studs are sold across North America and sought after by our customers due to our exceptional quality, customer service, and reputation.
NorSask was one of the few sawmills to remain open in the downturn and has remained a viable and successful sawmill under some of the most difficult conditions. NorSask directly employs nearly 200 people and 75% are aboriginal, almost half of whom are first nations people and most quite young.
The regional jobs that are maintained in the planning, harvesting, transportation and maintenance, and use of the timber are well in excess of 1,000 people and many of these are also first nations members. All of these jobs are linked to NorSask and MLTC's role in forest management.
Despite our success and resilience, we face unprecedented pressures due to limited market access, infrastructure deficits, no rail service, low quota levels, high labour cost, shortages of skilled trades, and competition for government resources from foreign-owned multinational companies.
ln 2007 we could see that forestry had to change. Lumber markets were collapsing. The traditional model where a sawmill and pulp mill operate hand in hand was just not sustainable. The pulp mills depend on low-cost pulp chips, produced as a byproduct of sawmills, as well as large government subsidies for capital and electricity rates, to stay viable. Pulp markets were shrinking. Pulp mills were closing and the future was uncertain. Pulp mills are also supposed to use hardwood species to allow access to the softwood for a sawmill.
Good lumber depends on good fibre and Saskatchewan has some of the best in the world. We are not yet impacted by the mountain pine beetle and the market knows that. Yet, we are still dependent on pulp mills, typically foreign owned, to utilize hardwood and to buy pulp chips, unless we change our model.
Since 2013, we have invested more than $20 million into modernization, expansion, and recapitalization of our sawmill. As a result, we have put our money where our mouth is towards innovation and the confidence that lumber will always be a product in high demand, despite market cycles.
ln our view, the future depends on finding better value from our timber resources instead of just lumber and pulp. We need to ensure total fibre utilization, including the value-added use of our wastes. Our focus turned to bioenergy and in particular electricity generation and wood pellets. Wood pellets are simple enough as long as you can find markets. Electricity, on the other hand, is very hard to get into without cooperation from local utilities. ln our case, SaskPower is the provincial-owned crown corporation and holds a monopoly in the regulated market. ln 2013, we successfully signed a power purchase agreement to construct a 36 megawatt biomass fired power plant, the first in Saskatchewan.
ln 2014, we started construction on Saskatchewan's first wood pellet manufacturing facility with a design output of 10,000 tonnes per year of premium wood pellets for use in residential heating and environmental spill cleanup. We are very optimistic that this plant can be expanded as we continue to develop more markets across North America.
A key issue worth mentioning is that first nations-owned sawmills do not qualify for many federal or provincial funding programs. So all of this is done with private investment. We can't use the accelerated capital cost allowance, SR and ED, IRAP, or any other innovation funding programs, and the softwood lumber agreement usually prevents direct government funding to sawmills. So our investments in innovation have been internally and privately financed, which is a huge disadvantage compared to the rest of the forest sector and hampers innovation investing.
I can't leave here today without mentioning the softwood lumber agreement. Saskatchewan is often overlooked in the Canadian negotiations. We haven't got enough quota. Today we have three saw mills operating and enough quota for one. Other provinces, such as B.C.... I won't go through the list, but several of them have excess quotas. Negotiators seem unwilling to try to help Saskatchewan because of the fear that changing the agreement would jeopardize the fragile consensus and that we're better just to renew the status quo.
We are strongly recommending that the SLA be structured to give Saskatchewan it's fair share. Moving quota does not cost the other provinces any jobs, but if Saskatchewan doesn't increase it's quota, it could cost a thousand jobs.
In summary my recommendations to the committee are as follows: develop financial support programs and investment incentives for diversified forest products that first nations-owned companies are eligible to received; focus on continued skills trade program funding such as Northern Career Quest, which we feel is very successful; develop a new domestic focus on ensuring that community ownership models are supported, including loan guarantees or other financing programs; rebalance the SLA quotas to support the Saskatchewan saw mill industry without harming other provinces who have surplus quotas; and expand and enhance federal funding programs for innovative new technology investments to encourage domestic investment and newer leading edge technologies.
I want to thank you for your time today, and I'll do my best to answer any questions you may have.
I hope that our story has been a benefit to your committee's work and we can offer some proof that forestry innovation is alive and well in Canada.
First of all, I'd like to say that, as a professor, we usually make one-hour presentations—
Voices: Oh, oh!
Dr. Sudip Kumar Rakshit: —and with quick PowerPoints, but the instructions we had here was to stick to six, seven minutes. I'll try my best to stay within that seven minutes.
Second, I want to mention to you that I moved to Canada three years ago, so I have a bird's-eye view and a critical view, maybe a not-so-patriotic view, so I might say something that might not be correct, but that will be my view.
Third, I'm not a forester, but a chemical engineer trying to make value-added products from wood and cellulosic products, like agricultural residues. I'm in that field. I don't take care of forests; I try to make use of the wood of the forests.
Like any agri industry, the forest industry also goes through its cycles. It's hopefully going out of that low cycle to a more optimistic position with some sales from British Columbia to China. Yesterday it was mentioned that the renminbi hub in China is going to help, but my colleague just told me that the Russian supply to China is going to hurt British Columbia as well. But there are other ways in which we could be increasing our sales and industry. One is pellets, of course, if the housing market in the U.S. gets better, but we need to do something now strategically for the long term to be in the game. That's my story there.
As far as bioenergy and biochemicals are concerned, there are three important things to remember in making it from wood. One is to have the technology. In many cases we do have the technology, but it's not economical enough. A good example of that is making alcohol from wood. It is possible technically, but not at a price that is going to sell. You need to have technology, you need to have economics, and the regulatory policy issues have to be correct. Under these situations, it's going to work, and I'm going to cover a little of all of them.
First of all, the constraints to the economic development of bioenergy and biochemicals from wood include the fact that transferring the wood from the forest to the mill in Canada costs about $100 to $120 per tonne. That cost alone makes us less competitive than other emerging countries, where it is much cheaper.
Second is the nature of the raw material technology-wise. We do make a lot of products from starch in Canada. We make a lot of ethanol, we make a lot of other products from vegetable oils, but making them from cellulose is always a problem. That's nature's way. We cannot handle that. Cellulose and lignin are much more difficult molecules to work with and, hence, we are not able to make them at a competitive price.
Third, emerging countries like Brazil, India, and China are making many of these chemicals at prices that we are not able to meet.
Fourth, and very important in the present context is the petroleum industry and the price of crude. It not only affects transportation fuel, as most people commonly imagine, but petrol crude also goes into making 5,000 products. Everyday plastic products, etc., come from crude. So it's not only transportation. I'll highlight that by giving you one example that is often quoted in Canada, that in the petroleum industry the amount of material that goes into making those plastics is 4%, with the remainder going into transportation, etc. But that 4% makes for 40% of the industry's profit. That's something we say we should be doing in the case of wood: trying to see if we could make things of higher value other than pulp and paper, and then gain the market.
Coming to some of the products in different stages of development—I can't list all of them, but will just give you a few—one is biocrude, which an oil company in Canada is now doing. From wood you make a product that is close to petroleum in its characteristics, and you can make a number of other products from that. You have polystyrene, you have succinic acid. All of us talk about succinic acid and amber in Sarnia, but if you look at the nitty-gritty of it, they're not making it from wood or cellulose but from cornstarch, which is a different game and much easier to do. In that case we have to look for what other types of products we have.
You have some products that are high-volume low-cost bulk chemicals, you have low-volume high-cost chemicals, and some in-between. After a lot of discussion, people in my field say that we have to look for that sweet spot in-between because we may not be able to do the other two ends successfully. We may not be able to do the bulk chemical, because the profits are small and we can't compete with some of these emerging countries. Cancer treatment from birch wood may be a good product, but it will be so small in quantity. So we look for those intermediary products, like cellulosic fibres or some of these polyalcohols, etc., which are in the market.
Also in Canada we have made a head start with some of these products. Nanocellulose is something that Canada has a head start with, but it's not a bulk chemical, so you'll not make as much money as if it were a bulk chemical.
There are issues of climate change and LCAs, which might someday turn away from...and disinvestment in petroleum, which might might make us look to wood in a different manner, economically and socially. But those are at different stages of development as well.
In conclusion, I'd like to make my suggestions, if you're making any decisions on these matters. There are five of them.
First is that we, as scientists, should not be working on the production of ethanol, because that's not going to get us any money—from cellulosics at least. We can get it from corn, we can get it from wheat and other things in Canada. And even for the other products, we have to wait for price of petroleum to rebound. At $60, even at $120, some of these products are not viable. At $60, it's definitely not viable.
Second, regarding the pellet industry, we are exporting to Europe as long as they are willing to buy. Even if we are going around the Gulf of Mexico and bringing it from British Columbia to Europe, they're still willing to buy. But then in my hometown in Thunder Bay, we are bringing in pellets from Norway or Texas—so-called advanced pellets. As a scientist and fellow citizen in that small town, I've asked many people to give us some money to create those advanced pellets, which can be kept in the snow and rain and they will still give you the heating power.
While we are selling normal pellets to the world, we are buying advanced pellets here. I'm saying this not with the view of that particular situation, but if we had the technology for pellets, then we could use more of the pellets in this country without buying and making silos at a high price. It's a matter of only a little bit of technology. If they can do it in Norway and other places, we can do it as well. We just need some inputs in that direction.
Third, some of my colleagues around the witness table are making dissolved cellulose products. Indeed, there are many companies in Canada that are now producing dissolved cellulose and exporting it to other countries to make into rayon, which is then sent back to Canada. As I was thinking about it this morning, I thought that this is a complete reversal of roles. I'm from India. In time of the British, they used to take our cotton from India and bring it to the United Kingdom, make textiles from it, and send it back to India. Mahatma Gandhi said that wouldn't do, that we weren't going to buy those clothes any more.
But we are doing exactly the same thing in Canada. We are making dissolved bulk now and sending it to India, Brazil, or some other country; they're making rayon and we are buying the rayon at a higher price with our own raw material. The question I'm asking here is, why don't some of these companies, with the help of the government and some policies put in place, make that value-added product here? Why not? How do we allow a product to get out of here, add value, then come back?
There are many examples of this. The City of Toronto's solid waste is sent to the U.S. You pay a price for the solid waste to go to the U.S., they put it into a landfill, then they grow tomatoes and sell them to Toronto. So you're paying twice. You're paying for it to be taken away and you're paying for the tomatoes again, while you could do that here.
That's a really easy-to-understand thing. We are doing the same thing with dissolved bulk as well.
Fourth, and last, when I came to Canada I was appointed as Canada research chair because in Thunder Bay—and I'm giving this as a typical example—we had five paper mills. Four closed and we were tasked with creating an institute called the Biorefining Research Institute. We said “Let's do something else with the word 'value-added'”, but all the government funding agencies tell you, when you go to them for money, “Bring an industry that will pay 50% of the research amount”.
You are talking about professors always asking for money. How do I get that money, that 50%? I go to Resolute mill, which is barely surviving in Thunder Bay, and say, “I have this bright idea, can we do this together?” They'll say, “We don't have the time, the amount of resources, to give you that 20% or 30%”. So how do I get the money to do the research then?
I am not saying give professors money. I know of professors taking money and not delivering, but then industries cannot also expect that it's sitting there for them to come and take. So there has to be a mechanism that will be put in place to see that we at least try to deliver, that we just don't take the money and go away. But as the situation is for us, at least in Thunder Bay because we are away from the major cities, getting an industry partner who will help us to run a good industry-based project is nearly impossible. All funding agencies say 40%, 50%, has to come from industry.
My last point is that we need to think a little bit out of the box sometimes. If we want to make biochemicals, if you talk to a person who has worked in a paper mill, he's only talking about black liquor and white liquor. Maybe you have to go a little bit beyond that, and when I talked about strategic decisions, I'll just end by saying that a Saudi Arabian oil minister is famously quoted to have said, “The Stone Age did not end for lack of stone.”
That's why I started by saying that we have to be looking strategically for what to do with our wood when the petroleum era closes. That's the point I would like to make here with a few examples as far as I could.
Thank you very much. I didn't take one hour, but maybe eight minutes.
Thank you for having me here. It's my pleasure to be here today.
Before we start, I would like to make an opening statement from my global experience in the forest products industry.
Canada's forest is one of its largest resources. We have about 10% of the world's forests and we actually have 27% of the boreal forest. It is one of our most valuable resources, like other resources such as mining, oil, and others. I think it is time for us to look at our natural resources not as a commodity but as a value-added hi-tech technology throughout, and as a service.
Today we live in a global world, which I say is one world. There is no difference between east and west, south and north, China or India, or Brazil and Canada. Therefore, my first and foremost recommendation to the committee would be, even if you are looking as the softwood lumber industry and the softwood lumber treaty with the U.S., we should find ways in terms of regulations, policy, and other trades to facilitate this conventional, very profitable industry going beyond the United States, particularly to reach people in China, India, Brazil, Colombia—which has now become very important—and Chile.
Therefore, we have to think about this and how to capture the market. China is the largest market, which we can't deny. India is the second-largest market, and yet we haven't tapped into it. That's one important thing I want to stress.
The second thing I would also like to stress is that as dean of the faculty of forestry, I see many aspects of forestry and what you often don't think of as a forest product. For instance, the by-products from a pulp mill that we are manufacturing from near Montreal have a much higher value compared to our conventional fibre today because of the global economy and the expectations from Malaysia, Indonesia, and Brazil, where they are making eucalyptus at about $40 to $50 per tonne. I'm referring to two simple materials coming from the pulp and paper industry. One is the lignin, which is known as black liquor. My dear colleagues all know that the term is black liquor. The second is fibre.
We all know and very familiar in this country with making paper and boats. I would like to say, let's think in a different way and use those extremely valuable products in a different way. So with these two particular resources, I would like to call for a transformative change in our landscape of technology, and at the same time in commerce or business.
How do you want to encourage that? First and foremost, please do not undermine the brilliance of this country. I'm a citizen of Canada. I'm very proud to be a citizen of this country. I know the talents we have coast to coast. You go from British Columbia to Alberta to Quebec to Ontario and you have the largest intellectual capital diversity in the world. I can guarantee you that because I go everywhere in the world.
Therefore, if this young generation comes out with a new idea that uses some of this, particularly sources from the forest industry or forest biomass, please give them some chance to exploit their idea into a process of business.
What do I mean? I mean that you have to use strategy; you can't give to everybody. You have to link the forest industry to the existing mega-industry of this country. What I'm talking about is spectrochemical. I'm talking about automotive. I'm talking about the packaging industry. I'm talking about electronics and the biomedical industry.
Personally, I believe that if these two ingredients, lignin and fibre, are carefully and in an innovative and transformative way nurtured as a spinoff, each industry can be served, and that will benefit us, not only by getting substantial economic and job creation, but also by making our country's image a greener one, a leading country in the world.
I would like to mention some of these products that we're talking about, specifically, fibre-derived products like the one I mentioned: a dissolved cellulose derived value-added product like rayon. Go beyond that and make it a carbon fibre. You can do that from lignin, which is one of the transformative materials coming into play for the right application of the transportation industry.
Today, if you see a Boeing 787, that Boeing 787 is 40% lighter. The wings are lighter. They need less fuel. That particular carbon fibre can be derived from lignin sources.
As another example, today as I speak our cars are using forest product biomass from micro- and nano-derived fibre. Introducing biotechnology and nanotechnology as a synergy, and introducing that as a commercial product, is not a new thing for Canada. We are the leaders in the bioeconomy, and we have to lead that and foster that the way we can.
The other thing I want to mention is to facilitate research institution, academic base innovation commercialization by promoting young entrepreneurs—not by seeking jobs, but by creating jobs. Ask them to create jobs and they go and create their own jobs and innovations in those areas. The areas I mean are biocomposites, bionanocomposites, carbon trading, by nurturing biorefinery and the bioeconomic platform.
Facilitate policy and regulations to capture new market and better spinoffs for the forest product industry in novel green products and ecological and health services. I also want to mention that forests can serve our health sectors. Forests can serve our ecological success in the urban communities.
I'll go into that in a little bit of detail. Encourage them by giving a tiny amount of seed money to make one commercial product. That might lead to the rise of our conventional forest product industry. I would encourage the conventional forest industry to look for this successful spinoff for licensing or acquisition. Why is it so important? Branding and the mechanism of international strategy are important. The small company can do that. If a company like Resolute, or others like Timbec, come forward and acquire this company and become a megacompany in the world, they can make this happen much better.
The other thing I want to mention in these few minutes is to promote legislation that includes a government procurement policy aspect. If a small company is striving to get its first commercialism product, we should have a procurement policy so that we can buy their product the fastest and so that they can have in the world market one commercial product. It's important for China to know if this company already has a commercialized product. They will not trade with us unless this company has a new commercial product. Therefore, government has the role and should continue that role in the landscape.
One more important thing that we've not realized yet is the urban forest economy. Here I refer to carbon trading and the health of the forests. Today's economy is about sustainable cities. Seventy percent of our citizens live in urban landscapes, which is is concrete and big. Tall buildings [Inaudible--Editor] should be considered, with all kinds of legislative challenges overcoming that and making it happen. This is the time we should make it happen. This is the platform. We have the technology and we should have the will and guts to make all those drivers. I know that in Toronto it's the firefighters. We should have sufficient landscape to make it safe, and we know that we have that safe. This is the time to make it happen.
Recreation and the health service should be a tool in that particular area.
I wanted to mention that in today's economy, if we want to survive, it is all us. There is no division between Alberta, Saskatchewan, or Quebec. We have to work together, not repeat what we are doing, and not repeat the funding what we are doing. We have to have a synergy so we can have the maximum use of our resources.
Thank you very much.
Thank you for the opportunity to talk to the committee.
As the committee is only too aware, for more than a decade it's been obvious that this is a time of radical change in the forest products industry. The effects on companies and workers in the industry, particularly in smaller mill towns across Canada, have been effectively disastrous. Some of the details are given in a Globe and Mail article from last December, which lists at least a dozen mills that have completely closed. My colleagues here know, as you do, that there are many more. This is pretty gloomy.
However, I'd like to suggest that there really is a silver lining to all of this. In my opinion, in the last decade, perhaps spurred by this disaster, there's been an outburst of creativity encompassing science, technology, and the innovative effort with regard to lignocellulosic materials. It's been supported by universities, companies, and government. So I don't think it's as gloomy as I originally thought when I was trying to write this.
Some examples of the creativity and progress include things my colleagues have already mentioned. There is the biorefinery concept. The craft mill is no longer a craft mill, it's a method for making a range of products from the forest resource in as efficient a manner as possible. I completely agree that the use of wood-based materials and composites, which Mohini mentioned, in the automotive and even aeronautical field, which is our big field, and the use of engineered wood structures in building could be a great market.
Essentially, my interest is in the production and use of nanocellulose-based materials. So I'll spend the rest of my time talking about that. There are two main classes of nanocellulose. The first is cellulose nanocrystals. Really, if you imagine a grain of rice and then shrink it by about a million times and make it out of cellulose, that's cellulose nanocrystal. The other is cellulose nanofibrils, which are really shaped like a strand of spaghetti but are roughly one-millionth of the width of the strand of spaghetti.
Since the early 1990s, NSERC has been supporting our fundamental research on cellulose nanocrystals through the Discovery Grant process. Our problem was that we could make only very small quantities in the lab, and if people want to test applications, they want enough stuff to play with. That was taken care of by a scale-up undertaken by the Pulp and Paper Research lnstitute of Canada, which is now FPInnovations. This led to the formation of CelluForce, a joint venture of FPInnovations and Domtar, which, with government support, established Canada as a leader in nanocellulose production.
I've listed a few Canadian companies that are currently involved with nanocellulose production. CelluForce, of course, is in a mill in Windsor, Quebec. The Domtar mill in Quebec is probably still the world's largest facility capable of making cellulose nanocrystals. Alberta lnnovates Technology Futures can produce nanocrystalline cellulose at a smaller pilot plant facility in Edmonton. Cellulose nanocrystals can also be made by a novel process developed by NRC researchers at a biochemistry laboratory in Montreal; and they were available for awhile from Bio Vision Technology in Nova Scotia. Developmental quantities of cellulose nanocrystals are also available from Blue Goose Biorefineries in Saskatoon. As well, and perhaps most exciting at the moment, a five-tonne-a-day cellulose filament facility was recently dedicated at Kruger paper mill in Trois-Rivières.
In all cases there was provincial and federal government support for these undertakings. Most of this industrial activity can trace its roots back to NSERC support and research. I think combining academic and industrial efforts is the way to go for new materials.
There have been many applications suggested for nanocellulosic materials. A lot of them, as was mentioned originally, tend to be of really high value but really small tonnage. It's not going to make much difference to the forest products industry. However, there are a bunch of larger-scale applications on the horizon.
One of them involves these cellulose nano-filaments, which, although they're a product of the pulp and paper industry and can be made with relatively small modifications of current plant, can be used by the pulp and paper industry to improve the properties of paper and board, especially strength and surface properties. These nanocellulose products have been suggested as additives for oil and gas recovery. It looks like they're going to be good for improving the curing properties of concrete. Applications in reinforcement and barrier properties of packaging could be a huge market for such materials and as reinforcing agents in polymer composites.
There is a lot of competence in that area among the gentleman also here at the table.
But we have to face the fact that it will take much more than nanocellulose itself to replace the lost production currently across the Canadian pulp and paper industry, but at least we can hope that these sustainable, carbon neutral resources and materials will contribute to a whole bunch of new markets for Canada's vast forest resources.
I have no recommendations for the committee, but I'd be happy to answer any questions you can pose on this matter.
Thank you very much for your attention.
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.
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.
My questions are for Mr. Veilleux and Mr. Pelletier.
I want to start by saying how disappointed I was to hear you give your presentation in English. I will be asking my questions in French.
I was pleased to hear you talk about the investments in forest industry transformation, or IFIT, program and its importance. My Conservative colleague, Mr. Trost, said that it was important for every federal dollar to go farther, and I agree with him. But it all boils down to the numbers.
Last year, the Conservative government proposed beefing up the program by $90.4 million over 4 years. As you mentioned, the needs of the forest industry are great indeed. In its pre-budget report, the Forest Products Association of Canada asked the government to increase the program's funding by $500 million over 6 years, because that amount accurately represented the forest industry's needs. Obviously, it's music to your ears when the forest industry gets money from the federal or another level of government.
I want you to talk about projects that you'd like to carry out if the federal government were to enhance the program's funding, projects that would be a boon for not just Canada's forest industry, but also the economy, as a whole. I'm often disappointed that the Conservative government, whose financial resources are limited, gives more money to the automobile sector than to the forestry sector.
If the federal government were to beef up IFIT program funding by $500 million, as requested by the Forest Products Association of Canada, what projects would your company, as well as the others represented here today, put forward?