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Borregaard and RYAM to invest in lignin operations in the US

Borregaard, operator of the world's largest biorefinery, and Rayonier Advanced Materials (RYAM), a supplier of cellulose specialties natural polymers for the chemical industry, have entered into a non-binding letter of intent regarding the establishment of a new lignin operation adjacent to RYAM's Fernandina Beach pulp mill in Florida.

The new company will be owned 55% by Borregaard and 45% by RYAM.

The Fernandina Beach mill manufactures specialty cellulose and lignin raw material as co-products from softwood. The new company will initially manufacture lignin products suitable for concrete admixture and similar applications targeting primarily the North and South American markets. The products will be marketed through Borregaard's international sales network and will represent a 30% increase in the lignin sales volume at full capacity.

It is anticipated that the project will be completed in two phases over five years. The parties estimate an aggregate $110 million (€97.5 million) for a capacity of 150,000 tonnes dry substance per year. The first phase is expected to commence commercial operations in 2017.

Completion of the new operation is subject to board approval by both companies and conclusion of definitive agreements, as well as final engineering, refinement of capital estimates, and obtaining required permits and other approvals.

'The Fernandina Beach project represents an excellent growth opportunity for our lignin business in a global market which for some time has been supply constrained,' says Per A. Sørlie, president and CEO of Borregaard.