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Lenzing Expand, Modify Production Sites

March 30, 2010

Plan will expand China site, modify Austrian facility.

The Lenzing Group is expanding and modifying its sites in Lenzing, Austria and Nanjing, China. The production capacity of fiber site Nanjing will be more than doubled to 140,000 tons per year with a €55 million investment over the next 18 months to two years. Meanwhile, the Lenzing site will switch production from standard viscose fibers to modal fibers within the next fifteen months. This investment is estimated at €23 million.

“The investment is a continuation of our consistent expansion policy: The value of the Lenzing site as the world's biggest producer of special cellulose fibers will grow – and doubling capacity at the Nanjing site will meet the fast-growing demand for standard cellulose fibers in Asia,” said Peter Untersperger, chairman of the Lenzing management board, comments on the latest decisions.

The new program complements the current fiber capacity expansion program with a total investment of €120 million launched in December 2009. These include an expansion in China and the adding and subsequent debottlenecking of a fourth line at the Indonesian subsidiary PT. South Pacific Viscose (SPV) scheduled for May 2010, which will raise the Asian production capacity of the Lenzing Group to 378,000 tons per year, equivalent to half of Lenzing's global fiber production capacity. As a consequence the new investment program will increase Lenzing fiber production to about 770,000 tons per year. Moreover, a further viscose fiber production site is being planned in India.

There are numerous reasons for expanding modal capacity and downsizing viscose capacity at the Lenzing site. “Modal has very much turned out to be a global export success over the past years, particularly in Asia,” said Friedrich Weninger, responsible management board member for the fiber business. “The project will develop and secure our special fiber strategy for the Lenzing site. Integrated pulp production there enables optimized and decisive control of the production quality parameters from beech to fiber required for special fibers and the site's expertise in modal production spans

decades. Moreover, remodeling will be comparatively fast and cost-efficient.”

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