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Lenzing Expands Fiber Production Capacity

December 15, 2010

Lenzing’s expansion includes construction of the first industrial-scale production plant.

The Lenzing Group has announced an expansion program that includes the construction of the first industrial-scale production plant for TENCEL fibers at the site in Lenzing/Upper Austria, the construction of a fifth viscose production line at its Indonesian subsidiary PT. South Pacific Viscose (SPV), as well as further capacity expansion measures.

These new expansion projects, in addition to those already in progress, are expected to increase the Lenzing Group’s annual fiber production capacity of currently nearly 700,000 metric tons by approximately 25%. This would be a significant milestone in reaching the strategic target of a production capacity of one million metric tons of fibers by 2014. The total investment volume amounts to approximately €285 million.

Lenzing's CEO, Peter Untersperger said, “This expansion program responds to the dynamic demand development for man-made cellulosic fibers and is intended to further secure our leading world market position. The structural changes in the global textile fiber market, which are characterized by a tendency towards rising cotton price levels and an eve rincreasing
volatility of cotton quantities, as well as the increasing demand for man-made cellulosic fibers in nonwovens, lead us to continue to expect strong demand for Lenzing fibers over the next years. Moreover, the capacity expansion program is intended to further secure our leading position in the industry with respect to cost efficiency and market position.”

The decision to construct the first production plant for TENCEL at the facility in Lenzing/Upper Austria represents a milestone for this site. The total investment will amount to approximately €130 million, with a planned annual production capacity of approximately 60,000 metric tons. The
plant will be the world's first fully backward integrated production site for TENCEL fibers, as it can be directly supplied with pulp from the fully integrated pulp mill at the Lenzing site. The regulatory approval procedures for the industrial-scale plant are expected to be initiated shortly.

The new investment program also includes the expansion of the TENCEL production site in Mobile, Alabama. A total investment of almost $30 million is expected to increase the site's annual production capacity to approximately 50,000 metric tons. A production line that was decommissioned by the site's previous owner will be modernized and upgraded to meet the strong demand for TENCEL fibers from the nonwovens sector (wipes, baby care products) in North and South America.

In response to strong demand for Lenzing viscose fibers in Asia, Lenzing is planning to increase capacity at its sites in Purwakarta/Indonesia (SPV) and Nanjing/China. Lenzing will construct a fifth production line with a total investment of approximately $130 million at SPV. It will be designed as
a “jumbo line” with a planned annual production capacity of 80,000 metric tons, which is expected to increase SPV's total capacity to 325,000 metric tons by 2013. The additional quantities are expected to be mainly sold in the fast-growing Indonesian domestic market.

At Lenzing’s site in Nanjing/ China, a second production line is currently under construction, which is scheduled to almost double current production capacity to 140,000 metric tons by mid-2011. Lenzing willincrease production capacity of this site's second line to 160,000 metric tons
immediately after start-up, with a total investment of approximately $18 million. The additional capacity is expected to be available from 2012 onwards. Moreover, production capacity for specialty nonwovens fibers will be expanded at the Lenzing site. An existing line will be upgraded at a total investment of approximately €17 million. This expansion measure is in response to strong demand for Lenzing's nonwoven fibers. This project is scheduled to be completed by mid-2012.

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