A Balanced Approach to Sustainability

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A Balanced Approach to Sustainability NewPage
Corporation June 4, 2007
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NewPage Corporation beliefs

• We incorporate the concept of sustainability into
  our business model to manage and protect our
  available human, natural, and financial resources
• NewPage daily needs are balanced by our long-term
  interests
• Maintain a safe and healthy workplace for all
  employees, contractors, and visitors
• Continuity of fiber supply for our mills through
  sustainable-managed sources
• Compliance with government agencies and laws
• Good stewards of the communities in which we
  operate
• An environmentally-responsible paper encompasses
  more than just recycled fiber content
• Recycled fiber content
• Fiber certification
• Carbon footprint
• As a company, we maintain a balanced approach to
  these three elements

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Recycled Fiber
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Recycled fiber in North America

• Two types of recycled fiber
• Pre-consumer
• Paper waste generated in a paper mill prior to
  completion of the papermaking process
• Most paper mills utilize pre-consumer fiber as
  standard practice
• Post-consumer
• Paper, paperboard, and fibrous wastes
• Collected from a variety of sources, including
  offices, stores, municipal solid waste
• Recovered after it has passed through its
  end-usage as a consumer item
• Does not include printer overrun, converter
  scrap, or over-issue publications
• Generally viewed as the more environmentally-frien
  dly option

Source US Environmental Protection Agency
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Recycled fiber in North America(continued)

• The original, environmental intent of
  post-consumer recycled fiber
• Save trees
• Reforestation not an issue in North America
• On US commercial forests, net annual growth
  exceeds harvests and losses to insects and
  disease by 50 percent each year
• Reduce landfill space
• North American recovery rates have increased from
  approx 32 in 1990 to 50 in 2006
• Supply of recovered paper in North America has
  outpaced North American consumption since 1990 by
  an average of 20 balance of fiber is exported
• All fiber that CAN be used is consumed or
  exported
• Therefore, landfill space has not been
  significantly affected by paper products
• Current demand driven largely by eco-marketing,
  not environmentalism

Source AFPA, RISI Industry Statistics Database
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Recycled fiber in North America(continued)

• Recycled fiber in value-added coated paper adds
  cost to the supply chain
• Cost disadvantage for integrated paper mills
• On average, market pulp more expensive vs.
  internally-manufactured pulp
• De-inked pulp procured on open market, cost
  fluctuates with demand/supply balance
• Continued increases in Asian demand could lead to
  de-inked pulp price increases
• Additional cost to process in value-added grades
  vs. newsprint or packaging
• Sorting
• Screening
• Bleaching
• De-inking
• Reduction in yield (quality issues)
• Difficult to use in freesheet papers due to
  potential groundwood content

Source Reel Time Report March 2007
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Recycled fiber in North America(continued)
Recycle Economics
Economics for Coated Paper Mill
Cost/Ton NBHK Dried 580 NBSK Dried
670 Recycled Pulp- De-inked 605 Average
Integrated Pulp Cost 400
Cost/Ton De-inked Pulp 605 Newsprint
Use 260 Packaging Use 122
Post Consumer Fiber
De-inking Process Adds 2 to 4x the Costs of
Other Uses Results in 50 hazardous sludge that
needs to be landfilled or burned
A Dry Mill is Approx. Equivalent Using Recycled
vs. a 50 Disadvantage for an Integrated Mill
Source RISI World Pulp Monthly (Mar 07),
internal research, NBHK/SK numbers adjusted down
15 to adjust off list prices
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Practical levels for post-consumer

• The EPA recommends a maximum of 10 post-consumer
  fiber content for coated papers
• High-end coated free papers 10 post
• Groundwood coated papers 10 post
• The EPA also states that higher levels of
  post-consumer content are better-suited for
  products with lower cost and required level of
  quality
• Forms bond 30 post
• Packaging (folding cartons) 40 to 80 post
• Newsprint 20 to 85 post
• Industrial paperboard 45 to 100 post
• NewPage concurs with the US EPA and offers 10
  post-consumer on all grades
• Standard component of Signature True web/sheets
  and Sterling Ultra sheets
• Optional upon request for all other grades

Source United States Environmental Protection
Agency Recovered Materials Advisory Notice,
Comprehensive Procurement Guideline www.epa.gov/ep
aoswer/non-hw/procure/index.htm
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Fiber Certification and Forest Conservation
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Our pledge to forest conservation

• NewPage fully intends to contribute to the
  protection of the worlds forests today and in
  the future
• We must ensure sustainability of wood supply for
  our own operations
• We encourage our employees to find new ways to
  conserve resources and reduce waste
• We respect the opinions of individuals
  organizations that share our dedication to
  protecting the worlds forests
• We place top priority on compliance with
  government with local, state, and federal laws in
  developing and applying our forestry standards
• We are dedicated to balancing the needs of paper
  production with the preservation and beauty of
  our forests

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NewPage certifications
American Tree Farm (ATF) Group Certification All
mills in the NewPage system will source fiber
from ATF lands in 2007. Master Logger
Certification (MLC) In 2007, NewPage will source
MLC fiber at its Rumford, Escanaba, and Wickliffe
facilities. Sustainable Forestry Initiative
(SFI) All NewPage mills procurement systems
carry independent third-party certification from
SFI. Forest Stewardship Council
(FSC) NewPages Escanaba facility has achieved
independent third-party chain of custody
certification from FSC.
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Similarities between FSC and SFI

• Established standards for forest management
• Independently governed
• Subject to third-party certification
• Supported by conservation groups
• Fight illegal logging while recognizing the
  rights of indigenous peoples
• Protects water, soil, and wildlife
• Protects endangered forests
• Improves forest productivity by allowing prudent
  use of EPA-approved pesticides
• Improves forest productivity by allowing
  plantation forestry

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Differences between FSC and SFI

• Non-native tree species
• FSC discourages use of non-native tree species
  whereas SFI does not
• SFI does require that non-native species do not
  cause problems (i.e. out-compete) for native
  species
• Genetically-modified organisms (GMO)
• FSC does not allow, with no exception
• SFI does allow because
• GMOs are currently available in medicine and
  agriculture
• May be a future need in forestry
• High conservation value forests (HCVF) or old
  growth
• FSC initially maintained strict preservation
  standards
• SFI has subsequently adjusted
• The standards are now very similar

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NewPage forest practices

• NewPage Corporation owns no forestland
• None of our supply from areas with high
  conservation value
• Rain forests
• Old growth forests
• Intact forests (Canadian Boreal region,
  Cumberland Plateau)
• Only obtain wood fiber from areas designated for
  harvesting
• Nearly 70 from private lands
• Approximately 23 from scrap generated by
  facilities making solid wood products
• Public lands supply 5 balance is purchased pulp
• We do NOT source wood from illegal harvesting,
  including those in Indonesia, China, and Russia
• NewPage promotes 3rd party certification
• Actively pursuing increased amounts of certified
  fiber for our mills
• Assisting landowners with achievement of
  certification
• Provide on the-ground forest management
  assistance to families and individuals through
  our Forest Management Assistance (FMA) program
• Founding member of the FSC Family Forest Alliance

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Energy Conservation and Carbon Footprint
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Our beliefs about energy use

• The continued use of fossil fuels as an energy
  source has increased the amount of carbon
  dioxide, a greenhouse gas, emitted into the
  atmosphere
• Greenhouse gases may be accumulating in the
  atmosphere, enhancing the natural greenhouse
  effect, resulting in a gradual increase in global
  temperatures
• Regardless of the cause, global climate change is
  an important emerging issue
• We require a substantial amount of energy to
  manufacture paper, from chipping to pulping to
  drying
• NewPage will take constant action to reduce our
  energy consumption as a way to
• Lower our costs
• Conserve limited fossil fuels
• Minimize environmental impact

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NewPage actively reducing our footprint

• We use biomass in lieu of fossil fuels
• Organic byproducts of papermaking, including
  bark, wood waste, etc.
• Sourced from
• Our internal manufacturing process
• Purchased from local markets
• Considered carbon neutral does not release
  additional CO2 into the atmosphere
• Effective means to manage costs with recent hikes
  in fossil fuel cost
• Spent 1mm in 2006 on screw press at Escanaba
  facility
• Effectively removes water from residual pulp mill
  sludge, a form of biomass
• This biomass now used for energy vs. sent to
  landfill
• Approximately 60 of NewPage energy produced by
  burning biomass will continue efforts to
  increase this percentage.
• From 1990 to 2006, GHG emissions per unit of
  production have been reduced substantially
• GHG reduction of 24 per ton of paper produced
• Measured from NewPage core mills (Escanaba,
  Rumford, Luke, Wickliffe)
• Represents total GHG emissions from NP
  consumption of fossil fuel purchased electricity

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NewPage Corporation beliefs

• We incorporate the concept of sustainability into
  our business model to manage and protect our
  available human, natural, and financial resources
• NewPage daily needs are balanced by our long-term
  interests
• Maintain a safe and healthy workplace for all
  employees, contractors, and visitors
• Continuity of fiber supply for our mills through
  sustainably-managed sources
• Compliance with government agencies and laws
• Good stewards of the communities in which we
  operate
• An environmentally-responsible paper encompasses
  more than just recycled fiber content
• Recycled fiber content
• Fiber certification
• Carbon footprint
• As a company, we maintain a balanced approach to
  these three elements

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NewPage Corporation