Sustainability Report :: Sustainability

Tolko Industries 50th Anniversary - 1956-2006

Tolko Industries Ltd. 1998/99 Sustainability Report

MANUFACTURING

In 1998, Tolko produced over one billion board feet of solid wood and composite products and 150,000 tonnes of unbleached specialty Kraft paper. Specific products include SPF (Spruce/Pine/Fir) and Fir dimension lumber, plywood, veneer, OSB (Oriented Strand Board), Kraft paper, boards, specialty products and co-products. With this wide variety and large volume of production, Tolko must continually balance environmental, social and economic considerations.

ENVIRONMENTAL
Tolko works with government regulatory agencies, such as Environment and Fisheries Ministries, to ensure compliance with environmental standards that protect air, water and soil on and around plant sites. All manufacturing operations monitor air and water impacts to prevent pollution. Regular noise level testing is conducted, and improvements have recently been made to reduce noise levels.

Through capital upgrades, Tolko ensures that efficient equipment is used in its manufacturing facilities. Although still reliant on fossil fuels in its plants, the Company has invested in energy-efficient motors, and some facilities have developed methods of recycling energy to reduce their consumption of externally-sourced power. Chemical use and disposal are controlled, and non-chemical substitute products are sought wherever possible. Tolko follows a rigorous spill response and reporting process, and employees and contractors receive spill management training.

Continuing technology upgrades are improving Tolko's fibre recovery in processing logs. With the assistance of scanners, lasers and simulation models, the total value and range of products recovered from every log are optimized. Tolko produces co-products (chips, shavings, sawdust and hog fuel) in its manufacturing processes, and these can either be processed further, sold or used to provide an energy source to reduce external energy needs.

In 1999, Tolko completed an independent environmental audit of one of its solid wood manufacturing facilities. This audit generally affirmed that Tolko is in compliance with environmental regulations and requirements and has shown due diligence in managing any issues that have arisen. Tolko will initiate further environmental auditing and improve documentation of its environmental management systems and measures. The Company will continue to research alternatives for its four remaining wood-waste burners.

TOLKO MANITOBA, KRAFT PAPERS DIVISION
Tolko's unbleached Kraft paper mill in The Pas, Manitoba, has made impressive progress in environmental management.

The Kraft papers produced by Tolko - SPK and SPX - are environmentally responsible in their nature. Both are produced from unbleached Kraft pulp and are utilized primarily for multi-wall packaging. The technology used to manufacture these papers results in above-average strength, which allows customers to meet the environmental challenge of reduced packaging. Both SPX and SPK are recyclable, and Tolko has demonstrated that, under the right conditions, its papers can be composted.

Tolko's Kraft paper mill achieved ISO 9002 certification in 1992 and has taken steps toward certification to the ISO 14001 standard. The mill's manufacturing systems have specific strengths in the areas of waste management, reduced energy and water consumption and environmental effects monitoring.

To manage and reduce waste streams, Tolko has incorporated the concept of recycling in its pulp and paper manufacturing process. At many stages throughout the process, wood fibres are recovered from waste streams and fed back into the process, thereby maximizing fibre utilization. The chemicals and water used to break down the fibres are constantly recycled and reused. Waste liquid is treated through a controlled and monitored system before being disposed of in compliance with government regulations.

The natural energy contained within a tree is utilized to reduce the mill's overall energy consumption. Lignin is removed from the wood during the process of making Kraft pulp. This lignin is subsequently burned in a recovery boiler, providing the energy necessary to generate steam and electricity to make pulp from wood. Additional energy savings are achieved by burning the wood waste (referred to as hog fuel) in a power boiler to produce sufficient steam for the process of making Kraft paper from Kraft pulp. This innovation reduces the amount of energy required from outside sources.

As a preventative measure, Tolko conducts regular testing of its environmental impacts on soil, air and water. One example is the Environmental Effects Monitoring (EEM) Study to assess the impact of treated mill effluent on fish and fish habitat. Completed in 1995, this independently-conducted EEM study found that there was no evidence of significant adverse effects from Tolko's effluent on the fish or fish habitat of the Saskatchewan River. A follow-up study will be completed in the fall of 1999.

SOCIAL
In many of the communities in which it operates, Tolko is often one of the largest components of the local economy. The Company's operations interact with and involve many people from local communities.

Tolko invests substantially in its employee relations. In 1998, the Company committed over $1 million to training manufacturing employees in areas ranging from job skills and safety to interpersonal skills. Weekly communication meetings are held at all levels, with information shared between work groups and Divisions. A company-wide focus on safety and emergency preparedness succeeded in reducing the number of lost-time accidents in 1998 by 22%. Health and safety will continue to be a priority, and Tolko will expand its training to provide more comprehensive coverage of sustainability issues and their relation to each employee.

In addition to employment, Tolko contributes to communities in a variety of ways, including volunteerism, donations, sponsorships and special events. Through open houses, media relations, advertising and industry association initiatives, the Company informs and involves communities in its operations. Tolko will build upon this consultation process and seek ways to improve communication with interested parties.

ECONOMIC
Compared with other activities in Tolko's production chain, manufacturing operations create the greatest economic impact. This is measured by the Company's contribution through employment, capital investment, resource efficiency and community support.

Over 1750 people are directly employed in Tolko's manufacturing facilities, and this job creation positively affects indirect employment. Through its long-term planning process, product innovation, cost management, consistent fibre supply and strong marketing, the Company has minimized the number of production slowdowns and strives to provide secure and continuous work for its employees.

Tolko continues to invest substantially in capital upgrades to its manufacturing facilities, thereby contributing to the economic sustainability of communities in which it operates. By replacing equipment with newer technology and improving production efficiency, the Company maintains its competitive advantage, meets environmental standards and enhances its long-term viability. This commitment to capital growth has also contributed to improvements in Tolko's resource efficiency by ensuring that the maximum value is extracted from each log.

Tolko's significant financial contribution includes taxes, employee benefits and donations of funding and products to community fundraisers, events and programs.

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