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FOUNDER, CHAIRMAN AND CEO OF FORTRESS Paper, a specialty paper company based in Vancouver, Canada, Chadwick Wasilenkoff considers himself a contrarian investor. Before launching Fortress in August 2006, Wasilenkoff bought a series of out-of-favor assets and sold them at a tidy profit; they included South American gold mines, properties in the natural-gas-rich Barnett Shale in Texas, a copper deposit in British Columbia and a uranium company with assets in Saskatchewan and Nunavut, Canada.

Wasilenkoff then led a group of investors that bought a paper mill in Landquart, Switzerland, that produces security paper and a Dresden, Germany, mill that makes nonwoven wallpaper. With these assets in hand, Wasilenkoff took Fortress public in July 2007 through a C$46 million ($46.3 million) equity offering, even though forestry had had a devastating couple of decades characterized by what he calls “huge erosion of capital and a near-total loss of investor confidence.” The C$105 million loan Fortress needed to finance the acquisition and conversion of a key production mill in Thurso, Quebec, at the end of 2011 came from the provincial government because no bank would touch the request. The company has gone back to the government to finance development of a second mill in Quebec.

That environment hardly sounds promising for Fortress. Wasilenkoff, 40, is the first to admit that newsprint is going away, the paper telephone directory is doomed, and the future of books, in his view, at least, is online. So what’s the upside in paper? Nonwoven wallpaper and security paper — chiefly, banknotes — along with Fortress’s other major product, dissolving pulp (the feed product for rayon) defy characterization as commodities, although they were tarred as such along with less profitable paper when the CEO created Fortress.

Nonetheless, two of the company’s product lines face serious challenges. To be sure, rayon is fast replacing cotton in clothing, especially among Chinese manufacturers. But because rayon is tied to cotton’s price, which took off a few years ago, leading to a big increase in pulp supply, Fortress now finds itself with intense competition for dissolving-pulp sales, which account for 36 percent of its total 2011 revenue of C$309 million. Now the company is offering clothing makers volume discounts in hopes that it can drive higher-cost competitors out of business. Meanwhile, production has suffered in recent months because the Thurso plant was shut down for maintenance and then struck by lightning after starting back up.