Future mill will have a capacity of 2.5 million tonnes of eucalyptus pulp per year and is expected to start operating in 2028
06/23/2022
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With an average distance of 150 kilometers between the plant and the forests, the unit will be the most competitive of the Chilean group — Foto: Divulgação/Zig Koch
Arauco signed an agreement with the government of Mato Grosso do Sul on Wednesday to build a mega pulp mill in the state. With investments of $3 billion, the new unit will be located in Inocência, 337 kilometers far from Campo Grande.
The future mill, which still depends on certain conditions to get off the drawing board, will have a capacity of 2.5 million tonnes of eucalyptus pulp per year and is expected to start operating in the first quarter of 2028. A second phase of the project is planned for the future.
After the signing of the agreement, in a ceremony attended by Arauco CEO Matias Domeyko Cassel and Governor Reinaldo Azambuja Silva, the company will seek an environmental permit, which is a condition for the investment to be executed.
“There are legal proceedings to fulfill. This is the beginning of a journey,” said Carlos Altimiras, Arauco CEO in Brazil. The project is expected to be submitted for approval by the board of directors in the second half of 2024, with construction starting in January 2025.
In addition to environmental permits and confirmation of the investment by the board, the execution of the project relies on the availability of wood for pulp production.
According to Mr. Altimiras, the project requires nearly 380,000 hectares of gross area to be developed. Arauco already has 60,000 hectares, 40,000 of which are planted with eucalyptus, and has several negotiation fronts open to ensure enough wood to start operations in 2028. The company expects to reach 2024 with 70% to 80% of the total area needed.
With an average distance of 150 kilometers between the plant and the forests, the unit will be the most competitive of the Chilean group. Installed on the left bank of the Sucuriú River, it will have quick access to pulp distribution channels, including the MS 377 highway, the Paraná River (100 kilometers away) and the railroad network (47 kilometers away).
The logistical structure was key in choosing the location, said Mario José de Souza Neto, Arauco’s head of development and new business in Brazil. “We are evaluating the alternatives to see which are the most viable,” he said.
The future mill will be self-sufficient in energy, using a renewable source, with the capacity to generate 400 megawatts from the reuse of biomass. The surplus energy, or 200 MW, will be sold in the free market.
The implementation of the Sucuriú project will mark the arrival of the Chilean group to the pulp industry in Brazil – Arauco was already present in the country with forestry operations and four wood panel plants.
In addition, it will increase by about 50% its production capacity of the raw material, from 5.2 million tonnes per year, including the expansion underway in Chile, the Mapa project, to 7.7 million tonnes per year.
With Mapa, which is expected to go online in the second half of the year, Arauco will become the second-largest market pulp producer in the world, only behind Suzano. The group has fiber mills in Chile, Argentina and Uruguay, where it is a partner of Stora Enso in the Montes del Plata joint venture.
During construction, the Sucuriú project will employ more than 12,000 workers, benefiting around 20,000 families in the region, according to the Chilean group. In operation, the unit will employ 2,350 people, 550 of which in the plant, between direct and indirect jobs, and 1,800 in forestry.
The governor of Mato Grosso do Sul highlighted that the project will be located in a region that is part of the state’s Forest East Coast, but has not yet had a pulp mill.
“This plant shows the confidence of investors in Mato Grosso do Sul, in our tax incentive policy, in the legal security of those who invest, and in the logistical structure we are creating for those who need to distribute their output,” he said.
By Stella Fontes — São Paulo
Source: Valor International