Brazilian pulp mill equipped for global leadership

NIB is stepping up its presence in Brazil, one the world’s key growth markets. The Bank has supported the ambitions of the country’s major pulp and paper producer Suzano Papel e Celulose to double its pulp output capacity in order to become one of the world’s top-10 producers in its sector. By creating several thousand new jobs, the project will also benefit the economic and social development of the South Bahia region in Brazil.

Suzano Papel e Celulose’s new eucalyptus pulp mill in Mucuri, southern Brazil, was launched in late August 2007, 35 days ahead of schedule. The construction works were completed within 22 months. This is already Suzano’s second pulp production line in Mucuri. The capacity of the new line is 1 million tonnes of pulp a year, which will be entirely dedicated to export markets.

The additional capacity will bring the company’s total annual output to 2.8 million tonnes of pulp and paper. This will make Suzano the No. 2 pulp manufacturer in the country and one of the world’s top-10 pulp producers on the market. Equipment for the new factory is being supplied by Finnish, Swedish and German producers.

“Equipped with very competitive state-of-the-art production machinery and tools, having comparably low production costs and a fully integrated wood supply, Suzano is now armed to vie for global leadership in the industry,” says Tarja Kylänpää, Head of Project & Structured Finance at NIB.

The total project costs stand at USD 1.3 billion. NIB has participated in the financing of the project along with a number of other international banks and the Finnish export credit agency Finnvera. NIB’s facility with Suzano Papel e Celulose amounts to USD 50 million.

The expansion project is expected to have positive environmental and social impacts. In particular, the South Bahia region in Brazil will greatly benefit from the project. The construction works will directly and indirectly create more than 8,000 new jobs, while the new production line in Mucuri and the forestry operations are expected to employ nearly 5,000 people.

“We were impressed by Suzano’s social approach, including the practice of regular meetings with members of the local community. It is our strong belief that the Mucuri expansion project will greatly contribute to the development of local community services,” says Ms Kylänpää.

The expansion at Mucuri would also involve partnership with small rural owners, who may become timber suppliers for the factory. Suzano will also set up a training centre for local labour. The planned expansion of pulp production will contribute to improvements in hospitals, schools and highway infrastructure in the region.

NIB has been active in Brazil for over five years. The Bank has participated in financing projects in telecommunications, energy and infrastructure development.

“All of these projects, including the Mucuri expansion, have been important both for Brazil and for the economies of NIB’s eight member countries. Promoting economic growth and competitiveness is an essential part of our mandate as a multilateral financial institution,” says Ms Kylänpää.