Chilean Pulp Giant Arauco Sets Sights on Brazil with Massive $4.6 Billion Investment

Arauco, the Chilean pulp and wood panel manufacturer, has unveiled plans for a groundbreaking project in Brazil.

The company will construct its first bleached pulp mill in the country, marking a significant expansion into the Brazilian market.

Arauco’s board of directors approved the ambitious “Sucuriú Project” on Tuesday, September 24, 2024.

The new facility will rise in Mato Grosso do Sul, a state rapidly becoming a hub for Brazil’s pulp industry. Arauco will invest $4.6 billion in the project, making it the largest investment in the company’s history.

The plant aims to produce 3.5 million tons of bleached pulp annually, surpassing the capacity of Suzano’s recently opened facility in the same state.

Arauco has chosen a strategic location for its new mill. The plant will sit 50 kilometers from the city of Inocência, along the left bank of the Sucuriú River.

This area has been familiar territory for Arauco since 2009, when it began forest management and wood commercialization operations there.

The company expects the new facility to begin operations in the last quarter of 2027. However, Arauco has cautioned that this timeline may shift as the project develops.

The plant’s construction is already underway, with earthmoving work in progress at the site. Financing for this massive undertaking will come from multiple sources.

Arauco plans to issue debt, increase its capital by up to $1.2 billion, and tap into its own resources. The company has partnered with Finnish firm Valmet to supply equipment for the new mill.

Beyond pulp production, the Sucuriú Project will contribute significantly to Brazil’s energy grid. The plant will generate over 400 megawatts of electricity.

Chilean Pulp Giant Arauco Sets Sights on Brazil with Massive $4.6 Billion Investment

After using about half for its own operations, Arauco will feed the surplus into the national power system. This excess energy could power a city of more than 800,000 people.

Arauco’s decision to invest in Mato Grosso do Sul stems from several favorable factors. The state government has implemented well-structured industrial and forestry policies that support the sector.

Moreover, the local climate proves ideal for eucalyptus cultivation. Trees in the region reach optimal cutting age in just seven years, compared to twelve years in Chile.

The Sucuriú Project will join other major pulp operations in Mato Grosso do Sul. Suzano and Eldorado Brasil already operate plants in the state, collectively producing 4.75 million tons of pulp per year. Suzano is also constructing another facility set to open in July 2024.

Arauco’s investment underscores Brazil’s growing importance in the global pulp market. The project promises to create jobs, boost the local economy, and increase exports.

However, it may also raise environmental concerns regarding water usage, land use changes, and impacts on local communities.

As the Sucuriú Project moves forward, it will likely face scrutiny from various stakeholders. The development represents a significant milestone for both Arauco and Brazil’s pulp industry.

It highlights the country’s attractiveness for large-scale industrial investments and its expanding role in the global pulp market.

Chilean Pulp Giant Arauco Sets Sights on Brazil with Massive $4.6 Billion Investment