UPM and the Government of Uruguay sign an investment agreement to establish a competitive operating platform for a possible new pulp mill in Uruguay
(Thomson Reuters ONE) -
(UPM, Helsinki/Montevideo 8 November 2017 at 00:15 EET) - UPM and the Government
of Uruguay have signed an investment agreement, which outlines the local
prerequisites for a potential pulp mill investment. The agreement details the
roles, commitments and time-line for both parties as well as the relevant items
to be agreed prior to the final investment decision.
The agreement defines the requirements for the operating environment of a world-
class pulp mill project. The site of the mill would be close to the city of Paso
de los Toros, in the department of Durazno in central Uruguay.
A long-term industrial operation requires stable and predictable operational
environment. This will be supported by several measures in the areas of regional
development, environment, forestry and land planning as well as labour and
energy conditions.
Infrastructure development as key enabler
The Government will develop the rail and road network by tendering the
construction and long-term maintenance of the network. The total investment by
the Government has been reported to be approximately USD 1 billion. This
investment is necessary to enable the establishment of efficient logistic
infrastructure in the Uruguayan inland. The Government will also promote
concession for a terminal specializing in pulp in the Montevideo port with rail
access in order to secure reliable and competitive outlet to export markets.
Once the permitting requirements are fulfilled, the Government will grant the
mill a free trade zone status, which is necessary to ensure competitiveness on
international markets.
UPM will carry out an engineering study and permitting process for a pulp mill
with an annual capacity of about 2 million tonnes of eucalyptus market pulp. The
preliminary estimate for a pulp mill investment on site is approximately EUR 2
billion.
In addition, a successful project requires off-site investments in plantation
land and forestry, road network and nursery capacity, harvesting and transport
equipment, rolling stock for the rail, export facilities and human development.
"Robust infrastructure is elemental for industrial development. The Government
of Uruguay is stating their serious intent with this agreement and timeline. The
agreement sets the foundation for UPM's planning of a state-of-the-art pulp mill
investment," says Jaakko Sarantola, UPM's Senior Vice President, Uruguay
Development.
Global demand for sustainable pulp continues its strong growth
"A competitive world-class pulp mill must have a solid wood supply, well-working
logistic infrastructure and efficient mill operations. The environmental
performance of the mill would be secured with competent and engaged personnel
and with best available technology. When in operation, the mill, forestry and
related activities would employ 8,000 additional people in its full value chain.
The operations would also have a significant positive impact on the central and
north-eastern regions."
"The signing of this agreement confirms that we are now entering the second
preparation phase of this prospect, which is expected to take some 1.5 to 2
years. Achieving significant progress in the implementation of the
infrastructure initiatives is critically important for the final investment
decision," says Sarantola.
"The world megatrends support a strong growth of the market pulp demand. UPM's
customers value the stable quality of the Uruguayan eucalyptus pulp and hence
Uruguay could be a competitive alternative for addressing UPM's pulp market
opportunities in the 2020s. The possible new capacity in Uruguay would support
UPM's multifibre strategy; to serve customers in growing hygiene, packaging and
speciality end-use segments," concludes Sarantola.
For further information please contact:
Uruguay: Jaakko Sarantola, Senior Vice President, UPM, Uruguay Development.
Contacts through Burson Marsteller (+598 0) 2 623 28 70
International: Heikki Vappula, Executive Vice President, UPM Biorefining.
Contacts through UPM, Media Relations, tel. +358 40 588 3284, media(at)upm.com
Notes to the editor
In July 2016, UPM commenced discussions with the Government of Uruguay regarding
the prerequisites for long-term industrial development in Uruguay. The aim of
these discussions during the first preparation phase was to come to a mutual
understanding on an investment agreement that defines the local prerequisites
for industrial investment as well as initiatives for infrastructure development.
The investment agreement was signed 7 November 2017.
The subsequent second preparation phase consists of an engineering study,
tendering and permitting process as well as achieving significant progress in
the implementation of the agreed infrastructure initiatives. Any relevant items
are to be agreed prior to the possible final investment decision. This second
phase is expected to last 1.5 to 2 years.
If these two preparation phases are concluded successfully, UPM will initiate
the company's regular process of analysing and preparing an investment decision.
UPM, Media Relations
Mon-Fri 9.00-16.00 EET
tel. +358 40 588 3284
media(at)upm.com
UPM in Uruguay
UPM's operations in Uruguay include the Fray Bentos pulp mill, the UPM Forestal
Oriental forestry and wood sourcing company with its two nurseries, as well as
the UPM Foundation.
UPM Forestal Oriental manages about 250,000 hectares of plantable land including
own and Fomento partner producers' land. All of UPM's forest plantations are
certified.
The Fray Bentos pulp mill started operations in 2007 and remains one of the
world's most modern and efficient pulp mills. Its annual production capacity is
1.3 million tonnes of eucalyptus pulp. Besides pulp, the Fray Bentos mill is a
significant biomass-based energy producer, accounting 8% of Uruguay's total
energy production. The mill's wood raw material comes from sustainably managed
local plantations.
Founded in 2006, the UPM Foundation works in coordination with local
stakeholders to promote the development of rural communities through education,
training and entrepreneurship, fostering a culture of safety and healthy living.
UPM employs directly and indirectly altogether 7,000 people in Uruguay and its
contribution to Uruguay's GDP is 1.4%. www.upm.uy
UPM
Through the renewing of the bio and forest industries, UPM is building a
sustainable future across six business areas: UPM Biorefining, UPM Energy, UPM
Raflatac, UPM Specialty Papers, UPM Paper ENA and UPM Plywood. Our products are
made of renewable raw materials and are recyclable. We serve our customers
worldwide. The group employs around 19,300 people and its annual sales are
approximately EUR 10 billion. UPM shares are listed on NASDAQ OMX Helsinki. UPM
- The Biofore Company - www.upm.com
Follow UPM on Twitter | LinkedIn | Facebook | YouTube | Instagram |
upmbiofore.com
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: UPM via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 07.11.2017 - 23:15 Uhr
Sprache: Deutsch
News-ID 567110
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