Arauco to convert paper pulp mill in Valdivia, Chile, to dissolving pulp output, as well, submits permit applications to environmental authorities; mill currently producing only softwood kraft pulp but dissolving pulp would be based on eucalyptus

LOS ANGELES , July 14, 2014 () – Celulosa Arauco y Constitución SA (Arauco) plans to convert its paper pulp mill in Valdivia, Chile, to the production of dissolving pulp (DP), as of the first quarter of 2017. 

Ricardo Strauszer, Arauco’s marketing and sales director, said the company submitted permit applications to environmental authorities on July 9 and that he expects the permits to be approved by the end of this year.

The cost of the project would be an estimated US$180 million.

Strauszer said the DP output would be based on eucalyptus, sourced from the area. The DP capacity would be 500,000 tonnes/year.

The converted mill would be able to produce paper pulp, as well, depending on market conditions.

As Industry Intelligence reported July 6, the Valdivia mill has been producing only bleached radiata kraft pulp (BRKP) since March because of the low bleached eucalyptus kraft pulp (BEKP) prices.

It will produce only BRKP through the rest of 2014.

Previously the Valdivia mill was producing half BRKP and half BEKP on its two lines of 275,000 tonnes each, for a total of 500,000 tonnes/year. (Industry Intelligence editor's note: a typographical error that said "250,000 tonnes/year" has been corrected.)

(Although the mill’s permit restricts it to the production of no more than 550,000 tonnes/year, it has the capacity to produce more than that, so although softwood pulp yields are lower than those of hardwood pulp, the volume this year will still be 550,000 tonnes).

Strauszer said today that Arauco has not yet totally decided its 2015 production mix, but that it is “highly likely” the Valdivia mill will produce only softwood “the rest of this year and 2015.”

He said 2016 plans would be evaluated in 2015, but he said that “considering the continuous growth and market forecast” for hardwood, the company might continue producing BRKP until the production of DP starts.

Separately, as reported July 6, Arauco said that its first shipment from the new 1.3 million tonnes/year Montes del Plata BEKP mill in Punta Pereira, Uruguay, was sent to Asia in the week prior. Arauco and Stora Enso Oyj jointly own the mill but they separately market and sell their shares of the output.

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