Paracel pulp mill in Concepcion could put Paraguay on world pulp and paper industry map if it goes online as planned in next few years; JV involving Sweden’s Girindus Investments would produce 1.5 million tonnes/year of bleached eucalyptus kraft pulp

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LOS ANGELES , May 18, 2022 () –

A pulp mill in the works in Paraguay could potentially transform the local economy and demonstrate the country is ripe for investment.

The Paracel SA pulp mill, which is expected to produce 1.5 million tons of bleached eucalyptus kraft pulp (BEKP) per year, will also put Paraguay on the radar of the global pulp and paper industry, as noted in a Fisher International blog published by Industry Intelligence on May 12.

Since word first emerged that Sweden's Girindus Investments and Paraguayan investors were considering establishing a pulp mill, the Paracel project appears to have been progressing without much fanfare. On its own website, Paracel says the mill is a joint venture between Girindus and Zapag group, a leader in the field of fuel import and distribution in Paraguay. 

Fisher International’s blog notes Paracel’s new mill “is about to come to completion, leaving many to wonder if this could give Paraguay a chance to evolve into a frontrunner in Latin America.”

An investment summary on the project by IDB Invest notes the mill’s pre-construction phase started in January 2021 and that mill operation was estimated to begin by the end of 2023. 

Paracel management has not yet responded to Industry Intelligence enquiries for an update on its timeline, but a source in Latin America said this week that the start-up date now being considered is the end of 2024. Talks with engineering suppliers are said to be “advanced and the major ones defined.” 

According to a May 16, 2021, article in Valor International, Pöyry completed the basic engineering services for the new mill and the river port in December 2020, and that the Zapag family in Paraguay, which owns fuel distribution company Copetrol, will control the project.

Valor also reported that US$3.5B will be invested, comprising US$1B in equity and US$2.5B of debt. Other reports have put the capital investment at US$2.0B.

Industry Intelligence’s regional contact said they had no information on the source and availability of capital for the pulp mill project. “However, based on current pulp price, EBITDA from the players and the willingness of the government to industrialize the country, it looks possible. It can cost some more equity, but I strongly believe it is doable.”

In a May 9, 2022 article on business platform 5 Days (5dias.com.py), Federico Sosa, director of investment attraction with Investment and Export Network (Rediex), Paraguay's export and investment promotion agency, said the Paracel mill could generate 24 thousand jobs in its different phases of operation. Sosa also stressed that Paraguay still has a lot of room to continue expanding. 

That view appears to be shared by Nils Grafström, a Swedish executive who led the implementation of Veracel, a Brazilian pulp production joint venture between Suzano and Stora Enso, and Uruguay’s Montes del Plata, a joint venture between Arauco and Stora Enso.

According to Valor’s article, Grafström was the link between Paraguayan businessman Blas Zapag and Girindus. And in an interview with Valor, Grafström said Paraguay was one of the few countries with the right conditions to site a greenfield pulp mill: a good climate, water resources, efficient internal logistics and a route to external markets via Uruguay.

 

Industry Intelligence editor’s note: In addition to the Fisher International blog posted on May 12 by Industry Intelligence and contacts in Latin America, other primary sources of this article are a May 9 article by 5 Days [click here], a May 15, 2021, article in Valor International [click here], a March 4 article on Fancyco [click here], an investment summary on the project by IDB Invest [click here] and Paracel's website.

 

 

 

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