SAO PAULO, January 28, 2008 (RISI) - Metso Paper expects to maintain a strong performance in Latin America and reach sales of $400 million this year, repeating the result of 2007, which was a record in for the region. Brazil, Chile and Uruguay are the most important countries to the company, especially due to their ongoing large pulp projects. “The Brazilian market represents 75-80% of our business in Latin America,” said Aristides Labigalini, Metso Paper South America Div. president.
Labigalini explained that Uruguay is replacing Argentina as an attractive region to develop pulp projects. “When Arauco acquired Alto Paraná’s operations, located in Argentina, the Chilean group decided to concentrate its investments in Chile. As a result, the country (Argentina) lost an important local player that could invest there,” he stated.
Currently, Metso is focused on one of the largest pulp projects in Uruguay: Ence’s 1 million tonnes/yr bleached eucalyptus kraft pulp mill. “The producer is analyzing different supplier proposals to start ordering the main equipment,” Labigalini said.
Metso plans to supply the evaporation system to Ence through its Brazilian unit as well as the EPC project (Engineering Procurement Construct), which means the entire pulp production system, including a chemical recovery plant. “There is also a possibility of an association with another company in order to complete the energy system supply,” he said.
Labigalini believes that Ence will choose its energy system supplier in the coming 2-3 months. “We are very confident in our ability to execute this project”.
Also in Uruguay, Portucel’s new pulp plant is other major project which could generate good opportunities to Metso. The Portuguese producer is verifying the possibility of expanding its bleached hardwood kraft (BHK) pulp and uncoated woodfree paper operations by building a mill in the Latin American country.
“In addition, Stora Enso has plans to invest in the region,” Labigalini commented.
In 2008, Metso Paper is focused on the Horizonte project conducted by Votorantim Celulose e Papel (VCP). “We have contracts of $300 million to deliver the recovery boiler as well as the power boiler,” he said. The Brazilian firm is building a 1.3 million tonnes/yr pulp mill in Três Lagoas, Mato Grosso do Sul state, southwest Brazil.
Last year, Metso Paper fully installed a new fiber line, power recovery boiler and evaporation boiler at Chilean Arauco’s Nueva Aldea plant. Its capacity is 1.6 million tonnes/yr of eucalyptus and pine.
Also in 2007, the company supplied Suzano Papel e Celulose with a single line for its 1.1 million tonnes/yr eucalyptus pulp line 2, in Mucuri, Bahia state, northeast Brazil. The company built and installed the continuous cooking unit, evaporation system, recausticizing system, lime kiln and the largest drying section in action in the world.
Metso also participated in Klabin’s expansion project at the Monte Alegre plant, in Telêmaco Borba, Paraná state, southern Brazil. The latter supply included a bleaching line, lime kiln and recovery boiler, among other systems.
A region that grows. In the past three years, Metso’s businesses in Latin America have more than doubled, which is explained by the production ability of these nations. “In 2004, Metso sales totaled $180 million in the region,” Labigalini stated.
He said the low cost of wood as well the high productivity of forest have made the region a good option for pulp investments. The plantation growth indices in Brazil and Chile are around 40-50 m3/ha/yr compared to 5-20 m3/ha/yr in USA. Additionally, Latin America still has a lot of lands which can be cultivated, while North American is mostly saturated.
“Brazilian pulp and paper producers know how to take advantage of its paper machines in order to produce as much as they can by means of low investment,” Labigalini added.
Besides that, Brazilian paper and board per capita consumption, which is 38 kg, has the potential to greatly increase in comparison with Europe (300 kg) or North America (130 kg). “Brazil, for example, has a large local market to supply,” Labigalini noted.
Until 2015, Latin America will probably produce an extra volume of 10 million tonnes of pulp, which means almost one new 1 million tonne pulp plant per year. “Each greenfield project like that may generate business of around $500 million to machine suppliers. So, we’ll have a lot of projects to become involved in,” Labigalini concluded.
