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Suzano Suspends Piauí Pulp Mill Project

Salvador, Brazil, South America 14 March 2013 -- Suzano Papel e Celulose(Suzano) has put on ice its renewable energy and the Piauí pulp mill expansion projects. On 12 March, the Brazilian pulp and paper company informed that it had suspended the two projects for an indefinite period of time in order to focus on productivity improvement and debt reduction measures. The resumption of these projects was dependent on macroeconomic and market conditions, and on the company's level of debt, according to Suzano.

Suzano planned to build a 1.5 million tpy eucalyptus pulp mill in Brazil's north-eastern state of Piauí at an investment cost of $2.3bn (€1.7bn) and has already invested in the forestry base to secure raw materials supply for the new pulp unit. The BEK pulp mill was expected to start production in mid 2016.

With the renewable energy project run by Suzano Energia Renovável, the pulp and paper company considered to enter into the biomass energy market. Suzano intended to invest about $800m (€615m) in three wood pellet production units with an installed capacity of 1.0 million tpy each. The production start up was expected for 2014.

"Suzano Renewable Energy and Piauí Project will be suspended until the company’s leverage falls below 2.5x Net Debt/EBITDA, and macroeconomic and market conditions improve," Suzano said in the Q4 2012 earnings release. For the year ended 31 December 2012, net debt was 5.0 times EBITDA, up from 4.2 times in the previous year.

The pulp and paper company will focus now on measures to improve productivity and reduce costs of its existing operations, along with the start of operations of its new Maranhão market pulp unit. Key technology for the 1.5 million BEK tpy greenfield pulp mill is supplied by Metso. The engineering, procurement and construction management contract was awarded to Poyry.


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