Click here for Pulp & Paper Radio International
The Paperitalo Library
Free Downloads
My Profile
Votorantim Celulose e Papel Releases Update of Pulp Mill Project
São Paulo, Brazil, 01 June 2007 -- Votorantim Celulose e Papel (VCP) releases additional information about its bleached eucalyptus pulp mill under construction in Três Lagoas, in the state of Mato Grosso do Sul, named "Projeto Horizonte."

The mill, whose construction had its start-up sponsored by International Paper (IP), former owner of the project, had its scope redefined and renegotiated with constructors and machinery and equipment suppliers, resulting in significant changes in the project, as per detailed below.

The industrial unit will have a nominal capacity of 1,300,000 tons per year of bleached eucalyptus pulp with a total estimated amount for the mill of approximately USD 1.5 billion.

The capacity and value of the project were redefined, compared to the previous estimates, driven mostly by three factors: (i) changes in market conditions such as commodities international prices increase, specially metals; (ii) currency appreciation over the U.S. dollar; and (iii) strong demand for equipments in every sector of the economy.

Facing this, VCP decided to search for capacity increase to make its plant more competitive, optimizing the investment per metric ton. As mentioned, the investment was part of the asset swap with IP, in which VCP, in exchange, received a plant under construction totally funded, as a turnkey model in accordance with construction agreement signed between IP and Poyry Empreendimentos Industriais. The company expects the project learning curve to take place in accordance with the following table:

Year 2007 2008 2009 2010 2011 Total
Learning curve - - 635 1240 1300 1300
Production (1000 tons)

The project's total area target is to reach approximately 225,000 hectares, including own and leased lands, out of which 146,000 hectares planted with eucalyptus. This forestry base will be enough to supply the first production line of the "Projeto Horizonte." We estimate the average distance between the forestry and the industrial unit to be of 57 km.

Based on the estimated average distance and considering current raw material, energy, labor, and other costs, including inbound and outbound logistical costs negotiated for the project, we expect total production cash cost added to transportation to Santos seaport (including shipment) to reach approximately USD 190-210 per ton, 10%-20% lower compared to Jacareí's production cost plus pulp transportation to Santos seaport currently in place.

VCP will sell approximately 160,000 tons per year of pulp to International Paper at competitive prices. This volume will be used for the production of paper, which will be produced in a paper machine to be installed close to the pulp mill. The remaining production volumes will be primarily exported following the current geographic distribution.

Considering the capacity revision, improvements, and changes in the project obtained from the asset swap with IP, VCP estimates the start-up production of the pulp mill to take place in May 2009.

Based on those estimates and considering current fuel, energy, raw materials, labor, maintenance, and other costs, VCP expects to reach its minimum required return of WACC + 3%.


Related Articles:

Powered by Bondware
News Publishing Software

The browser you are using is outdated!

You may not be getting all you can out of your browsing experience
and may be open to security risks!

Consider upgrading to the latest version of your browser or choose on below: