Brazil's cellulose sector to invest R105bn by 2028

Brazil's paper and cellulose sector will invest R105bn ($18.9bn) to build new plants and logistics infrastructure as well as expand existing ones by 2028, Brazilian forestry industry (IBA) president Paulo Hurting said on Tuesday.

Multiple companies will invest, with some already doing so. Suzano will invest R15.9bn to build a plant with capacity to produce 2.55mn metric tonnes (t)/yr of eucalyptus-based cellulose. It will also spend R6.3bn in other initiatives, such as building logistical infrastructure and planting.

Chile's Arauco will invest R25bn to build its first cellulose plant in Brazil in 2028. The unit will have an initial production of 2.5mn t/yr and will double that by 2032. The project also foresees generation of 400MW of clean energy, which will ensure its energy self-sufficiency.

Another Chilean company, CMPC, will also invest R25bn to build a new industrial plant and a port terminal in Rio Grande do Sul state. The 2.5mn t/yr plant will produce bleached eucalyptus-based cellulose, which can be used to make different kinds of paper, packaging and hygiene products. It is also used some food items, medicines and cosmetics.

Eldorado Brasil will invest an additional R25bn to add a second production line in its Mato Grosso do Sul state operations and a railway to transport production.

Bracell — which is controlled by Singapore-based Royal Golden Eagle — will invest R5bn in a paper tissue plant, which will be installed next to its cellulose plant in Lencois Paulista, in Sao Paulo state. The firm disclosed neither plants' capacity.

Finally, Klabin — Brazil's largest producer of packaging paper and corrugated cardboard — also announced a R1.6bn investment, but did not detail how it will use that money.

Hurting's announcement came during a sector meeting with Brazilian President Luiz Inacio Lula da Silva and vice-president and trade minister Geraldo Alckmin.

"These investments are being made in areas of low economic activity," Hurting said, adding that the paper and cellulose sector is planting cultivated forests that are replacing unproductive pastures.

Brazil's paper and cellulose sector had 10mn hectares of productive planted areas in 2023, according to the federal government. The area to grow cellulose increased by 19pc in the first half of 2024 from the same period last year, it said, without giving a more recent figure.

Brazil is the largest exporter and second largest producer of cellulose, according to Alckmin. The 47 companies linked to IBA produced 25mn t of cellulose, 11mn t of paper and 8.5mn m³ of wood panels last year, according to IBA figures. Additionally, Brazil exported a record 19.1mn t of cellulose, the group said.

By Lucas Parolin