Brazil invests heavily in bleached hardwood market pulp.

Brazil accounts for 25% of global bleached hardwood market pulp capacity. Production is estimated at 5.1 million metric tons (2003), an increase of 1.5 million tons since 1999. Additional large scale bleached hardwood kraft pulp (BHKP) investments from 2004-2007 will expand that capacity and market share even further. Today, the leading Brazilian producer is Aracruz (2.4 million metric tons/yr), which accounts for 11% of global capacity and almost half of Brazilian capacity. Votorantim, Cenibra and Suzano are the other key producers.

Votorantim completed a major expansion at its Jacarei mill in late 2002. After closing an older 140,000 metric tons/yr line, Votorantim's net capacity increase was 530,000 metric tons/yr. The US$550 million investment project included a new ECF fiber line, Metso pulp dryer, CBC Mitsubishi recovery boiler, evaporation plant, causticizing system, lime kiln, Andritz woodyard, and a digester modernization by Kvaerner Pulping. The Jacarei mill now has a total capacity of 1 million metric tons/yr of bleached eucalyptus kraft pulp, of which 900,000 metric tons/yr is market pulp.

What is happening next? Stora Enso and Aracruz Celulose have decided to proceed with construction of a 900,000 metric tons/yr joint venture eucalyptus pulp mill (Veracel Celulose S.A.). The mill will be the largest single-line bleached eucalyptus pulp mill in the world. Both companies have a 50% stake in the project and will be entitled to half of the mill's output. The pulp mill project is budgeted at US$ 870 million. An additional US$ 300 million has already been spent on forestry-related activities and infrastructure, and an additional US$ 70 million will be spent on infrastructure. The project is being financed by 45% equity and 55% loans.

Veracel Celulose S.A. has ordered the main equipment for the greenfield pulp mill project. Andritz will supply a complete fiber line--from digester to finished market pulp bales--and a white liquor plant. The company contracted Kvaerner Power to deliver a EUR 100 million boiler island. Metso Paper will supply a complete woodyard system. One of the largest pulp mills in the world, the system will include two chipping lines, a chip handling system, and a bark and fuel handling system. The value of the order is about EUR 25 million, including deliveries from sub-suppliers. Veracel Celulose S.A. is expected to start up in mid-2005.

Cia. Suzano de Papel e Celulose's board of directors has given the go-ahead for detailed engineering and economic feasibility studies for the second pulp line at Bahia Sul Celulose. The planned 1 million metric tons/yr line would start up in 2007. Final approval is expected in the second half of 2004. The company is currently carrying out an upgrade at its existing line in the mill, expanding its eucalyptus pulp capacity to 645,000 metric tons/yr.

Brazilian investments are targeted to fulfill the growing demand for high quality eucalyptus pulp in offshore markets. BHKP exports grew from 3 million metric tons in 1999 to 4.4 million metric tons in 2003 and are expected to continue growing. Domestic market BHKP consumption is gradually increasing but the volume is relatively modest, at 650,000 metric tons in 2003.

Aracruz Celulose        11%
APRIL                    8%
Grupo Empresarial ENCE   5%
Votorantim Group         4%
Cenibra                  4%
Stora Enso               4%
International Paper      3%
Domtar                   3%
Parsons & Whittemore     3%
Portucel Group           3%
Others                  52%

Total 21.3 million tons

Note: Table made from pie chart

Note: This article is part of a series by Jaakko Poyry Management Consulting, Tarrytown, New York, USA, a provider of marketing and consulting services. Contact Soile Kilpi by email at [e-mail], or by phone at [phone].