UPM and the Government of Uruguay have signed an investment agreement, which outlines the local prerequisites for a potential pulp mill investment.
The site of the mill would be close to the city of Paso de los Toros, in the department of Durazno in central Uruguay. The Government will develop the rail and road network by tendering the construction and long-term maintenance of the network. The total investment by the Government has been reported to be approximately USD 1 billion. This investment is necessary to enable the establishment of efficient logistic infrastructure in the Uruguayan inland. The Government will also promote concession for a terminal specializing in pulp in the Montevideo port with rail access in order to secure reliable and competitive outlet to export markets. Once the permitting requirements are fulfilled, the Government will grant the mill a free trade zone status, which is necessary to ensure competitiveness on international markets.
UPM will carry out an engineering study and permitting process for a pulp mill with an annual capacity of about 2 million tonnes of eucalyptus market pulp. The preliminary estimate for a pulp mill investment on site is approximately EUR 2 billion.
"Robust infrastructure is elemental for industrial development. The Government of Uruguay is stating their serious intent with this agreement and timeline. The agreement sets the foundation for UPM's planning of a state-of-the-art pulp mill investment," said Jaakko Sarantola, UPM's Senior Vice President, Uruguay Development.
"A competitive world-class pulp mill must have a solid wood supply, well-working logistic infrastructure and efficient mill operations. The environmental performance of the mill would be secured with competent and engaged personnel and with best available technology. When in operation, the mill, forestry and related activities would employ 8,000 additional people in its full value chain. The signing of this agreement confirms that we are now entering the second preparation phase of this prospect, which is expected to take some 1.5 to 2 years," he went on.