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IDB supports largest private sector investment in Uruguayan history

New plant will produce pulp and generate power meeting high environmental and social standards, adding value to Uruguay’s renewable forest assets

The Inter-American Development Bank (IDB) approved a $200 million loan for Celulosa y Energía Punta Pereira S.A. and Zona Franca Punta Pereira S.A., two companies belonging to the Montes del Plata Group in Uruguay.

The loan will help finance the construction and operation of a mill to produce pulp from eucalyptus wood. In addition, the IDB expects to raise $250 million more in financing from commercial banks.

Montes del Plata has a strategic importance for the development and positioning of Uruguay’s forest products sector. At approximately $2 billion, this is the biggest industrial private sector-led investment in the country’s history.

The plant will produce 1.3 million tons of pulp per year, and it will have a 160-megawatt biomass-based power generation unit. Additional infrastructure includes a river port terminal and barge terminals with yards for wood storage, as well as a wood chip plant. These facilities are being built in a free trade zone in Punta Pereira, 190 kilometers west of Montevideo. The eucalyptus plantations that will feed the mill are located in various areas of Uruguay.

“This undertaking will add value to renewable forest assets by producing pulp and power in accordance with high environmental and social standards. It will have considerable impact on Uruguay’s gross domestic product and balance of payments, create a significant number of jobs and promote sustainable practices,” said IDB project team leader Martin Duhart.

The mill’s power unit – the largest biomass generator in Uruguay – will cover the plant’s electricity needs and supply additional energy to the Uruguayan power grid through an agreement with the state-owned utility Usinas y Transmisiones Eléctricas (UTE).

Once on stream, Montes del Plata is expected to contribute about $750 million per year to the country’s GDP, with exports reaching $700 million. The project should create some 5,800 direct and indirect jobs during the construction phase and 5,350 direct and indirect jobs during operations.

The project is consistent with the country strategy the IDB has agreed with Uruguay for 2010–2015 as it supports the sustainable use of natural resources associated with agro-industry, forestry, and the adoption of technology in agro-industry, designed primarily for export purposes.

The $200 million loan is for 12 years, with a 3-year grace period and payments spread over 9 years).

Montes del Plata, a joint-venture of Celulosa Arauco y Constitución of Chile and Stora Enso of Finland, comprises Celulosa y Energía Punta Pereira, S.A.; Zona Franca Punta Pereira, S.A.; Eufores S.A.; Forestal Cono Sur S.A.; Stora Enso Uruguay S.A.; El Esparragal Asociación Agraria de Responsabilidad Limitada; and Terminal Logística e Industrial M’Bopicuá S.A.

Celulosa y Energía Punta Pereira S.A. and Zona Franca Punta Pereira S.A. will develop the pulp mill plant and the infrastructure related to the free trade zone, respectively. The other companies in the group will carry out forestry and logistics operations.

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