Suzano announced that it increased by R$ 4.6 the estimated investment in the Cerrado Project, its new pulp mill in the municipality of Ribas do Rio Pardo, in the state of Mato Grosso do Sul, Brazil. The contribution of industrial capital previously disclosed by the company, of R$ 14.7 billion, will now reach R$ 19.3 billion.
According to the company, the additional amount includes investments in forestry, logistics and chemical plant, among others, related to the full execution of the project, with disbursement distributed between 2021 and 2024. Most of the amount – 75% – must be applied by 2023.
According to the operating director for pulp at Suzano, Aires Galhardo, the project will correspond to the largest single production line for eucalyptus pulp in the world.
The new plant will produce more than 2 million tons of eucalyptus pulp in the first year of operation. With startup forecast for the second half of 2024, the factory will have a production capacity of 2.55 million tons per year and will have the lowest cash production cost among the company’s industrial assets.
According to the director of forestry, logistics and supplies at Suzano, Carlos Aníbal, the pulp produced at the new plant will go by road to a terminal in the municipality of Inocência (state of Mato Grosso do Sul, Brazil) and, from there, it will take a railroad to the port of Santos. The company already has a memorandum of understanding with a transport company and has ongoing negotiations with shipping companies.
According to the President of Suzano, Walter Schalka, the company’s plan is to sell most of the production of the Cerrado Project via contract and not on the spot market. “The project is a milestone in terms of competitiveness. Even in a stressful scenario, it will bring return to shareholders and contribute to our sustainability goals”, declared the executive.
The manufacturer projects high single-digit short-fiber pulp global demand growth in the coming years, ensuring the absorption of additional supply with the entry into operation of the Cerrado Project. The replacement of long-fiber pulp by short-fiber and the replacement of materials of fossil origin for those of renewable origin support this perspective.
Even in the face of current logistical bottlenecks, the pulp company believes it will be able to meet the project’s schedule and put it into operation in the second half of 2024, concluded Schalka.