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New ‘world class’ pulp mill to transform economy

Finnish forestry company UPM has announced it is investing $2.7bn (£2.22bn) into a new, ‘world class’ pulp mill in central Uruguay that will create up to 10,000 jobs in the area.

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UPM’s sustainable plantations in Tacuarembó, Uruguay

The construction of a 2.1 million tonne greenfield eucalyptus pulp mill near Paso de los Toros will increase UPM’s current pulp capacity by more than 50%, whilst also increasing Uruguay’s annual export value by 12%.

“During the past decade UPM has developed additional plantation areas in Uruguay and created a market driven pulp business with wide customer base in growing end uses,” says Jussi Pesonen, president and chief executive officer of UPM.

“At the same time, we have consistently improved our financial performance and achieved a truly industry leading balance sheet. We are now in an excellent position to take this transformative step and capture the opportunities of attractive, growing markets in a sustainable and highly competitive way.”

The firm already has a mill in Fray Bentos which is supplied by UPM’s owned and leased plantations in Uruguay, covering 382,000 acres, which will also supply the new mill in Paso de los Toros.

Plans for the new mill in Paso de los Toros

The new mill, scheduled to start up in the second half of 2022, will have the capacity to produce 2.1 billion tonnes of pulp whilst generating more than 110 megawatts surplus of renewable electricity, thus providing a stable source of revenue and strengthening Uruguay´s energy balance, UPM says.

Aside from investing in the mill, UPM will also invest a new residential area in Paso de los Toros and provide temporary housing for those working on the construction, as well as funding the improvement of municipal wastewater treatment plant and restoration of the municipal landfill in the area.

In its most intensive construction phase, more than 6,000 people will be working on site. When the mill is completed, around 10,000 jobs are estimated to be created in the Uruguayan economy where 4,000 would be directly employed by UPM and its subcontractors, the firm says.

UPM has also decided to build a deep-sea pulp terminal in the Port of Montevideo to create an efficient supply chain that allows for direct rail access from the mill to the seaport terminal.

For decades Uruguay has shown a consistent long-term vision in developing the prerequisites for industrial operations and building the foundation for foreign investment

The firm says this $280m (£230m) investment will allow for synergies in ocean logistics with UPM’s existing operations in Uruguay, as all pulp can be delivered in full vessels directly to main markets.

Pesonen adds: “For decades Uruguay has shown a consistent long-term vision in developing the prerequisites for industrial operations and building the foundation for foreign investment. I humbly recognise the determination with which the decision makers have made way for the country’s economic development.

“Today’s decision will bring many new opportunities for small and medium-sized companies and educated workforce in the central part of Uruguay benefitting thousands of Uruguayans for decades to come.”

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