MercoPress. South Atlantic News Agency

Chilean company buys Brazilian plant becomes world’s second producer of pulp

South America rapidly biting into Scandinavia and North America pulp markets

CMPC SA owned by Chile’s billionaire Matte family, agreed to buy a pulp unit in southern Brazil from Fibria for 1.43 billion US dollars to become the world’s second-biggest producer of cellulose.

CMPC, based in Santiago, will pay 1 billion US dollars on December 15, when the deal is due to be concluded, and a second instalment of 430 million USD within 45 days after the first payment, Fibria said in a filing to Brazil’s stock regulator Thursday.

Fibria was formed after Votorantim Celulose e Papel SA bought Aracruz Celulose SA this year.

CMPC will surpass Chilean rival Celulosa Arauco y Constitucion SA in pulp production with the acquisition, Itau Unibanco Holding SA analyst Marcos Assumpcao said last month.

Fibria, the world’s biggest pulp maker, said the sale will help it reorganize its debt and resume growth through “high-return” projects as it seeks to regain investment-grade ratings.

The Guaiba unit, in Brazil’s Rio Grande do Sul state, has the capacity to produce 450,000 metric tons of pulp and 60,000 tons of paper per year. The purchase includes about 212,000 hectares of land and licenses to expand the pulp plant to 1.75 million tons of output a year, Fibria said.

“This acquisition is a decisive step in the internationalization of CMPC and in the consolidation in the cellulose business”, said Arturo Mackenna CMPC general manager.

South American pulp makers have won markets from rivals in Scandinavian countries and North America in past years because of lower production costs.

“The purchase is telling you that Latin America will be the recipient of tremendous growth in the years ahead” said César Pérez, a managing director at Santiago-based brokerage Celfin Capital SA. “It will receive a lot of influx from investors and demand, given the competitive advantage that forest land in Latin America gives.”