January 14, 2013

World's Largest Paper Mill Opens in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

While most of the news about Brazilian agriculture involves increase crop production (Brazil will assume the position as the number one soybean producing country from the U.S. in 2012/13), the amount of pulp and paper production in Brazil continues to increase as well.

A company called Eldorado Brasil, which is located in eastern Mato Grosso do Sul, started to export its new paper products to the United States last week. The company exported 2,500 tons of paper from the Port of Santos destined for Mobile, Alabama. The company expects to export 90% of their paper production to customers in Asia, Europe, and the U.S. By the end of 2013, the company expects to export 1.4 million tons of paper products via the Port of Santos.

Eldorado Brasil's new paper mill in Mato Grosso do Sul was inaugurated on December 12, 2012 after the company invested R$ 4.5 billion in plant construction, R$ 800 million in logistics, and R$ 900 million in planting eucalyptus trees for its paper production. When fully operational, the mill and related industries are expected to employ 2,500 workers.

The paper mill has the world's largest single line operation and they already have plans to triple production over the next eight years by investing another R$ 10 to R$ 13 billion. Their plan is to increase their capacity to 5 million tons per year by adding two additional lines of production. The mill is already the world's largest and after the expansion is complete, it will certainly be a behemoth in the industry.

The company chose to locate their operations near the city of Tres Lagoas in Mato Grosso do Sul because of the access to rail lines and barging operations. Half of their production will be transported by truck to a nearby rail terminal operated by American Latina Logistica where it will then be railed to the Port of Santos. The other half of their production will be barged to the interior of the state of Sao Paulo where it will be transferred to trains destined for the same port.

Eucalyptus trees are the preferred tree species used for reforestation in Brazil due to its rapid growth pattern and its adaptability to Brazil's climate. Eucalyptus plantations are a very common sight all throughout central and southern Brazil. New plantations generally replace pastureland and since there is so much pastureland in Brazil, it is possible to increase row crop production and pulp production at the same time.