IDB supports construction of pulp mill, 255 MW biomass plant

By Inter-American Development Bank | March 09, 2016

The Inter-American Development Bank has joined efforts with Klabin S.A. to finance the construction of a new state-of-the-art greenfield pulp production mill in the municipality of Ortigueira, one of the poorest cities of the state of Parana, Brazil. Through an A/B Loan of $300 million, the IDB Group has provided Klabin with long-term financing to develop Project Puma—the largest private investment in the history of Parana.

Puma will have a significant development impact in neighboring communities and make Klabin one of the largest employers in the region. The project will create approximately 8,500 jobs during the construction phase and 1,400 once it becomes operational.

The new mill will be self-sufficient in electricity, thanks to a 255 MW biomass facility that will sell 56 percent of its energy surplus to the national grid. It will have one of the lowest pulp production costs in the world and an installed production capacity of 1.42 million tons of pulp per year. Puma will also strengthen local infrastructure through investments in railways, road networks and port facilities.

As a result of the collaboration between the IDB Group’s public and private sector arms, the municipality of Ortigueira will also receive resources and expertise to strengthen its institutional capacity and manage the increase in tax revenues and economic activity resulting from the project. The IDB Group has also mobilized $500,000 from the Global Environmental Fund to support Klabin in the construction of wildlife-friendly corridors within the project site, as part of a globally significant biodiversity hotspot called Mata Atlantica.

The $150-million B-loan mobilized by the IDB Group has a 7-year tenor—a longer term than that which is usually available in the local commercial banking market. The participating banks are HSBC, Sumitomo Mitsui Banking Corp., and Bank of Tokyo-Mitsubishi UFJ. The first portion of the loan, $200 million, was disbursed last week.