IDB loans $300m to Brazilian pulp mill with 250MW biomass plant

The Inter-American Development Bank (IDB) has joined efforts with Brazil’s largest paper producer Klabin to finance the construction of a new state-of-the-art green field pulp production mill.

The new facility will be located in the municipality of Ortigueira, one of the poorest cities on the state of Parana, Brazil.

Through an A/B Loan of $300 million (€270m), the IDB 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 neighbouring 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 255MW biomass facility that will sell 56% 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 1.28 million tonnes 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’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 has also mobilized $500,000 from the Global Environmental Fund (GEF) 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 has a seven-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 Corporation (SMBC), and Bank of Tokyo-Mitsubishi UFJ (BTMU).

The first portion of the loan, $200 million, was disbursed last week.

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