Forestry company Arauco has sealed a US$2.2bn export credit agency-backed financing package from a diverse group of lenders to develop a pulp production factory in Brazil.
The International Finance Corporation (IFC), the World Bank Group’s financing arm, and multilateral development bank IDB Invest are co-leading on a US$1.25bn loan to Chile-headquartered Arauco. IFC also acts as environmental and social coordinator.
The remaining US$970mn comes from a group of eight banks, with JP Morgan acting as global coordinator, and is guaranteed by Finnish export credit agency Finnvera. A spokesperson for IFC declined to name the other lenders involved.
The funds will support the development of Arauco’s Sucuriú project, a pulp production facility in the central-western state of Mato Grosso do Sul.
The facility is planned to have an annual capacity of 3.5 million tonnes of pulp produced from sustainably managed eucalyptus plantations and biomass-based energy. It is expected to generate 400MW of renewable energy, of which 45% will be supplied to Brazil’s national grid.
It will also strengthen sustainability practices within Brazil’s pulp sector by promoting regenerative materials and establishing new standards for environmental performance, IFC says.
“The Sucuriú project will leverage advanced technologies and sustainable practices to address some of the critical development challenges in Latin America, including strengthening industrial productivity, boosting exports, and promoting regenerative materials and renewable energy,” the institution adds.
Performance standards established by IFC will apply to the project’s land acquisition procedures, stakeholder engagement and biodiversity management.
Sustainable practices include “biodiversity monitoring, clean energy generation, efficient water management, and responsible forest management”, as well as local community engagement on planning and partnerships, IFC says.
