UPM will commence discussions with the Government of Uruguay on the development of logistics infrastructure. Discussions will include railroad and roads, which currently are a critical challenge to establish large scale industrial operation in the Uruguayan inland and to connect it to a deep sea port.
"Uruguay could accommodate a third state-of-art pulp mill with proven environmental performance, if the logistics infrastructure would be rebuilt to support large scale export-oriented businesses. If these challenges can be solved in the coming few years, Uruguay could be a competitive alternative for addressing UPM's pulp market opportunities in the 2020's," says Jaakko Sarantola, UPM's Senior Vice President, Uruguay Development.
UPM estimates that healthy fibre demand growth will continue in the long term. By end of 2020's the world demand for chemical pulp is expected to grow by approximately 20 million tonnes. Some 24 million tonnes of capacity has been closed during the last 15 years and UPM expects the closures to continue at similar pace creating opportunity for new, more competitive capacity.
"In a short period of time Uruguay has created necessary conditions and successfully developed its pulp industry into an export business that has generated positive impacts to the country in many ways. UPM has been part of Uruguayan development for 25 years. We have consistently increased our plantation base in Uruguay and we are well-prepared to supply the wood for the third pulp mill in Uruguay," Sarantola added.
"We assess alternative growth prospects in different parts of the world. This prospective opportunity in Uruguay is well in line with our multifibre growth strategy. UPM is one of the few operators in the pulp market supplying both long and short fibre pulps for a broad range of customer sectors. The future capacity, along with UPM's current four world-class pulp mills, could serve customers in growing consumer and industrial end-uses like tissue, packaging and specialty papers and boards", concludes Sarantola.