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Klabin's Directors Approve $2.3 Billion Puma II Project in Brazil, Includes Construction of Two Kraftliner Machines

Puma II consists of the construction of two new containerboard machines, along with production of integrated pulp, situated at the same industrial unit (Puma Unit) that Klabin operates in the municipality of Ortigueira in the state of Paraná, in southern Brazil. The total capacity of the new machines will be 920,000 tons per year of Kraftliner paper.

April 17, 2019 - KLABIN S.A. announced that after a detailed analysis of market conditions, engineering and viability studies, its Board of Directors on April 16 approved a 9.1 billion-real ($2.3 billion) containerboard expansion project named Puma II Project.

Puma II consists of the construction of two new paper machines, along with production of integrated pulp, situated at the same industrial unit (Puma Unit) that Klabin operates in the municipality of Ortigueira in the state of Paraná, in southern Brazil. The total capacity of the machines will be 920 thousand tons per year of Kraftliner paper.

Klabin's Puma Unit produces bleached pulp (hardwood, softwood and fluff) and will continue to supply the domestic and export markets with an annual capacity of 1.6 million tons.

According to Klabin, the construction of the Puma II Project will be executed in two stages:

1. The First Stage consists of the construction of a principal fiberline for the production of unbleached pulp, integrated with a Kraftliner and White Kraftliner paper machine — the products of which will be sold under the brand Eukaliner — with an annual production capacity of 450 thousand tons. In addition, this stage also includes the construction of complimentary installations supporting the new lines and plants for the recovery and utilities areas.
2. The Second Stage incorporates the construction of a complimentary fiberline for the production of unbleached pulp integrated with a Kraftliner paper machine with an annual production capacity of 470 thousand tons and the expansion of some support installations.

Klabin estimates that construction of each stage of the project may last 24 months, and that the beginning of the second stage may take place after the startup of the first stage. Thus, startup of the first machine is expected in the second quarter of 2021, and startup of the second machine is expected in the second quarter of 2023.

Klabin said the gross investment budgeted for the construction of Puma II Project is BRL 9.1 billion, subject to currency fluctuation and restatement for inflation, which will be disbursed between 2019 and 2023. Approximately BRL 0.9 billion out of the gross investment is regarding recoverable taxes.

Since the majority of the equipment will be installed on the First Stage of the Project, approximately two thirds of the capex will be disbursed between 2019 and 2021, Klabin noted.

The Project will be financed by a combination of the cash position of the Company and the cash generation of the recurring operations. Nonetheless, the funding structure may include debt if the conditions are attractive in terms of maturity and costs, Klabin added.

In a written notice Klabin said, “The world's containerboard industry has presented significant growth over the past decades, mainly in emerging economies, contributing with the demand for paper that supply this industry. The global demand for containerboard, which was approximately 60 million tons per year in 1990, nowadays has reached around 170 million tons per year, according to Poyry. The consultancy firm estimates that the containerboard industry will grow 2.5% per year until 2025, with a good outlook for the papers made of virgin fibers.

“The two new paper machines will reflect Klabin's technological and cost competitiveness, supplied by a forest that is a global benchmark in productivity and average distance to the mill. Furthermore, the synergies with Klabin's existing manufacturing and forest operations in the region and the Company's commercial positioning in the global market of containerboard support the implementation of Puma II.

“The investment in the Puma II Project will benefit the cities in the region, with the generation of up to 9 thousand jobs in the construction period and 1.5 thousand direct and indirect jobs after the startup of production. In addition, there will be a positive impact due to the taxes collection and business developments, socio-environmental improvements and development of local infrastructure.”

Klabin is the largest producer and exporter of paper for packaging in Brazil, its only company offering one-stop solutions in hardwood, softwood and fluff pulp, and the leader in corrugated board packaging and industrial bags. The company has 17 industrial units in Brazil and one in Argentina. To learn more, please visit:www.klabin.com.br.

SOURCE: Klabin