Announcement of IFC to help Finance New Type Pulp Mill in Mexico June 17, 1986

ional Finance Corporation L J A Tuesday, June 17, 1986 Donald Roessner Press Release No. 86/43 (202) 676-0394 IFC TO HELP FINANCE NEW TYPE PULP MILL IN MEXICO A $45 million, 75,000 metric tons-a-year pulp project in Mexico, based on new technology and sponsored by Grupo Industrial Durango, S. de R.L. de C.V. (Gidsa), will be assisted by an $11.9 million loan and equity investment from the International Finance Corporation (IFC). The enterprise, Celulosa y Papel de Durango, S.A. de C.V. (Cepadusa), will produce bleached chemi-thermomechanical pulp (B-CTMP), a new type of virgin pulp. This will be the first significant B-CTMP project in the developing world. Cepadusa's output will be sold primarily to Mexican companies for manufacturing printing and writing papers, newsprint, paperboard, liquid packaging board and tissue products. Production will substitute for imported pulp and result in significant foreign exchange savings. The venture will also benefit the economy by creating an additional source of employment in one of Mexico's less-developed rural areas, by utilizing an extensive natural resource and by bringing a new technology into the country. Equity for the project is being provided by the sponsor, Gidsa, Mexico's second largest forestry products private sector group, $13.1 million; Nacional Financiera, S.N.C. (Nafinsa), $4 million; and IFC, the leading international organization that assists the economic growth of developing countries by investing in their private sectors, $1.9 million. IFC is also lending $10 million for the venture while Nafinsa and other Mexican financial institutions are lending $16 million. MORE - 2 - Equipment, technical know-how and basic engineering for the construction and operation of the project and the training of project personnel is being provided by Kamyr, Inc. and the Sprout Waldron division of Koppers Company, Inc. of the United States. B-CTMP plants are being successfully operated in several developed countries. The technology has several advantages -- it needs only half the capital investment per ton of capacity as conventional processes, is efficient in smaller-scale operations, can be implemented in half the normal construction time, uses raw materials more efficiently, consumes much less chemicals and releases less effluents. These factors outweigh its disadvantages, namely the higher electric power usage per ton than the chemical pulp process and the lower brightness and strength of the pulp produced. -0-