Announcement of Loan Granted to Chile on September 10, 1953

·,: 'f . i. 'D ;'<;ti' HOID FOR.RELEASE HOLD FOR RELEASE INTERNATIOl~.L BANK FCR R~ONSTRUCTI01'1 ANJ;) DF~v.tIT,OPMENT FOR THE PRESS F'OR . ;7' • RELEASE S:00 P.M. PRFSS REIEASE MO. 337 Se1tUmbe:r 10, 1953 The International Bank for Reconstruction and Development today made a loan of $20,000,000 to help finance the construction of a chemical pulp mill and a newsprint paper mill in Chile. The new plants will not only el.inrl.na.te the need to import paper pulp and newsprint, but will produce a surplus of these products for export.,. The joint borrowers are the Cia. Manufa.ctttrera de Papeles y ·cartones S.A., a private~y owned corporation, and the Corporacion de Fomento de la Froduccion (Fomento), an agency of the Chilean GoverrJ1nent. 'l'he loan is guaranteed by the • Government • The Papeles y Cartones company is the only p~p and paper manufacturer in Chile and is one of Chile's leading industries. In 1952, it produced 11,000 tons of na,sprint and 30,000 tons of other papers and paper products. Despite a steady growth in production., the company has not been able to meet the coWltry•s demands i'or paper and paper products. In 1950, Chilee.n imports of newsprint and cellulose pulp were valued at the equtvalent of over,$5 million. Locally produced chernica.l pulp and increased paper p:rodu.ction will not only elimjna.te the need for these imports, but will make possible new paper products. The n6W plants will also be constructed so that., with additional equipment, the:(Y could be used for the manufacture of l,'"ayon pulp to meet Chile's grcn,1ing demand for this product. The e~tablishment of the net-r mills will be an importan\ step towafd )i the fuller use of Chile's extensive forest resources, Cll-iie enharked •.. i · "'c .. '\. about 30 years a.go on an afforestat·ion program in areas unsuited for (:i  • 'D - 2 - • agriculture. These areas now contain lal'.ge stands of insignis pine, which grows with extraordinary rapidity in the soil and climate of central Chile. Since 1938, the Pap el es y Cartones company has been using insignis pine for '.fuaking mechanical pulp, and extensive tests have shown that the wood is also 'well suited to the making of chemical pulp. The new chemical pulp mill will be located'at Laja,. a village on the main railway- line running between Concepcion and Santiago. The plant will b~ designed to make unbleached, semi-bleached and bleached chemical pulp totaling about 50.,000 tons a year.. In addition, the mill will produce 10.,000 tpns of kraft paper annually. The newsprint paper mill will be located on the Bio Bio River near the city of Concepclon which is rapidly becomL"lg the industrial center of Chile. • The plant wi?)- be d,esigned to make 44,000 tons of newsprint and 6.,600 tons of 1 boxboard each year from. mechanical pulp, chemical puip and scrap paper. The company's boxboard and kraft paper machines will be transferred ~from the main plant at Puento J~lto to the new sites and will be modernizeq, to ensure greater efficiency or operation. The total cost of the constructton of the two mills is estimat.eci at the equivalent of about $26., 000., 000. The Bank 1 s loan of' i4o __ 7-;,,\ . million will be used to pay for imported equipment, and the company will finance the local currency l requiranents. The Bank's loan is for a term of 17 years and carries interest or 5%,including the 1% commission whi~hJ under the Bank's Articles of Agreement, is allocated to •' '/ a special reserve. Amortization payments will begin May 15, 1958. F'omento fL~:;a government agency created in 1939 to promote Chile's economic development, and by law is required to be a co-borrowe:r in loans guaranteed by tbe  • - 3- Government. In the past., the Bank has lent Fomento a total ot $17.3 million for agric~~ural machinery, ;iectric power development and i""igation. The Ci.a. Manu.facturera de Pape:tes y Cartones s. A. is a privately owned Chilean joint stock corporation with approximately 7,000 stockholders. The company was fox,ned in 1920 to make paper and paper prod~cts from straw and imported chemical wbod pulp. Since then, it has a~quired subsidiary companies and property beneficial to its basic operations. The company has a long record of profitable operat,ions. After having been approved by the= Bank's Executive Directors, the loan documents were signed today by His Exc.ellency., Anibal Jara., Chilean Ambassador ,, in Washington., on behalf of the Gove:i~ent of Chile, by Mr. Antonio Bascunan Perez, General Manager., on behalf of Cia. Manuf'acturera de Papeles y Cartones s. A., .• , ~.Y Bernardo Pizarro, or FOJ11ento•s Mew YoTk otfice,; on behalf .or FomentQ, and by <\ Eu.g~ne.R. Black., President, on behalf' or the Intei-national Bank. i)