Announcement of Major Pulp and Paper Project Set for Mexico on July 16, 1980

0 • Inteniational Finance C01pomtion IFC Press Release ,I :I No. 81/5 1818 H Street~"N W . Washington. D.C. 20433, U.S.A. 202-477-1234 Wednesda:y, JuJy 16, 1980 Major Pulp and Paper Project Set ·for Mexico A m)tj or, $117. 8 million ··pulp and paper project based on Mexico's I large, but :~elatively undeveloped, forestry resources is being undertaken at Durango ~n the northwest of the ~ountry with a substantial part of Ii the financihg being provided by the International Finance Corporation lf I ,~, (IFC) and al'. group of United States banks. Cel:~losicos Centauro, S .A., an established producer of unbleached I kraft pulp,!lwill increase pulp production from about 15,000 metric tons • annually at:[ present to 60,000 tons annµally. In addition, the Company will add facilities for producing 220,000 tons a year of kraft liner and corrugating)medium papers -- all production for domestic consumption. I IFC':, the World Bank affiliate that assists private enterprise ventures im developing countries, is making a $54 million, long-term loan for the pro:~ ect. Of this, $44 million is being provided by a group of i participati:~g banks consisting of C~ntinental Bank of Chicag9, Bankers Trust Company, Chemical Bank and First National Bank of Chicago. IFC is retaining $:~O million for its own account and is providing, additiona;lly, a $5. 5 million subordinated loan. Nadi.onal Financiera of Mexico is 16nding $6.6 million for the project andi: a supplier's credit of $19.6 million is being provided by Banco ~ do Brasil. A share ~apital increase, other local loans and cash generation complete the financial plan. Cetj:tauro is owned by Grupo Industrial Alfa, S .A., which is a 1; widely-held! Mexican industrial group active in the paper and packaging, steel, capd'.tal goods, petrochemicals, synthetic fibers, electronics, food, • broadcastitig and tourism sectors. \\  - 2 - ,, The Centauro project is in line with Mexico's efforts to make fuller use of the country's forests, which are extensive, and reduce imports of pulp and other wood products a., The Government is implementing a forestry • development plan for the State of Durango and Centauro will be the first important private venture based on the program. The project will utilize "secondary" pine wood and low-value species of oak which otherwise would be wasted and will generate 850 direct jobs and some 2,000 indirect jobs. Centauro's output will increase Mexico's unbleached pulp capacity by about 25 percent and sharply reduce the countryis deficit in pulp. The project will result in an estimated annual foreign exchange saving of $30 million. The venture will further benefit the Mexican economy by provid.:f.ng a demonstration effect and encouraging additional investments in forestfY based projects. • •