Announcement of IFC Supports Pulp and Paper Mill Expansion Project in Argentina on March 15, 1972

FOR IMMEDl,ATE RELEASE I/ ~ INTERNATIONAL FINANCE CORPORATJ!:ON \,.1818 H STREET. N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IFC Press Release No. 72/3 March 15, 19 72 IFC Supports $72.5 Million Project in Argentina Pulp and Paper Hill Expansion The International Finance Corporatiort, an affiliate of the World Bank, is making a loan of $10.0 million to help finance a $72.5 million expansion project of Celulosa Argentina S.A., the largest pulp and paper producer in Argefatina, and one of the three largest in Latin America. The project is to expand pulp production capacity from 145,000 tons to ;~ 245,000 tons per year, and paper production capacity from 188,000 tons to 292,000 tons per year. Its basic objectives are to follow the paper demand, increasing at the same time the company's share in the local market and to reduce substantially production costs by substituting high cost imported pulp with pulp manufactured locally by the company. The proposed expansion will enable the company to increase the production \\ of several types of printing and writing paper~ kraft papers, special wrapping papers, sanitary tissues, corrugated containers and boxboards, short and long fiber pulps, and caustic soda and chlorine. It is expected to be largely completed by December 1973. This will be IFC' s second investment in this company. In July 1964, IFC had made an investment of $2.5 million in La Papelera Argentina, S.A., which •• subsequently merged with Celulosa. The investment announced today brings the total IFC commitments in Argentina to $39,210,000. /more  0 P.R. No. 72/3 ~- Argentina ...-.. pulp & paper IFC ":, • Background - 2 - Established in 1929, Celulo,a has grown from a small and rudimentary plant at Rosario to become the. largest integrated pulp and paper producer in Argentina, with six mills in differet1t provinces. The company has constantly strived to improve its technology in an effort to produce a wide range, of products of international quality standards. Celulosa is a public corporation, wholly locally owned, whose shares are 1,; [{ widely held and most actively traded on the Buenos Aires Stock Exchange. It has approximately 30,000 shareholders. The market for printing and industrial papers in Argentina has grown at a satisfactory pace during the last five years and forecasts indicate that • this growth will continue through the present decade at a rate of about 6.5% per annum. The Celulosa expansion project is one of the major industrial projects being undertaken by the private sector in Argentina and will surely make a significant contribution towards rationalization of the country's pulp and paper sector. Financing The financial plan of the project reflects Celulosa's effort to obtain financing from a broad range of local and foreign sources. Avail~ble local sources of long-term funds are being fully utilized through Banco Nacional de Desarrollo (BND), the con1pany' s own cash generation, and ,new share issues, and represents 49% of the total financing required. An additional 37% is being I'., obtained from foreigri sources such as the Export Develop~nt Corporation of • Canada, the U.S. Export-Import Bank, Crocker International .. Bank and other banks (, - ' and suppliers. IFC was asked to provide the remaining 14%. Participating with IFC in this investment is the Bank of Montreal (Bahamas and Caribbean) Ltd. /more  J) • IFC P.R. No. 72/3 -- Argentina -- pulp & paper - 3 - Economic Effects Most of the total investment in fixed assets will go towards the integration of Celulosa' s large'st mill at Capitan Bermudez, near Rosario, including the installation of a chendcal recovery plant, the expansion of paper production capacity at the largely integrated Zarate mill and further programs of afforestation. These steps will diminish the company's dependence on imported pulp and will substantially reduce production costs. The remainder of the total investment in fixed assets will go towards rebuilding • and ll¥)dernizing the existing plant facilities so that they may improve their productivity. This expansion and rationalization of the company's manufacturing operations will have a significant favorable impact on the com try' s balance of payments since substitution of imported pulp plus the planned increase in paper production will contribute to substantial foreign exchange savings during the period 1972-1979. - 0 - •