Latin America Invests More than $500 Million in Paperboard and Converting Projects

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Researched by Industrial Info Resources Latin America (Cordoba, Argentina)--About $500 million in paperboard and corrugated cardboard production projects will be performed in Latin America in 2013 and 2015. These projects will be developed mainly in Brazil and Mexico, where the producers of this type of paper have responded to strong demand from growing industrial activity in the region.

In Brazil, companies such as Klabin (São Paulo) and Orsa International Paper Embalagens (São Paulo), which is the recently formed joint venture between Brazilian company Grupo Orsa and International Paper (NYSE:IP) (Memphis, Tennessee), are largely responsible for investments in this sector. Klabin plans to construct a paperboard mill and a conversion complex next to the facilities of its new pulp mill in the city of Ortigueira (Parana, Brazil), which will require an investment of $60 million in its first phase. The company also has plans to execute other projects, such as equipment upgrades and optimizations, and is planning production capacity expansions in its other operational units, highlighting an investment of $100 million for the modernization of its Monte Alegre unit in the city of Telemaco Borba (Paraná, Brazil).

In turn, Orsa International Paper Embalagens is evaluating the feasibility of constructing an addition to a conversion plant in the city of Rio Verde (Goias, Brazil), including a new paperboard mill with a corrugated line to consolidate integrated production.

In Mexico, Grupak (D.F., Mexico) will spend $150 million for the construction of two new paperboard factories in the region of Hidalgo. One of them will be in the city of Emiliano Zapata and is scheduled to begin production in the fourth quarter of this year. At the second mill in Pachuca (Hidalgo, Mexico), the company is considering whether to start the first phase of the project in the first semester of next year. The second stage involves building a box conversion facility. The engineering firm chosen for the execution of the first mill was the Mexican SPS Construcciones, and it probably will be in charge of the engineering of the other factory as well.

In Peru, the company Trupal S.A. (Lima, Peru), a subsidiary of Grupo Gloria Holding, is building a new corrugated paper-converting plant that will feature a box conversion unit. The initial investment, which already has been submitted for capital approval, is for $15 million, and the implementation of this project is to begin in the last quarter of 2013. This project was planned to reduce Peru's import dependence of this type of paper from neighboring countries.

Several related projects can be found in the region, including the purchasing of new equipment, particularly those associated with box-conversion production, such as punch presses, printer machines, gluers and cutters. In addition, the number of upgrades and optimizations at paperboard machines and corrugated machines in order to boost production capacities is increasing. This shows a tendency of companies in the industry to strengthen installed production capacity, improving the quality and efficiency of the production in countries such as Brazil, Mexico, Peru, Chile, Uruguay, Argentina, Ecuador, Venezuela and Colombia.

Industrial Info is tracking more than 50 active paperboard and corrugated converting projects in Latin America, which are valued at more than $500 million.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.