Investment

TOTAL: 2,200 MM USD

Commercial forest: 800 MM USD
Pulp Plant: 1,400 MM USD

Financial Indicators

  • IRR Forest: 11.28%
  • IRR Plant: 10.43%
  • Recovery Time: 10 years


Management Model

The investor builds the plant and develops the forest for production inputs.

Benefits for the investor

Through the signing of an investment agreement with the Ecuadorian government, recorded as a public deed, reception of benefits are guaranteed.

  • Stability on tax incentives up to 15 years, renewable once (maximum validity 30 years)
  • The company may request total or partial reduction of duties for any capital goods imported
  • Exemption of foreign exchange taxes on financing operations
  • Establishes conflict resolution mechanisms
  • Reduction of 10% on the Income Tax rate on the amount reinvested in productive assets
  • Exemption of Income Tax for 10 years for Basic Industries


Objective

Implement a pulp production plant 1000 TM/year BHKP (Bleached Hardwood Kraft Pulp), from the tree species EUCALIPTUS UROGRANDIS through the development of a commercial forest to supply the raw material to the pulp plant, while it has a potential exporter to Europe and Asia, to supply for the domestic, regional and global market.


Project Details

The purpose is to promote the implementation of an industrial plant for the production of BHKP type pulp (short fiber); this project is comprised of two components: the commercial forest that supplies raw material to the pulp plant.


Technical description of the Project

  • Basic study of the Pulp and Paper industry in Ecuador
  • Advisory Service for the Characterization of a Pulp and Paper Plant in Ecuador” – 2014, Bain & Company
  • Study to determine the potential surface to establish forest plantations of tropical Eucalyptus as source of raw material for the pulp and paper plant. The study was conducted by the Ministry of Agriculture, Livestock, Aquaculture and Fisheries – 2016
  • Basic study of the pulp plant optimized and the roadmap to develop the Forest Pole – 2017


Market

  • The plant’s production will be earmarked for exportation. The global pulp market is 50 000 TM with annual growth between 1 and 2%; Europe and China are the main consumers
  • Pulp importers: China 36%, Germany 8%, USA 7%, Italy 5%
  • Paper and cardboard importers: USA 11%, Germany 8%, UK 5%, France 5% Leading country: Brazil leads short fiber (Eucalyptus) production

Demand:

Regional trade balance: 2.9 billion USD. Wood pulp is the product of greater export; and wrapping paper and cardboard are the products mostly imported.


Regulatory Framework

  • Organic Law of Rural Land and Ancestral Territories
  • Organic Code of Production, Trade and Investments (COPCI)
  • Incentive Program for reforestation with commercial purposes – Ministry of agriculture & Livestock


Location

  • Commercial forest: Esmeraldas, Santo Domingo, Manabí, Pichincha
  • Pulp plant: the location of the plant is near the Blanco River (La Concordia Canton, province of Santo Domingo de los Tsáchilas), which will supply the water necessary for its operation