UPDATE 1-Stora expects final permit for Uruguayan pulp mill this week

Tue Jun 3, 2014 8:44am EDT

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By Jussi Rosendahl

HELSINKI, June 3 (Reuters) - An executive at Finland's Stora Enso said the $2 billion eucalyptus pulp mill it has built in Uruguay with Arauco should receive its final permit this week, and he reduced its 2014 output target due to recent delays.

The long-delayed mill, the biggest investment in Uruguay's history, is a 50-50 joint venture of Stora Enso and Arauco, an arm of Chilean industrial conglomerate Empresas Copec.

"It should start literally any minute. We expect most likely this week to have the permit from the environment authority," Juan Bueno, the head of Stora's pulp division, said in a speech at an industry conference on Tuesday.

He later told Reuters the latest delays would mean that the mill this year will produce about 650,000 tonnes, only about 50 percent of its full 1.3 million tonne capacity. Stora in April had estimated output of 700,000-800,000 tonnes.

Stora Enso, Europe's second-biggest paper producer, is shifting its focus from print paper to more profitable areas such as pulp and packaging board.

The global demand for pulp, which is needed to make paper but also for tissue products and packaging board, is expected to grow mostly due to Chinese demand.

The new Uruguayan plant as well as other recent mill projects by rivals Suzano and Eldorado will pressure hardwood pulp prices during the next few years, Bueno said.

"That is the concern that everybody sees in the industry. There is pressure price-wise as more capacity is added, and there's not enough demand to cope with all of that supply," Bueno said.

The launch of the Montes del Plata mill has been delayed by more than a year by strikes and other labour issues at the site. Its main supplier, Austrian machine builder Andritz, this week put in a an arbitration claim for 200 million euros ($272.15 million) due to disagreements regarding the delays. ($1 = 0.7349 Euros) (Reporting by Jussi Rosendahl; editing by Jane Baird)

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