Stora Enso Exploring Joint Ownership of Sawmill, Forestlands in Brazil

Oct. 26, 2006 - Stora Enso said that it is initiating exclusive discussions with Chilean forest products company Arauco. The talks are focused on joint ownership of certain assets of Stora Enso Arapoti in Brazil.

The assets, formerly owned by Inpacel — Industria de Papel Arapoti Ltda. and Inpacel Agroflorestal Ltda., were subsidiaries of International Paper before being acquired by Stora Enso in September 2006 for US$420 million (EUR 333 million).

The Arapoti operation includes a paper mill with an annual capacity of 205,000 tons of coated mechanical paper, a sawmill, and about 50,000 hectares (approximately 124,000 acres) of forestland in Parana. Included among the 50,000 hectares of forestlands are 25,000 hectares of pine plantation and 5,000 hectares of eucalyptus plantation.

According to Stora, the potential joint ownership with Arauco is focused primarily on the sawmill and forestland operations.

Non-binding joint ownership discussions are expected to be finalized before the end of January 2007, Stora said.

"One of the core businesses of Stora Enso is to produce high quality publication paper, which was the main reason for acquiring Arapoti. Stora Enso does not see itself as a sawmill operator in Latin America. Stora Enso will also explore with Arauco the most efficient use of the forest resources," said Nils Grafström, president of Stora Enso Latin America Division.

Arauco is one of the largest forestry companies in Latin America in terms of surface area and yield of its plantations, production of market kraft wood pulp, and production of sawn timber and panels. The company has operations in Chile, Argentina, Brazil, and Uruguay.

SOURCE: Stora Enso

PaperAge. Copyright © O'Brien Publications, Inc. All rights reserved.