UPM’s $2.7 billion Investment in a World Class Pulp Mill in Central Uruguay

Hughes & Hughes and White & Case advised on the deal

UPM has made the investment decision to construct a 2,1 million tonne greenfield eucalyptus pulp mill near Paso de los Toros in central Uruguay.

The highly competitive mill investment of USD 2,7 billion will grow UPM’s current pulp capacity by more than 50%, resulting in a step change in the scale of UPM’s pulp business as well as in UPM’s future earnings. Additionally, UPM will invest USD 350 million in port operations in Montevideo and local facilities in Paso de los Toros. The mill is scheduled to start up in the second half of 2022.

With a combination of competitive wood supply, scale, best available techniques and efficient logistics the mill is expected to reach a highly competitive cash cost level, approximately USD 280 per delivered tonne of pulp. This figure includes the variable and fixed costs of plantation operations, wood sourcing, mill operations and logistics delivered to the main markets. This would position the mill as one of the most competitive mills in the world and enable attractive returns for the investment in various market scenarios. Furthermore, the safety and sustainability performance of the value chain from plantations to customer delivery is expected to be on an industry leading level.

The prerequisites for the investment have been carefully prepared in cooperation with the state of Uruguay. For UPM, it has been important to ensure sustainable, competitive operations long-term and to minimise risks both in the project phase and during continuous operations. For Uruguay, the project and the infrastructure development offer significant opportunities for economic and social development.

In Uruguay, Hughes & Hughes advised UPM with a team including Haroldo Espalter (Picture) Mariana Estradé, Lucía Patrón, Clara Villaamil, Sofía Cairo, Magdalena Castagno and Patricia Villalba.

White & Case advised UPM with Mukund Dhar, Jeannine Acevedo and Dann Irving.

Involved fees earner: Sofía Cairo – Hughes & Hughes Abogados; Magdalena Castagno – Hughes & Hughes Abogados; Haroldo Espalter – Hughes & Hughes Abogados; Mariana Estrade – Hughes & Hughes Abogados; Lucía Patrón – Hughes & Hughes Abogados; Clara Villaamil – Hughes & Hughes Abogados; Patricia Villalba – Hughes & Hughes Abogados; Jeannine Acevedo – White & Case; Mukund Dhar – White & Case; Dann Irving – White & Case;

Law Firms: Hughes & Hughes Abogados; White & Case;

Clients: UPM-Kymmene Oyj;