Aracruz Celulose and its joint venture partner Stora Enso announced the decision to postpone expansion plans for Veracel, in Bahia, for at least one year. Capital expenditures scheduled for 2009 will be cancelled, including the purchase of land, the formation of forests and a feasibility study.
According to the company statement, the partners believe that this is a prudent action in light of the current and short term market outlook. The Veracel II project would involve construction of a second pulp production line with capacity for about 1.4 million tons per year.
A joint venture of Aracruz (50%) and Swedish-Finnish Stora Enso (50%), Veracel is located in the municipality of Eunápolis, in the south of Bahia, with annual production capacity of 1 million tons of bleached eucalyptus pulp.
The company owns 211,000 hectares of land, of which 90,000 hectares consist of plantations and about 104,000 hectares are native forest reserves, including the Veracel Station and Permanent Preservation and Legal Reserves.
Veracel came on stream in May 2005 and is world renowned for its operational excellence, making it the company with the lowest production costs in the global pulp industry. The company’s activity is an incentive for the social and economic growth of the local community, through projects and assistance programs to help satisfy income creation, health and educational demands, as well as tax revenues and jobs.