IDB & IFC fund LD Celulose for Brazilian wood pulp plant

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IDB Invest and IFC are co-leading a $1.1 billion financing to LD Celulose, a joint venture between Lenzing and Duratex, to build one of the largest dissolving wood pulp plants in the world, in Minas Gerais State, Brazil. The investment will strengthen the competitiveness of Brazil’s pulp industry, create jobs, and also help in climate change mitigation.

The export credit agency, Finnvera and seven commercial banks are participating in the financing. The financing co-led by IDB Invest and IFC will support LD Celulose’s investment programme for 2020-2022, which consists of the construction of a dissolving wood pulp (DWP) mill and the installation of a 144 megawatts cogeneration plant. LD Celulose will also sustainably plant and manage approximately 70,000 hectares of eucalyptus plantations, according to a press release by IDB.

The plant will be one of the most productive and energy-efficient in the world and will supply the public grid with renewable energy from the 40 per cent of excess bioelectricity generated on site. DWP is the main raw material used to produce wood-based textile fibres, a biodegradable and more environmentally friendly fibre alternative.

The $1.1 billion loan package includes a $500 million financing package arranged by IDB Invest (a $200 million loan from IDB Invest, $50 million loan through IDB Invest’s administered China Co-financing Fund, and $250 million loan syndicated to international commercial banks); a $500 million financing arranged by IFC (a $200 million loan from IFC; $50 million loan through the IFC’s co-lending programme; and $250 million loan syndicated to international commercial banks); and a $147 million loan from financial institutions backed by Finnvera.

Participating banks are Banco Santander, BNP Paribas, Commerzbank Aktiengesellschaft (Filiale Luxemburg), Erste, HSBC, KfW IPEX, and Raiffeisen.