UPM is taking part in the international public tendering process in the port of Montevideo organized by the National Ports Administration (ANP) of Uruguay. The scope of the concession tender is the building and operation of a port terminal specialized in the storage and shipping of pulp, chemicals and other inputs related to pulp production with a capacity to handle approximately 2 million tonnes of pulp annually. The tender includes the design, financing, engineering, construction, operation and maintenance of the pulp terminal. The tenure of the concession would be for 50 years.
Port development, supporting an efficient and reliable outbound logistics, is a key fundamental for the potential installation of the third pulp mill in the country. Modern facilities in the Montevideo deep sea port would offer a competitive gateway from South America to growing export markets benefiting the Uruguayan economy.
The tender is made in the context of UPM's current study on the potential of building a new pulp mill in Uruguay. The investment agreement with the Government of Uruguay was signed in 2017. As part of the agreement the Government will promote concession for a terminal specializing in pulp in the Montevideo port with rail access. The possible pulp mill would have an annual capacity of approximately 2 million tonnes of eucalyptus market pulp. The preliminary estimate for a pulp mill investment on site is approximately Euro 2 billion.
Two preparation phases need to be successfully completed before UPM would be in a position to make a final investment decision on the pulp mill. The second preparation phase is currently proceeding. Achieving significant progress in the implementation of the agreed infrastructure initiatives by the Government of Uruguay and any relevant items are to be agreed prior to the possible final investment decision. If these two preparation phases are concluded successfully, UPM will initiate the company's regular process of analysing and preparing an investment decision.
If awarded a concession in the Montevideo port, UPM's financial commitment in the form of a performance bond would be $20 million at this stage. At the time of the potential final investment decision on the pulp mill project UPM would proceed with the port investment decision and start of the construction of the port facilities. The preliminary UPM investment estimate for the port facilities would be approximately $260 million.