Jun 30, 2006. /Lesprom Network/. Aracruz Celulose, a Brazilian company that is the market leader for bleached eucalyptus pulp, this morning, in Porto Alegre, signed letters of intent with the state government and the municipal governments of Barra do Ribeiro, Cachoeira do Sul, Guaíba and Rio Pardo, for the expansion of the company's operations in the state of Rio Grande do Sul. These documents define the commitments made by the state and municipal authorities that enable the setting up of a new production line with an annual capacity of 1.3 million tonnes of pulp. The project provides for the construction of the new production line beside the existing mill, which is currently producing 430 000 tonnes of pulp per year. The aim is to attain an annual production level of close to 1.8 million tonnes of pulp, thus making the Guaíba Unit internationally competitive. According to Aracruz's CEO, Carlos Aguiar, the choice of Rio Grande do Sul was the result of extensive studies. "The state undoubtedly has great potential, but Aracruz wanted to analyze all the possibilities, as well as talk to the government, the community and other interested parties, before making a decision." Aracruz expects the state government and the municipal authorities in question to adapt the local highway infrastructure, so as to improve traffic flow, as well as to create suitable conditions for the effective use of local waterways to transport timber and pulp, and to provide tax support for the industrial processes and the affecting of improvements to the supply of electricity for the inhabitants of Guaíba and Barra do Ribeiro, in addition to providing support for the company's professional training program, since the company adopts a policy of giving priority to local labor in all the municipalities in which it operates. The investment in Rio Grande do Sul, of around US$ 1.2 billion, which is still to be confirmed, would make the state a new hub for forestry and pulp production, thus broadening the range of economic activities in the region, reinforcing the forestry efforts, generating rural employment and reducing the migration from rural areas. If it goes ahead, the project could create around 12 500 direct and indirect jobs during its implementation. During normal operations, there would be 250 direct jobs in the industrial area and 1 000 in the forestry area, in addition to thousands of indirect jobs. The project foresees the new mill coming on line somewhere between 2010 and 2015. The latest technology and best international environmental practices will be adopted in the industrial area, bringing about a reduction in water consumption and in aerial and liquid emissions, improving the mill's thermal and energy efficiency, as well as optimizing its logistics, by increasing the use of waterways for transportation. The company's forest base will need to be augmented by 100 000 hectares, including areas planted under contract through the company's Forest Producer Program and around 55 000 hectares of preserved areas and legal reserve. Implementation of the project is calculated to generate about US$ 200 million in taxes and inject into the local economy more than US$ 300 million, through outsourcing to local businesses and forestry work. Aracruz Celulose is a Brazilian company and world leader in the production of bleached eucalyptus pulp, accounting for about 30% of global supplies, which are used in the manufacturing of printing and writing paper, toilet and kitchen paper and special papers with a higher added value. The company's forestry operations cover an area of approximately 261 000 hectares of renewable eucalyptus plantations, alternated with some 139 000 hectares of native reserves, which are essential to the equilibrium of the ecosystem. Aracruz is responsible for approximately 10 000 direct jobs, including the company's own employees and permanent service providers, and is one of Brazil's greatest exporters, generating foreign exchange reserves amounting to around US$ 1 billion a year.