22 January 2016

Mozambique: Portucel Increases Forecast Investment in Mozambique

Maputo — The Portuguese pulp and paper company Portucel has increased its forecast investment in a major forestry project in Mozambique from the initial 2.5 billion to three billion US dollars, according to a Friday report carried by the Reuters news agency.

The first phase of the project envisages planting 40,000 hectares of eucalyptus in the central provinces of Manica and Zambezia. Planting began in 2015, a year behind schedule, due to licensing problems.

The Portucal Chief Executive Office, Pedro Moura, told Reuters that since the project was first designed, technological advances in production equipment have allowed an increase in the potential output and the company expected to take advantage of that.

"Production capacity could be increased by 50 per cent”, he said “Overall, investment will reach three billion dollars, with the strongest component being the industrial".

Portucel is still looking for investors to help finance the project, although it intends to centralise control in its own hands.

The project is hugely ambitious. The 40,000 hectares of eucalyptus mentioned is only a small portion of the 356,000 hectares to which Portucel has the land rights. The land title is for 50 years, and could be extended to 100 years.

But it will be a long time before any paper is produced. The factory producing cellulose, the raw material used in paper production, will not be completed until 2023. In all, the Portucel project is expected to create 7,000 direct jobs, and many more indirect jobs.

In his visit to Portugal in July 2015, Mozambican President Filipe Nyusi encouraged Portucel to press ahead with the project, regarding it as an important step in the industrialisation of Mozambique. “We want to promote development, and not simply the production of paper”, said the President.

Outside of the mining and hydrocarbon industries, this is the largest foreign investment in Mozambique. The government is optimistic that it will boost both agricultural and industrial growth, and eventually be of great importance to the balance of trade.

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