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Thu, Jul 25, 2024 02:01
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Investing in Tomorrow's Paper: Capital Projects

As the ball drops in Times Square on New Years Day, the trees in South America grow ever taller, and are much better and more productive than that dropping ball (which mainly yields a great deal of traffic). Interesting things are happening in South America, and I do suspect capital projects for 2024 will be affected, and hopefully started for the upcoming year. Why is that?

1) Valmet is adding to its services in South America by acquiring the company Demuth, to strengthen its wood handling technology and to offer services and a presence in South America. Sami Riekkola, Business Line President, Pulp and Energy, Valmet, had this to say about Demuth:

"Pulp business is growing in South America, both with new greenfield investments and upgrades of the existing mills. By joining Demuth offering and production capabilities with Valmet, we can strengthen our position as a wood handling supplier in the pulp mill segment in South America." (1)

Valmet intends on strengthening their local presence, spare parts business, and field service delivery capabilities, especially in Brazil and plans to increase their competitiveness in South America in general.

Now, Valmet has already done work with places like Cenibra, a large pulp and paper company in Minas Gerias, Brazil. Where else in South America would Valmet be strengthening their presence and increasing their competitiveness?

2) This brings us to the second point. There's something quite interesting going on just south of Brazil, something you may or may not have heard of.

The people in Argentina, burdened by long decades of an overly-large government and runaway inflation, quite recently voted in a new leader for the country, Javier Milei. Milei is now beginning to implement his plan to stabilize the economy, working hard to usher in a new political era, and hopefully leading Argentina to becoming a country once again filled with integrity and wealth.

And that's good for papermakers as well.

The timing of this Valmet purchase is surely coincidental, but it's interesting now that sweeping changes are happening in Argentina, a major, resource-rich country in South America, the Valmet purchase goes through...

That's called good timing.

At any rate, it'll be wise for the Argentinian dust to settle before investing in the country just yet. Meanwhile, Brazil and other quieter, more stable places are ready to go for capital projects for 2024 and beyond.

It looks like South America as a whole will be a fascinating place to watch for capital projects for 2024 - and beyond.

May your 2024 be filled with much pulp and paper.

And have a Happy New Year!


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