cost to build a pulp mill 2007

Note the quantities,specifically Note 3,even the TAP report was erroneous compared to Gunn's latest report.
Even Comsec was dubious of the pulp mill investment back in 2007.

BUT note 3 is the sobering statement(cubic metre's per Hectare to tonnage ).

But here's the rub---Currently Brazil is doing it for half price compared to us,their xchange rate is half of ours.Pulp prices world wide as of june 30 2012 are $784.25 per tonne,a drop in twelve months of $112

Excerpt of TAP 2007 report Page 10

At a cost of $1.4 billion to build, the pulp mill will have a ‘cost per installed tonne’ of AUD$1,700 per tonne (i.e. $1.4 billion divided by 820,000 tonnes of pulp). In US dollars, this is a cost per installed tonne of $1,280 per tonne.

The current benchmark for cost per installed tonne for pulp mills is less than US$1,000 per tonne. For example, at the Barro do Riacho new operation being built in Brazil, installed cost per tonne is expected to be US$960. Thus before it begins, the pulp mill will be carrying a significant additional cost per tonne of pulp.


Many analyst research reports are also discussing the likelihood of the project cost rising to $1.5 billion. Using a weighted average cost of capital (WACC) of 8.7% this additional US $270 million is equivalent to an additional US $40 cost of capital per tonne.
Cost to run the pulp mill

The most important competition for the pulp mill will come from South America, which is predicted to grow from 17% of the global pulp market in 2004 to 25% by 2009, and from South East Asia (another 10% of the global pulp market) These pulp mills will have significant cost advantages over the Bell Bay pulp mill, including:

1. More sunshine and more rainfall, more evenly distributed.

2. Genetic research and development means that hardwood pulpwood matures in 7 years in South America (c.f. minimum 13 years in Tasmania).

3. Eucalyptus plantation began in Brazil in 1964 so there is deep experience in genetic development: mean annual increment growth of 50 cubic metres per hectare as opposed to 20 to 25 in Tasmania.


The rapid rate of expansion of plantation in Chile and Brazil gives economies of scale.
The countries are still developing economies with low per capita incomes and hence low labour costs.



Summary of financial risks of Gunns' proposed pulp mill | Tapvision ...
tapvision.info/node/433

Report prepared by TAP, 2007. Gunns Ltd and the Tasmanian ... Gunns' lack of experience in building and running a pulp mill. 2. High costs relative to ...