Paracel Advances $2.8 Billion Paraguay Pulp Mill Project, Targets Financing in 2027

Paracel, a joint venture formed by Paraguay’s Zapag Group, Sweden’s Girindus Investments, and Austria’s Heinzel Holding, is continuing development of its planned $2.8 billion pulp mill project in northern Paraguay while seeking a strategic or financial investor to support the next phase of funding.

Seven years after its establishment and following completion of its first eucalyptus planting cycle, the company has begun infrastructure development for its forestry and industrial hub in Paraguay’s Concepción department. The work is supported by a $165 million financing package from the Inter-American Development Bank (IDB) and includes construction of a river terminal, power transmission lines, and road infrastructure. The phase is expected to take 24 months.

Paracel Chief Executive Officer Flavio Deganutti said the company expects market conditions to improve sufficiently to secure financing in 2027, allowing the mill to begin production in 2030. Investment bank Jefferies is advising the company in its search for a new investor.

The planned facility would initially produce 1.8 million metric tonnes of pulp annually. Paracel says it already has sufficient timber resources to supply that production level. The company has been seeking a new partner since early 2025, with Brazilian and Asian groups evaluating the project but not yet committing.

Industry sources indicate that Paracel could face competition for capital from a potential pulp project being evaluated by Silvipar, a forestry company backed by Girindus and partnered with UK-based asset manager Astarte Capital Partners. No formal announcement has been made regarding such a project.

Deganutti said Paracel maintains technical cooperation with Silvipar, including potential timber supply arrangements during the early years of mill operations, and described the relationship as complementary rather than competitive.

Paracel owns more than 200,000 hectares of land and is approaching 100,000 hectares of FSC-certified eucalyptus plantations. According to Deganutti, the company’s assets are valued at approximately $1.5 billion.

The company plans to transport pulp by barge along the Paraguay River to a port in Soriano, Uruguay, for export to international markets. Paracel also intends to construct a terminal in Uruguay in parallel with the mill project.

Deganutti said the company believes its cost structure will be competitive, citing lower labor and electricity costs, tax incentives, and logistics advantages. He added that Paracel’s pulp could reach port at a cost 30% lower than producers in Brazil’s Mato Grosso do Sul state.

Paracel maintains that there is market capacity for another South American pulp mill to enter production around 2030 and continues to target a construction decision in 2027.