Suzano Papel & Celulose SA, Brazil’s second biggest pulp producer, has agreed to pay $259 million for land and a small hydropower dam as part of an effort to secure supply of cellulose at lower costs for a key mill in the country.
Suzano said on Wednesday it would pay about $245 million for about 75,000 hectares (185,329 acres) of land between the Brazilian states of Maranhão and Tocantins, of which about 60 percent are arable. The cost of the mini dam was $14 million.
The deal highlights growing demand for arable land across Brazil’s northern and northeastern regions as speculation mounts that lawmakers plan to ease existing restrictions on sales of land to foreign investors in coming months.
For pulpmakers, buying land in Brazil has become strategic – the country’s soil productivity is bigger than in regions such as Scandinavia or Chile.
Under the deal, which requires regulatory approval, Suzano said it bought the land and the dam from steelmaking mills Cia Siderúrgica Vale do Pindaré SA and Cosima Siderúrgica de Maranhão Ltda.
Earlier on Wednesday, São Paulo-based Suzano said third-quarter net income came in at 53 million reais ($17 million), reversing a loss of 959 million reais a year earlier. The result missed a consensus estimate of 115.7 million reais compiled by Thomson Reuters.
Net revenue shrank 27 percent in the quarter, driving earnings before interest, tax, depreciation and amortization – a key gauge of operational profitability – down 48 percent on an annual basis.
Management will discuss third-quarter results later in the day.
($1 = 3.1111 reais)