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Report: Stora Enso's Brazil expansion hinges on new rules

BRAZIL (From news reports) -- Stora Enso, Europe's biggest paper maker, may consider expanding in Brazil depending on whether the government eases legal and regulatory uncertainty for pulp and paper producers, a company executive told Valor Econômico newspaper.

In an interview published on Thursday, Juan Carlos Bueno, Stora Enso's executive vice president for biomaterials, told Valor that growing the Veracel Celulose venture hinges on how the government deals with issues like landless peasants' activism or existing limits on foreign land ownership.

Veracel is owned equally by Helsinki-based Stora Enso and Fibria Celulose SA, the world's largest eucalyptus pulp producer. A recent gain in Brazil's currency, the real , has mostly annulled the impact of price hikes that pulp producers implemented in previous months, Bueno told Valor.

Bueno's remarks underscored the importance of Latin America for Stora Enso's strategy to obtain low-cost pulp from tree plantations. Brazil's pulp and paper industry could potentially lure $23 billion in investments by 2020, the Swedish Trade & Investment Council said in a recent presentation.

Those investments could help double Brazil's forestry base, increase existing plants and build new ones. In Brazil, Veracel's average annual pulp production is 1.1 million tonnes.

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