SAO PAULO (From news reports) -- Chilean pulp and wood panel manufacturer Arauco has signed an agreement to invest around $3 billion to build a new pulp mill in Brazil, it said in a statement.

The industrial facility, called the Sucuriu Project, will be located in the central-western state of Mato Grosso do Sul and will represent a major upgrade in terms of the company's production volume.

It will have a capacity to process 2.5 million tonnes of hardwood pulp per year, which alone is almost half of Arauco's current capacity of 5.2 million tonnes, the company said.

The mill, which is still pending approval from the company's board and environmental authorities, is scheduled to start operating in early 2028.

The investment marks Arauco's entry in Brazil's pulp sector, which includes major local players such as Suzano SA, Klabin SA and Irani.

The company, a subsidiary of Empresas Copec SA, currently operates in the sector in Chile, Argentina and Uruguay, but so far only had wood panel factories in Brazil.