The firm said the new bleaching line is expected to come on stream in autumn 2007.
UPM said this increase in bleached pulp will be made possible by the fact that less unbleached pulp will be needed at the mill after a key paper machine is shut down in the second quarter of 2007.
The mills current total pulp production capacity will not increase while the use of pulp produced at the mill will increase from 50% to 70%.
Tervasaari has four paper machines, two of which produce 250,000 tonnes of base paper annually, making it the worlds largest base paper supplier.
About 90% of all of the mills production is exported.
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