Arkansas 23 November 2015 -- (From The Economic Times) -- China's Shan Dong Sun Paper Industry Joint Stock Co said on Monday it would spend about $1.36 billion to build a pulp mill in the United States in its first investment outside the country.

The facility is expected to break ground in 2016 and start operations in 2018, Sun Paper spokesman Song Weihua told media outlets.

The mill in the southeastern state of Arkansas is slated to make fluff pulp, a raw material for diapers and sanitary products.

On Friday Sun Paper Chairman Li Hongxin signed a memorandum of understanding for this at a ceremony in Jinan which was attended by U.S. Commerce Secretary Penny Pritzker and Arkansas Governor Asa Hutchinson.

The U.S. Food and Drug Administration has approved the company to manufacture paper at the mill, Sun Paper said in a statement to the Shanghai Stock Exchange on Monday.

The investment by the northern China-based company is the latest in a slew of deals by Chinese manufacturers looking to diversify their operations and take advantage of initiatives and rebates in western countries.

Shandong Tranlin Paper Co Ltd invested $2 billion in a paper and fertilizer plant in Virginia last year.

Sun Paper declined to give details on its financing of the project, although sources said the company is likely to involve a combination of equity and debt.