JINAN -- China's Shandong Sun Paper Industry Joint Stock Co Ltd plans to build a pulp mill valued at $1.36 billion in the US state of Arkansas, the company said in a stock exchange disclosure on Monday.

The planned production capacity of the pulp mill in Arkansas, home to abundant forests, is 700,000 tons per year. The details were included in a letter of intent signed Friday by the company and the Arkansas Economic Development Commission, said the disclosure.

According to the signed letter, Sun Paper will hire necessary third parties to help with investment matters, such as choosing the location of the pulp mill and gaining environmental assessment approval. Arkansas will be responsible for implementing incentives for the project, including preferential tax policies and other policy supports, before May 1, 2016, according to the disclosure, citing the letter of intent.

The investment is still subject to changes, as the document signed by the two sides speaks only to intent and a time frame for feasibility studies, said the disclosure.

Sun Paper, headquartered in East China's Shandong province and publicly traded on the Shenzhen Stock Exchange, is a leading paper maker in China.