Veracel to expand?

Posted: 11 October 2006 in Aracruz, Brazil, Pulp and paper prices, Stora Enso, Veracel

According to RISI, Aracruz may be about to announce plans to install another pulp line at its Veracel pulp mill in Bahia. Veracel is a 900,000 t/yr pulp mill, built and run as a joint venture between Aracruz and Stora Enso.

“Just now, we are finalizing studies with our partner,” said Aracruz’s Chief Financial Officer, Isac Zagury. “It makes sense to have a second line and very soon we will have some news for the market.”

Zagury made these comments at a recent conference call to announce Aracruz’s earning for the third quarter of 2006: Net income was US$143 million, compared to US$72 for the same period last year. For the second quarter of the year, however, net income was down 36% compared to the previous year, at 56.4 million .

Zagury declined to answer questions about another increase in the price of hardwood pulp: “All we can say is that we are very confident about the market fundamentals.” Which sounds like Aracruz probably will hike the price of its pulp again.

This is all bad news. When the price of pulp is high, earnings are high and the pulp industry expands capacity. The impacts of the Veracel pulp mill on local communities are already serious. Increasing the capacity will mean a larger area of plantations. More communities will lose their livelihoods. More people will be forced to move to the cities. More forest will be cleared. More streams will dry up. More streams will be polluted by runoff of herbicides and pesticides from the plantations.

It doesn’t even make economic sense. Once the new capacity comes on stream the market is flooded and the price of pulp falls again.

  1. Pedro says:

    This is a very good new. Forestry and pulp industry is developing areas destroyed by bad practices of agriculture and cattle production.

    Veracel is an excellent example of join venture of Nordic and South American companies, where they installed a state of the art environmentally friendly mill. This is the best way to express solidarity of Northern countries: investing and creating jobs.

    Of course we know that there are people in the world that have interests that pulp production remain in northern countries, and that no industry is developed in the south.

    It is funny to see Nordic NGO blaming against Stora or Botnia, but they say nothing about their mills in Scandinavia.

    Strange kind of “solidarity”.

  2. Chris Lang says:

    Hi Pedro,

    Thanks for your comment – you say that Veracel is a “a state of the art environmentally friendly mill”. Why do you think that the Pataxó indigenous people are demanding that Veracel plants no more eucalyptus on their land? Or that 48 organisations and people in Bahia recently wrote a letter pointing out that Stora Enso’s operations in Brazil are socially and environmentally unsustainable?

    When I visited the area of the Veracel plantations with Brazilian friends and colleagues last year, one villager told us, “There are no jobs here now and no money from the eucalyptus.” Business at the local shop was down by 80%. The river was drying up and was becoming polluted. It would be a strange kind of solidarity to promote more of this.

  3. alexandre chueri says:

    Dear Chris

    I am working on to get pataxo citizenship for you .

    That is the only solution for someone who wants to look into things through the deep knowledge and the perspective of the pataxo wisdom


  4. Araponga from Caraíva says:

    Please…. the earth is crying for help in the south of Bahia, our water springs are drying out, there is no more fish in our rivers,we cant feed our families from this chemically destroyed earth… the green desert took over our home.

  5. avalongirl says:

    ”environmentally friendly mill” ????? since when a company that destroyed rain forest and leave indigenous people homeless can ever use a term as environmentally friendly ???

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