Plantations, poverty and power - Critical Information Collective

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101 International Finance Corporation (IFC): Public money for private profits The International Finance Corporation is the World Bank’s private sector lending institution. Founded in 1956, by 2007 it had a total committed portfolio of almost US$31 billion, 508 and has worked with more than three thousand companies in 140 countries. 509 According to its mission statement, IFC exists to “promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives.”510 But when talking to industry, IFC staff occasionally let slip the real purpose of IFC. “We are open for business,” announced Tatiana Bogatyreva, a senior investment officer with IFC, at a packaging industry conference in Moscow in June 2005.511 The conference was organised by the Adam Smith Institute, a far right-wing proprivatisation lobby group, and included sessions such as “Packaging as a marketing tool” and a “Champagne roundtable” with packaging industry executives.512 Bogatyreva told the conference that IFC is ready to finance more packaging sector projects. Unlike the rest of the World Bank Group, IFC provides loans directly to companies, rather than to governments. The benefits to companies are clear. As well as providing long-term, cheap financing, IFC provides advice on emerging markets, industry sectors and financial structuring. And IFC can help arrange project funding from commercial banks, as well as providing equity finance for companies. For several decades, IFC has been a major sponsor of pulp and paper projects around the world. In recent years, IFC has approved loans for pulp and paper projects in Pakistan, China, Brazil, Uruguay, Jordan and Kyrgyz Republic. When IFC decides to invest in a project, commercial banks will follow. For example, financing of the Botnia pulp mill in Uruguay was stalled until the IFC agreed to fund the project. The following list of projects gives an indication of IFC’s involvement in the pulp and paper sector:513 •IFC started lending to Kenya’s Panafrican Paper Mills in 1974, since when it has made around eight loans to PPM. In 1995, IFC gave a US$15 million loan to PPM to increase capacity at its mill in Webuye. The pulp and paper mill is massively polluting and has created a series of health problems for people living in Webuye. 514 •IFC provided a total of US$104.5 in loans to Arauco in Chile. 515 Pollution from Arauco’s Valdiva pulp mill killed hundreds of protected black-necked swans and caused thousands to migrate from the Rio 508 “IFC at a glance”, International Finance Corporation Annual Report 2007. http://www.ifc.org/ifcext/annualreport.nsf/AttachmentsByTitle/AR2007_v1_IFC_at_a_Glance/$FILE/AR2007_IFC_at_a_ Glance.pdf 509 “International Finance Corporation”, Bank Information Center. http://www.bicusa.org/en/Institution.6.aspx 510 “International Finance Corporation”, Bank Information Center. http://www.bicusa.org/en/Institution.6.aspx 511 Chris Lang (2005) “Open for business: How the International Finance Corporation subsidises the pulp and paper industry”, World Rainforest Movement Bulletin 95, June 2005. http://www.wrm.org.uy/bulletin/95/Global.html#IFC 512 “The CIS Packaging Summit 14th - 16th June 2005”, Conference brochure, Adam Smith Conferences. 513 This list was generated by a search for “International Finance Corporation” on 17 June 2005 on RISI’s website http://www.paperloop.com (now http://www.risiinfo.com). The list was updated with an additional search for “pulp” on IFC’s website: http://ifcgoogleext.worldbank.org/ 514 Chris Lang (2007) “Kenya: Pan Paper plans to expand its polluting operations”, World Rainforest Movement Bulletin 123, October 2007. http://chrislang.org/2007/10/29/kenya-pan-paper-plans-to-expand-its-polluting-operations/ 515 Machteld Spek (2006) “Financing Pulp Mills. An Appraisal of Risk Assessment and Safeguard Procedures”, Center for International Forestry Research (CIFOR), Bogor, Indonesia, page 22.
102 Cruces nature sanctuary, downstream of the pulp mill. •In 1989, IFC provided US$10 million capital to Celulosa del Pacifico (Pacifico), a joint venture between Chile’s largest papermaker, Compania Manufacturera de Papeles y Cartones (CMPC) and Simpson Paper of the USA, to build a 315,000 tonnes/year pulp mill. The following year, IFC provided a further US$147 million. The pulp mill started operations in 1992. 516 •When Klabin Bacell started its 115,000 tons a year pulp mill in the northern part of Bahia state, Brazil, IFC was part of the joint venture. A 2007 report by Ivonette Gonçalves de Souza and João Luiz Monti documents the impact of the company’s operations on local people. The company’s eucalyptus plantations have dried up water resources, seriously impacting farming in the area. 517 •IFC lent Advance Agro (Thailand) US$10 million in 1994. 518 Advance Agro’s plantations have replaced forests and taken over local people’s farmlands. Pollution from the company’s pulp mills continues to affect local people. (See section on Advance Agro, above.) •IFC owns shares in Korea’s second largest fine paper producer, Shinmoorim Paper and in October 1998 financed the company’s new pulp line. 519 •In 1998, IFC gave a US$20 million loan to United Pulp and Paper Company in the Philippines. IFC also bought US$7.5 million of shares in the company. UPPC ran into difficulties as a result of the Asian economic crisis and IFC planned to financially restructure the company to help it repay its loans. 520 •In 1998, IFC took a 20 per cent stake in Romania’s Dunapack Rambox in return for a long-term loan to help finance investment at the plant. •In 1998, IFC gave a loan of US$15 million to Bulgaria’s Celhart to renovate and modernise the company’s pulp and paper mill in Stambolijski. 521 Four years later, IFC and the European Bank for Reconstruction and Development took over Paper Factory Stambolijski in order to restart operations at the mill. 522 Mondi subsequently bought the mill and renamed it Mondi Packaging Stambolijski. 523 •Also in 1998, IFC provided a US$41 million loan to a Croatian paper and packaging company, Belice- Bel, to increase the capacity of its mill in Belice. The loan included US$6.5 million equity, giving IFC a stake in the firm. 524 •In 2001, IFC awarded a US$13 million loan to Turkish tissue producer Ipek Kagit, to support the company during a financial crisis in Turkey. In 1998, IFC provided US$65 million for the company’s US$100 million expansion plan. Ipek Kagit is jointly owned by Georgia Pacific and Turkey’s Eczacibasi Holdings. 525 516 Amanda Marcus (1993) “Chile: Smooth production for a rough climate”, Pulp and Paper International, August 1993. 517 “Bahia Pulp S.A. (Brazil)”, a report by Ivonete Gonçalves de Souza (CEPEDES) and João Luiz Monti (CDDH-Tx.de Freitas), April 2007. http://www.pulpmillwatch.org/companies/bahia-pulp-s.a/ 518 “Annual Report - Investment Portfolio 1999”, International Finance Corporation. 519 Robert Ryan (2000) “Shinmoorim speeds up as market slows down”, Pulp and Paper International, Vol. 42, No. 11, November 2000. 520 “United Pulp and Paper Company Inc., project number 9339”, IFC Summary of Project Information. http://www.ifc.org/ifcext/spiwebsite1.nsf/1ca07340e47a35cd85256efb00700cee/6C79AADFB3B2F8208525688E0079648 B 521 “Celhart Pulp and Paper Mill, project number 8969”, IFC Summary of Project Information. http://www.ifc.org/IFCExt/spiwebsite1.nsf/0/b4a3f1ec5ca32b8e8525688e00711b7eOpenDocument 522 “EBRD and IFC to finance the restart of paper production at Stambolijski”, European Bank for Reconstruction and Development press release, 22 March 2002. http://www.ebrd.com/new/pressrel/2002/02mar22x.htm 523 “Investment in Plovdiv mill”, CEE Packaging, 18 December 2006. http://www.ceepackaging.com/2006/12/18/investment-in-plovdiv-mill/ 524 “Croatian mill ups capacity”, Pulp and Paper International, June 1998. 525 “Ipek Kagit wins IFC loan”, Pulp and Paper International, Vol. 43, No. 12, December 2001.
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1 Plantations, poverty and power: E
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3 CONTENTS Introduction 1. Plantati
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5 New investors have emerged recent
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7 1. Plantations do not plant thems
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9 plantations established on grassl
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11 Nations Food and Agriculture Org
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13 Another reason for the move to t
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15 In his book, “Khor Jor Kor, Fo
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17 Between 1991 and 2006, the numbe
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19 are asking for”, notes WWF. 60
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21 consume fewer goods. Less advert
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23 credit crunch, unstable oil pric
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25 Investment in plantations in the
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27 possible price. Subsidies, linke
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29 2. The anatomy of five pulp proj
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31 However, while the Bank confirme
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33 make way for its tree plantation
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35 In April 2004, about 2,000 famil
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37 Sappi, Swaziland: 50 years of in
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39 after an assessment by the Soil
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41 impact of the plantations on wat
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43 Advance Agro, Thailand: Deforest
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45 confiscation and liquidation of
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47 management was facing a bankrupt
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49 Indah Kiat, Asia Pulp and Paper,
Page 52 and 53: 51 company owners want profits to b
Page 54 and 55: 53 • US$4.5 billion owed by APP i
Page 56 and 57: 55 explained that “association wi
Page 58 and 59: 57 Indah Kiat faces a series of lan
Page 60 and 61: 59 logging. While the investigation
Page 62 and 63: 61 experimental areas and not from
Page 64 and 65: 63 Staples and Office Depot in the
Page 66 and 67: 65 “the exhaustive studies have c
Page 68 and 69: 67 CEDHA has also filed complaints
Page 70 and 71: 69 of converting grasslands to indu
Page 72 and 73: 71 3. Pulp Inc. Profiles of seven p
Page 74 and 75: 73 Thailand, a power plant for a Ne
Page 76 and 77: 75 Management’s experts the possi
Page 78 and 79: 77 A year after Aracruz’s third p
Page 80 and 81: 79 In January 2003, Pöyry announce
Page 82 and 83: 81 Bank in the early 1990s. Groome
Page 84 and 85: 83 Pöyry’s role in the Baikal Pu
Page 86 and 87: 85 Under carbon financing, Pöyry o
Page 88 and 89: 87 Pöyry is working on second gene
Page 90 and 91: 89 The Confederation of European Pa
Page 92 and 93: 91 CEPI Eurokraft states that “it
Page 94 and 95: 93 sectors need to reduce by 21% co
Page 96 and 97: 95 The ADB’s report notes that th
Page 98 and 99: 97 Nepal In Nepal, the target area
Page 100 and 101: 99 loan for the second plantations
Page 104 and 105: 103 •In December 2000, IFC approv
Page 106 and 107: 105 firm’s activities. After his
Page 108 and 109: 107 safeguards are in practice.
Page 110 and 111: 109 Bank projects are approved by a
Page 112 and 113: 111 •€80 million to Portucel to
Page 114 and 115: 113 The Food and Agriculture Organi
Page 116 and 117: 115 Nevertheless, Poore and Fries n
Page 118 and 119: 117 failure to define industrial tr
Page 120 and 121: 119 FAO’s guidelines recommend th
Page 122 and 123: 121 Rosengren did not reply to my e
Page 124 and 125: 123 Forest Stewardship Council: Mis
Page 126 and 127: 125 body that rubber stamps operati
Page 128 and 129: 127 Criterion 1.6, for example, sta
Page 130 and 131: 129 fast wood plantations have take
Page 132 and 133: 131 Principle 10.8 should prevent t
Page 134 and 135: 133 By April 2004, FSC had, at last
Page 136 and 137: 135 plantations, because it creates
Page 138 and 139: 137 integrated set of common Princi
Page 140 and 141: 139 for clearing areas of Atlantic
Page 142 and 143: 141 Colombia were certified by SGS.
Page 144 and 145: 143 The dissociation became necessa
Page 146 and 147: 145 4. Future planned pulp mills As
Page 148 and 149: 147 Planned pulp projects: 698 Comp
Page 150 and 151: 149 UPM and Sveza Group Vologda Rus
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151 paper industry along ecological
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