Plantations, poverty and power - Critical Information Collective

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infrastructure necessary for the two new lines was installed when the pulp mill was built. 109 In 2004,
Aracruz’s Chief Marketing and Sales Officer Joao Philippe Carsalade told investors that Veracel was
looking to expand its operations. “There are plenty of land bases,” Carsalade said. “It’s a question of
building up a forest [sic] base for that. Also, there are some other alternatives that we will start looking at,
in terms of areas in which we can build forest [sic], and with a future plan of putting up a pulp mill.” 110
In 2005, Stora Enso’s then-CEO Jukka Härmälä described the Veracel pulp mill as “the most cost
competitive short fiber pulp mill in the world”. 111 But these cheap production costs are only possible
because of a series of subsidies and cheap loans. In October 2001, EIB approved a US$30 million loan to
Veracel. The loan covered establishing 26,000 hectares of eucalyptus plantations, buying forestry
equipment and building and upgrading hundreds of kilometres of roads. 112
Veracel invested about US$26 million in infrastructure, including roads and its own port. “There was
nothing but trees when we arrived here,” Jorma Kangas, Veracel’s project manager, told the Financial
Times in 2005. 113
In December 2003, EIB approved another loan to Veracel, this time a US$80 million loan for
construction of the pulp mill. 114 The Nordic Investment Bank provided a loan of US$70 million.115 The
Brazilian Development Bank (BNDES) also financed the pulp mill project to the tune of US$500
million. 116
The European Investment Bank’s process for approving its loans was not transparent. In October 2003,
representatives from four Brazilian NGOs and three European NGOs met with EIB officials in Brussels
to urge the bank not to finance the Veracel project. During the meeting, the EIB stated that it wanted
“hard facts” from NGOs. Yet the Bank offered no reports, documents and no concrete information about
the project. Marcelo Calazans from the Brazilian NGO FASE Espirito Santo asked to see the documents
that EIB has produced in its evaluation of the Veracel project. Werner Schmidt, a Senior Economist at the
EIB, replied,
“We look at the social and market aspects of the project. We look at employment. What was the situation
before the project and with the project Our evaluation is a continuous process. We look at market
aspects, whether the project is financially and economically viable. This is all part of the due diligence
process.” 117
109 Patrick Knight (2004) “Investments in the billions: Brazilian mills expect to supply 50% of world’s additional pulp
needs”, Pulp and Paper International, August 2004.
110 “Q4 2003 ARACRUZ CELULOSE S A Earnings Conference Call – Final”, FD (Fair Disclosure) Wire, 14 January
2004.
111 “Q2 2005 Stora Enso Earnings Conference Call – Final”, FD (Fair Disclosure) Wire, 27 July 2005.
112 “EIB loan for reforestation in Brazil”, European Investment Bank press release, 18 October 2001.
http://www.eib.eu.int/news/press/press.asppress=130
113 Raymond Colitt (2005) “Brazil is top of the tree in tale that is no pulp fiction”, Financial Times, 21 June 2005.
114 “Veracel Pulp Mill Project, Brazil”, European Investment Bank, press release, 30 March 2004.
http://www.eib.eu.int/news/News.aspnews=73&cat=10
115 “Fast-growing forest is Veracel’s trump card”, Bulletin, Nordic Investment Bank, July 2004.
116 “Brazil President To Attend BNDES Veracel Loan Ceremony”, JB Online, Latin America News Digest, 21 January
2005.
117 I took part in the meeting. The quotations are from my notes taken during the meeting.