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Expanding exports is the main reason for the investment that is being announced by the Brazilian pulp and paper industry to increase its productive capacity. According to the Brazilian Development Bank (BNDES), investors in the sector should reach 20 billion reais (US$ 9.1 billion) between 2007 and 2010.
"All of the expansion is aimed at supplying the foreign market," said the head of the pulp and paper department at the BNDES, Adely Branquinho das Dores. In all, the bank should participate with the financing of 11.7 billion reais. According to Adely, most of the so-called "market pulp" produced in Brazil is already exported. "Market pulp" is the name of the input that is not used by the industries themselves to make paper, but is sold to third parties. To have an idea of the size of the market, Brazil produced 5.9 million tons of market pulp in 2005 and exported 5.5 million. The country is the seventh greatest producer in the world, and is the main producer of short fiber pulp. In the case of paper, the domestic market, except for printing paper, is fully supplied. "There is no sense in installing machinery to produce 400,000 tons of paper a year for the domestic market, therefore investment in the segment is also turned to export," stated Adely. One of the examples is that of Klabin, the largest paper producer in Brazil, which this month announced investment of 2.2 billion reais (US$ 1 billion) in the expansion of the productive capacity of their factory in Telêmaco Borba, in the southern Brazilian state of Paraná. Among the forecasted improvements is the purchase of new machinery to increase the production of paperboard from 330,000 tons a year to 680,000. The idea is to export more and more. Heading South According to Adely, apart from the growth in the demand, there is also a change in areas receiving investment on the international scale, with companies closing factories in the northern hemisphere and investing in business in the South. "This is due to the competitiveness of our pulp. The cost of the raw material is low, not only due to favorable climate conditions, but also due to technological development," she said. All the material used in the production of pulp and paper in Brazil, according to the BNDES, comes from planted forests. There are 1.7 million hectares cultivated in the country, being 75% with eucalyptus, 24% pine and 1% other species. The companies have been investing in research and, in the case of eucalyptus, the trees become mature in around seven years. Most of the investment forecasted between 2007 and 2010 is turned to the production of pulp. The forecast, according to Adely, is to increase production from the current 6.8 million tons to 11 million. Half of the Brazilian exports of the input go to Europe. Asia is the second greatest market, answering to 25%. According to her, foreign sales of the product generated US$ 2 billion in 2005 and should reach US$ 2.45 billion this year. The production of pulp in the country is dominated by large companies, the two biggest being Aracruz, with an installed productive capacity of 2.6 million tons, and Votorantim Celulose Papel (VCP), with an installed capacity of 1 million tons, followed by Cenibra, Veracel, Suzano Bahia Sul and Jari. In the case of paper, the forecast is for expansion of production from the current 9.9 million tons to 11.6 million. The main markets are the countries of South America, followed by the United States and Europe. Last year, Brazilian paper exports totaled US$ 1.4 billion. According to the BNDES, the greatest companies in paper production are Klabin, which answers to 17%, Suzano (13%), VCP (13%), IP (5%), Rigesa (4%), Orsa (3%), Inpacel (2%) and Trombini (2%). "The most produced paper in Brazil is for packaging and writing," stated Adely. Also according to the BNDES, the pulp and paper sector as a whole includes 220 companies in 450 cities in 16 Brazilian states. The sector generates 110,000 direct jobs. Anba - www.anba.com.br
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