Lack of wood may slow pulp expansion in Brazil

CEOs also talked about environmental targets at a conference


Cristiano Teixeira, chief operating officer at Klabin — Foto: Ana Paula Paiva/Valor

Cristiano Teixeira, chief operating officer at Klabin — Foto: Ana Paula Paiva/Valor

Limited wood supply and rising input prices are expected to restrain announcements of new pulp mills in Brazil over the next seven years, which corresponds to the eucalyptus cutting cycle, said industry executives attending the Fastmarkets RISI Latin American conference held Tuesday in São Paulo.

“It is very difficult to foresee new projects happening in Brazil in the short term because of lack of wood,” Suzano CEO Walter Schalka said in a panel with Klabin chief operating officer Cristiano Teixeira, Bracell executive vice-president Per Lindblom, and Eldorado Brasil commercial and logistics head Rodrigo Libaber.

In São Paulo, as Mr. Schalka said, Bracell secured the wood that was still available to feed the expansion of the Lençóis Paulista mill. The company also advanced in Mato Grosso do Sul, where Suzano already operates and is building a new unit, through a total investment of R$19.3 billion, which represents additional demand for inputs.

“From my perspective, there is a shortage of wood in Brazil. We don’t have wood available for competitive short-term projects”, added Mr. Schalka.

At Eldorado, which has a plant in Três Lagoas, in Mato Grosso do Sul state, the perception is the same. Rodrigo Libaber said there will be no wood for new projects in the short term. “More: there will be no wood economically viable in the long term” if planting doesn’t start now, he said. There are areas available in Brazil and the frontiers are “huge,” the executive said. Therefore, there is room for growth in the industry, as long as it is “planned and organized.”

The Eldorado executive also said problems in the global logistics chain are unlikely to be solved in a short period, especially because the logistics cycles in the sector are long and, therefore, it takes time until solutions have some effect. “I don’t believe either that we will have the logistics we had before. There will hardly be a turnaround this year, and things will happen gradually until we reach equilibrium,” he added.

Asked about the commitments assumed by Brazil in the United Nations Conference on Climate Change last year, the COP 26, Klabin’s CEO said it is unclear in which conditions the country will arrive at the next meeting. “I can say that, given today’s figures of emissions and deforestation, we are likely to arrive at COP 27 with low expectations and without delivering what was promised,” said Mr. Teixeira.

According to the executive, the arrival at COP 26 was also marked by low expectations concerning potential efforts of the government, which ended up causing surprise by making unexpected commitments. However, discourse and practice have become disconnected ever since, in his view. “The carbon credit market could be the half-full glass, but the bill that was being discussed with different sectors ended up being run over by a decree,” he said.

Mr. Teixeira also said that it is part of Klabin’s strategic vision to evaluate potential acquisitions or mergers in the corrugated packaging market, and the company will keep this view. “If an opportunity for [paper] integration arises, Klabin will certainly look at it closely. Recently, it has preferred organic growth,” he added.

*By Stella Fontes — São Paulo

Source: Valor International