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Pulp producer allegedly acquired properties above limits imposed by law

10/06/2022


A court in São Paulo forced Bracell, the pulp maker owned by the Asian group Royal Golden Eagle (RGE), to comply with the legal limits for the acquisition and exploitation of land in Brazil, and may later order the sale of areas or the termination of lease agreements that exceed the provisions of a law that restricts the purchase of land in the country by foreigners.

The preliminary injunction favored the Brazilian Agribusiness Association (Abag) and the Association of Cane Planters of the Mid Tietê (Ascana), which filed a suit accusing the group of land grabbing – the acquisition of agricultural land in a predatory way, with social, economic and environmental damage.

The associations filed a public civil action against the group, accusing it of wrongdoings in the purchase and leasing of agricultural land, violation of national sovereignty, and of putting food security in Brazil at risk.

Bracell may appeal the injunction granted by Judge Valdeci Mendes de Oliveira, of the 4th Civil Court of Marília, São Paulo.

In the lawsuit, Abag and Ascana also requested that the Asian group be forced to sell or terminate the leases in the municipalities where the limit of 10% of the total area, provided for in the legislation, has not been observed.

In at least three cities in São Paulo — Oriente, Álvaro de Carvalho and Vera Cruz — the areas leased by Bracell, 32.7%, 11.8% and 10.9%, respectively, exceeded the legal limit.

The associations accuse the group of using corporate structures that break the law and camouflage its majority participation in Brazilian companies. And they attached to the lawsuit a technical evaluation from the Program for Continuing Education in Economics and Business Management (Pecege), linked to the Luiz de Queiroz School of Agriculture (Esalq/USP), which associates Bracell’s operations with the reduction of arable land, the lower supply of food, and the weakening of the local economy in the municipalities where the group is present.

Bracell’s activities, according to the lawsuit, have also resulted in overpricing of rural properties in the areas where it operates and in the loss of purchasing power of the population on agribusiness production. Abag and Ascana are represented in the lawsuit by the law firms Modesto Carvalhosa Advogados and Chiarottino & Nicoletti Advogados.

Bracell has pulp mills in Camaçari (Bahia) and Lençóis Paulista (São Paulo). The group has invested about R$15 billion in recent years in São Paulo, according to market estimates, to increase production capacity to up to 3 million tonnes per year of eucalyptus pulp or 1.5 million tonnes per year of dissolving pulp.

In a statement, Bracell said its business in Brazil “is in accordance with all legal regulations in force” and adds that “the company is aware of the public civil action and is preparing all the necessary legal clarifications,” it added.

*By Stella Fontes — São Paulo

Source: Valor International

https://valorinternational.globo.com/