Present in Brazil for more than 20 years, the conglomerate also controls April and has already invested more than $6.5 billion in Brazil

04/02/2024

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Praveen Singhavi — Foto: Gabriel Reis/Valor

Brazil is at the center of the strategy of the Asian conglomerate Royal Golden Eagle (RGE), owner of Bracell, a Brazilian producer of dissolving and bleached eucalyptus pulp that has been one of the most prominent investors in the local forestry sector in recent years.

With more than $35 billion in assets and 70,000 employees globally, the Singapore-based group, which also owns April and Asia Symbol, leading pulp and paper companies in Asia, is currently the second-largest producer of market pulp (sold to third parties) in the world, behind Suzano, and has plans to expand further in the country.

In addition to the billion-reais investment to buy and expand the former Lwarcel plant in Lençóis Paulista (state of São Paulo), which began in 2018 with the acquisition, Bracell is investing R$2.5 billion in a mega-factory for tissue paper in the same town, and another R$2.5 billion in a plant for chemicals used in pulp production, also in Lençóis. In 20 years, Bracell’s investments have already exceeded $6.5 billion (more than R$30 billion at the current exchange rate).

“Brazil is the sweet spot of the global pulp industry,” Bracell CEO Praveen Singhavi told Valor in his first interview in the position he has held for about a year. Neither Brazil nor RGE, however, is new to the executive’s career. For almost 16 years, he led another of the group’s operations, April. Before that, between 2006 and 2007, he was the head of Olam International, one of the global names in agricultural commodities trading in Latin America.

Government support for the pulp and paper sector, the existence of a mature ecosystem that contributes to the evolution of the local industry, and the availability of land give Brazil a vital position in the plans of major investors in the sector, including the Asian group, according to Mr. Singhavi. Added to that is the competitiveness of the raw material produced here, which has the lowest costs in the world and is also favored by the climate and soil.

It’s no surprise that the country is now the world’s largest pulp exporter. RGE uses dissolving pulp produced in the interior of São Paulo at mills owned by Sateri and Asia Pacific Rayon (APR), subsidiaries that place it at the top of the global viscose market ranking. Between Camaçari (in the state of Bahia) and Lençóis, Bracell can produce 3 million tonnes of kraft pulp or 2 million tonnes of dissolving pulp per year. To transport its production abroad, it invested R$1 billion in a terminal at the Port of Santos, also in the state of São Paulo.

With the completion of the OL Papéis purchase in 2023, Bracell will now operate two tissue units in the country with a capacity of 50,000 tonnes per year, marketed under the Familiar (single- and double-ply toilet paper) and Absoluto (paper towels) brands. “Brazil is an important tissue market, and we see opportunities for growth,” he commented. It is now installing an additional 240,000 tonnes of capacity at the new Lençóis plant, which will start operating in the second quarter.

Bracell’s upcoming project entails a R$300 million investment over two years aimed at modernizing its Camaçari plants that produce dissolving pulp, used in making viscose, and special dissolving pulp, a higher-quality fiber for medicines, food, cosmetics, and more. The Bahia factory was the group’s entry point into the country when it acquired the former Copener Florestal and Klabin Bacell in 2003. By 2030, the investment is expected to reach R$1 billion.

Some say that Bracell, which today has industrial and forestry operations in Bahia, São Paulo, Pernambuco, and Mato Grosso do Sul, with more than 11,000 employees—almost four times the number it had four years ago—is preparing a forestry base to build a new pulp mill in Mato Grosso do Sul. The company’s management denies such an intention. “Our focus is on having access to timber. Launching the tissue project and marketing are the priorities,” said Mr. Singhavi.

Bracell’s drive has annoyed competitors, not only in the pulp and paper industry but also in other agribusiness segments vying for land, especially in the São Paulo region where its largest operation is located. That has even led to a lawsuit over foreigners purchasing land. The strong demand for land and timber in certain regions, notably the South, Southeast, and Midwest, to supply new pulp projects has resulted in significant appreciation in recent years. “Bracell is a Brazilian company with a foreign investor,” said the executive. “The important thing is to follow the country’s laws, so we are within the land legislation.”

Regarding sustainability, Mr. Singhavi highlighted that past issues, such as the exploitation of native forests, which once troubled April, have been addressed and resolved. The RGE group company is in the process of seeking recertification from the Forest Stewardship Council (FSC), which represents the gold standard for responsible forest management practices. Mr. Singhavi added that the company not only fulfills all necessary criteria but also pursues one of the sector’s most ambitious conservation goals: for every hectare of land planted, an equivalent hectare will be preserved. Currently, they are close to achieving this goal, with the target standing at almost 90%.

*Por Stella Fontes — São Paulo

Source: Valor International

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