By Chris Lang. Published by urgewald, June 2007.
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1. WORLDWIDE PULP EXPANSION
Globally over the next five years, the pulp industry is planning a total of more than 25 million tonnes of new pulp capacity – an average of five million tonnes a year. This is a dramatic increase. Between 1994 and 2004, world pulp capacity increased at a rate of about one million tonnes a year. The global expansion of the pulp industry is focused on the global South, with the vast majority of this new pulp capacity planned for Uruguay, Brazil, Indonesia, Australia, China and Russia. The table below gives an overview of planned pulp mills worldwide. Associated with the expansion of pulp capacity is a huge increase in the area of industrial tree plantations.
The following section provides an overview of some of the countries in which the pulp invasion is taking place, the companies involved and the problems that these projects are creating for local people and their environments. Many of the planned ventures have already led to protests and thus pose considerable reputational risks for investors. While not all of the planned pulp mill projects are described in detail in the case studies, an indication is given of the seriousness of the problems to be awaited. More detailed information about projects in the pipeline, NGO concerns and company profiles are provided on our website: www.pulpmillwatch.org.
Overview of planned pulp expansions
Brazil is currently the world leader in new pulp capacity, with 6.7 million tonnes new capacity planned over the next five to six years. In Uruguay, construction of Botnia’s one million tonnes a year pulp mill is nearing completion and Ence is planning another million tonne mill. Meanwhile Stora Enso is buying up land for plantations in Uruguay and is considering one more million tonne pulp mill. In Latin America, as a whole, about 4 million tonnes of new pulp capacity is currently under construction. This figure does not take into account the new pulp capacity that has recently come on line, such as the new 900,000 tonnes a year Veracel pulp mill and Aracruz’s recent expansions (an increase of 1.3 million tonnes since 2000). In Chile, CPMC started up its 780,000 tonnes a year Santa Fe mill at the end of 2006 and Arauco’s 856,000 tonnes a year Nueva Aldea pulp mill started up in September 2006.
In Australia, Gunns is planning a new pulp mill with a capacity of between 800,000 and 1.1 million tonnes a year. Protavia recently announced that it intended to combine plans for two proposed mills to build a single 700,000 tonnes a year mill in Victoria.
In South Africa, 200,000 hectares of new plantations are planned along with an increase of 565,000 tonnes a year pulp capacity. South Africa’s pulp industry also looks to benefit from Mozambique’s plans to establish up to seven million hectares of plantations.
Other massive plantation schemes are planned elsewhere in the world. The Vietnamese government has a 5 million hectare reforestation plan, of which one million hectares is to feed the pulp and paper industry. About 750,000 tonnes of new pulp capacity is planned or under construction in Vietnam. Three new pulp mills are planned in India, with a total capacity of 540,000 tonnes. In Laos, the Asian Development Bank has set a target of 500,000 hectares of plantations by 2015. In Indonesia, the government (with the backing of the World Bank) aims to establish five million hectares of tree plantations. Meanwhile, about 4.4 million tonnes of new pulp capacity is currently planned or under study. Further possible projects include a US$ 1.3 billion plan from a group of Indian and Malaysian investors and plans by the South Korean Korindo Group.
Much of the pulp produced will be market pulp aimed at sales to China. But pulp production in China is also expanding rapidly. Although the Chinese government recently announced that it would order the closure of up to three million tonnes of small pulp mills, almost five million tonnes of new capacity is currently planned or under construction in China. The Chinese government aims to establish 5.8 million hectares of industrial tree plantations for the pulp industry by 2015.
Further competition for sales of pulp to China comes from Russia. Currently, about half of the pulp produced in Russia is exported to China. Almost two million tonnes of new pulp capacity is planned in Russia. This figure could increase considerably in the near future.
New pulp mills, planned and under construction:
|Company||Location||Country||Capacity (t/yr)||Cost (US$)||Completion anticipated|
|Gunns||Tasmania||Australia||800,000 – 1.1 million||1.2 billion||–|
|Aracruz||Rio Grande do Sul||Brazil||1.3 million||–||2010-2015|
|VCP||Tres Lagoas||Brazil||1.1 million||1.15 billion||2009|
|Sateri International||Bahia||Brazil||250,000||375 million||2007|
|Stora Enso||Rio Grande do Sul||Brazil||1 million||–||2012-2013|
|APP China||Zhejiang||China||250,000||142 million||–|
|Shandong Chenming||Guangdong||China||700,000||1.2 billion||2009|
|Stora Enso||Guangxi||China||1 million||–||–|
|Lee & Man||Chongqing||China||125,000||–||2008|
|West Coast Paper Mills||Karnataka||India||250,000||300 million||2008|
|Seshasayee||Tamil Nadu||India||170,000||80 million||2007|
|Kaltim Prima Pulp & Paper||East Kalimantan||Indonesia||1.2 million||1.5 billion||–|
|PT Garuda Kalimantan Lestari||West Kalimantan||Indonesia||1.2 million||–||–|
|Aditya Birla||Savannakhet||Laos||200,000||350 million||–|
|Larvik Cell||Pskov||Russia||600,000||563 million||2009|
|Baikal Pulp & Paper||Irkutsk||Russia||200,000||350 million||–|
|Mondi||Syktyvkar||Russia||1 million||1.5 billion||–|
|Sappi||Saiccor||South Africa||200,000||290 million||2008|
|NCT Forestry Cooperative||Richards Bay||South Africa||140,000||–||–|
|Botnia||Fray Bentos||Uruguay||1 million||1.2 billion||2007|
|ENCE||Colonia||Uruguay||1 million||930 million||2010|
|Stora Enso||–||Uruguay||1 million||–||–|
|Tracodi||Long An||Vietnam||100,000||93 million||2007|
|Lee & Man||200 km south of HCM City||Vietnam||150,000||–||2008-2009|
|Incomex Saigon||Quang Nam||Vietnam||115,000||150 million||–|
|BILT, Martin Group (?)||Tuyen Quang||Vietnam||130,000||200 million||2009|
|Vinapimex||Bai Bang||Vietnam||250,000||300 million||–|
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2. COUNTRY PROFILES
The woodchip industry in Australia and the proposed new pulp mills are focussed on the island state of Tasmania and the southeast of mainland Australia. Tasmania’s old-growth forests are ancient and unique in the world. The swamp gum tree (Eucalyptus regnans) is the world’s largest flowering plant and the tallest hardwood tree in the world. Tasmanian forests being converted to pulpwood plantations include areas of temperate rainforests that provide habitat for many rare and endangered animal species, including the famous Tasmanian Devil, that can be found nowhere else.
These old-growth forests are logged for wood chips to be exported mainly to Japan to be made into paper. When the forest is logged, only the largest trees are removed. What’s left is piled up and burned. Huge clouds of smoke hang over Tasmania, sometimes for weeks. Then the land is sprayed with herbicide and carrots laced with 1080 poison are left between the rows of seedlings to kill any wildlife , which survived the destruction of the forest. The monoculture plantations established to provide wood for the pulp industry are sprayed with a cocktail of chemicals to control pests and weeds. As a result, some local communities’ water sources have become contaminated with atrazine.
Australia plans to increase the area of industrial tree plantations in the country to three million hectares by the year 2020. Approved by the government in 1997, the report “Plantations for Australia: The 2020 Vision” was drawn up as a “strategic partnership between the Australian State and Territory Governments and the plantation timber growing and processing industry.”
In the five years after the 2020 Vision was launched, about 85,000 hectares a year were planted, mainly of eucalyptus. The government set up a system of tax benefits called the “managed investment scheme”.
Bill Manning worked as a forester in Tasmania for 32 years. His last forestry job was with the Forestry Practices Board, which regulates forestry practices in Tasmania. “From my extensive experience in the forestry industry,” he told a Senate Committee in 2003, the 2020 Vision has led, among other things, to “corruption of forest management in Tasmania such that there is no enforcement of this weakened code of forest practice and no silvicultural outcome other than the clear felling of native forest for plantation establishment of exotic introduced plantation species.”
Manning also testified to the Senate Committee that the logging industry was destroying native forests: “The clearfelling is out of control,” he said. “The scale of clearfelling in Tasmania is huge.”
New pulp mills planned
Two massive pulp mills are currently being planned for Australia. If these are built , they will consume at least six million tonnes a year of wood.
- For several years, an Australian investment company called Protavia has been planning to build two 350,000 tonnes a year pulp mills at Heywood and Penola in Victoria. In April 2007, RISI , an information provider for the pulp industry, reported that Protavia plans to drop the Heywood pulp mill scheme and build one mega-pulp mill in Penola. It is difficult to know how serious Protavia is about its pulp mill plans. Tim Woods, of the Construction Forestry Mining Energy Union told The Australian newspaper that “At every turn they [Protavia] have promised the mill would go ahead. A lot of people have planned their futures on that promise and Protavia let them do it, knowing they would get up and walk away.” Woods described Protavia’s director John Roche as a “deal maker” and suggested that Protavia was fulfilling a public relations role by providing the illusion that the tax breaks for plantations were producing a larger, diversified industry. Meanwhile, the South Australian government has offered to draw up a special bill that would ignore planning laws and allow parliament to decide whether the larger pulp mill at Penola could go ahead.
- Gunns is planning to build a pulp mill with a capacity between 800,000 and 1.1 million tonnes a year near Launceston in Tasmania. The US$ 1.2 billion pulp mill is to be supplied by a mixture of wood from plantations and native forests. In its first year of operation, 80 per cent of the wood supplied to the pulp mill would come from Tasmania’s native forests.
Gunns proposed pulp mill would consume Tasmanian native forests
Sean Cadman, a forest campaigner with the Tasmanian Wilderness Society, points out that Gunns proposed mill would “consume millions of tonnes of native forest and dump millions of tonnes of pollutants into the ocean and air. Thousands of tonnes of hazardous chemicals will be produced, transported, stored and consumed.” The impact on Tasmania’s forests and wildlife of the increased logging associated with this massive pulp mill would be severe. “Gunns have been responsible for clearing huge areas of Tasmania’s native forests and converting native forest including rainforests to monoculture plantations,” says Cadman. The endangered Tasmanian wedge-tailed eagle needs mature native forest to nest and breed. “If the planned logging goes ahead,” says Cadman, “the eagle will be driven further along the path towards extinction.”
In March, 2007, Gunns withdrew its application from the Resource Planning and Development Committee, arguing that the approval process was taking too long. Gunns then petitioned the government to create new legislation to avoid the assessment procedure. Tasmanian Premier Paul Lennon agreed and put a “Pulp Mill Assessment Bill 2007” to parliament specifically to allow Gunns to bypass state planning legislation , which requires that large-scale developments minimise environmental damage.
Parliament passed the bill and agreed to fast-track the approval process. The government appointed Finnish consulting firm SWECO PIC to carry out an assessment of the proposed pulp mill by 30 June 2007. The process will involve no input from the public, but will cost Tasmanian taxpayers US$ 625,000.
Tasmania’s Minister for Planning, Steven Kons states that SWECO PIC “has been serving the pulp and paper industry since 1971”. This is precisely the problem – SWECO PIC is not independent from the pulp industry. If SWECO PIC decides that the project can go ahead, several of its past (and potential future) clients stand to win lucrative contracts supplying equipment and services to the pulp mill. If the project doesn’t go ahead as a result of SWECO PIC’s report to the Tasmanian government, SWECO PIC is in effect depriving its own clients of work – and the probability of future contracts for itself.
Since resigning from the Resource Planning and Development Committee, Warwick Raverty has become an outspoken critic of the proposed pulp mill. Raverty has nothing against pulp mills in general, having worked for 20 years in the pulp industry before joining CSIRO in 2000. However, he is concerned about the approval process for the proposed mill. Speaking in a private capacity, he told freelance writer Roger Hanney that he’s “not impressed” with the selection of SWECO PIC as consultants. “One of the mills that they designed equipment for is the now infamous Arauco Valdivia bleached kraft pulp mill in Chile which has had to be shut because it polluted wetlands and caused mass killings of swans,” he said.
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Pulp industry and plantation proponents like to portray Brazil as a huge, half-empty terrain, where the pulp industry and associated plantations are providing jobs and developing the country. The industry advocates plantations as an alternative to using wood from the Amazon rainforests. But these plantations are not established on land that no one else wants, and the mills are thousands of kilometres from the Amazon. The plantations and pulp mills are concentrated in the coastal areas close to the ports from which the pulp is exported.
When the pulp industry arrived forty years ago in the Southeast of Brazil, large areas of Atlantic Rainforest were destroyed. With concessions granted by the then military government, plantation companies took over the lands of indigenous peoples, Quilombolas (descendants of escaped slaves) and peasant farmers. More recently, pulpwood plantations also replaced the species rich Cerrado savannah woodland. Ever since, the region has been impacted by pollution and sinking ground water levels and people have been protesting against plantations on their traditional land. But the expansions are still continuing at an alarming rate – driven by the international pulp industry and with the support of private banks and government subsidies.
Brazil has extremely inequitable land distribution, with three per cent of the population holding almost two-thirds of the country’s arable land. The large areas of land being taken over for industrial tree plantations exacerbate this situation.
Plantation expansion plans
The area of pulpwood plantations in Brazil is rapidly expanding as companies establish ever greater areas of eucalyptus monocultures. The pulp industry owns over 1.7 million hectares of plantations – about one-third of the total area of industrial tree plantations in Brazil (plantations are also used to provide charcoal for the steel industry and timber). While this figure may not sound much, especially in a country the size of Brazil, in some areas eucalyptus plantations completely dominate the landscape. In Conceição da Barra in the north of the state of Espírito Santo, for example, about 70 per cent of the land is covered with eucalyptus plantations.
The expansion of plantations in Brazil started under the military dictatorship in 1966 with a programme of subsidies for plantation establishment. The subsidies remained in place until 1987. An average of 180,000 hectares a year was established during this period. Recently the annual average increase in plantation area has been about 100,000 hectares.
Forest consulting firm Pöyry describes Brazil as the “natural hub for the forest industry’s expansion in South America”, and expects that the area of plantations will double in the next 10 years. According to Pöyry, “This raw material base will sustain the forest industry’s expansion with new mills mainly aimed at exports of market pulp, increasingly replacing the production of high-cost mills in the mature markets of North America and Europe.”
The pulp companies and their expansion plans
In 2005, according to the Brazilian Association of Pulp and Paper (BRACELPA), Brazil produced 10.1 million tonnes of pulp and 8.6 million tonnes of paper and employs 108,000 workers. The sector is dominated by a handful of major companies, of which, in terms of pulp production, Aracruz Cellulose is the largest.
Several companies are currently expanding their plantation and pulp operations in Brazil.
- Aracruz is planning to expand its operations in Espírito Santo and announced in 2006 that it is looking at the possibility of building a new 1.3 million tonnes a year pulp mill in Rio Grande do Sul. Aracruz currently has a total capacity of 3 million tonnes of pulp (up from 1.3 million tonnes in 2000). Almost all of Aracruz’s pulp is exported. The company accounts for nearly half of total pulp exports from Brazil and is the world’s largest producer of bleached eucalyptus pulp.
- Stora Enso is buying up land in the west of Rio Grande do Sul. The company aims to establish 100,000 hectares of plantations and is planning to build a new pulp mill in either Brazil or Uruguay, or perhaps both.
- In Bahia Sul province, Suzano is expanding its pulp operations. The company’s new pulp line is planned to start up in October 2007, increasing production by one million tonnes a year.
- Veracel has plans to double its current capacity of 900,000 tonnes a year in the state of Bahia.
- Sateri International is planning to expand its dissolving pulp mill Bahia Pulp by 250,000 tonnes a year.
- Votorantim Celulose e Papel (VCP) is building a new 1.1 million tonnes a year pulp mill at Tres Lagoas, 600 kilometres northwest of Sao Paulo. The pulp mill is planned to start operations in 2009.
At the costs of local people: Protests against the expansions
But this expansion of industrial tree plantations comes with serious social and environmental impacts. These plantations are occupying indigenous and traditional peoples’ territories, evicting people from rural areas and contributing to the creation of poverty.
In a country where land ownership is among the most skewed in the world, the vast areas of industrial tree plantations are further increasing land concentration. Brazil’s Movement of Landless Peasants (MST) is occupying lands planned for the pulpwood monocultures to illustrate the inequity of producing pulp for export from land that could be used to feed the people of Brazil.
Via Campesina, an international peasant farmers’ movement, has also protested against Brazil’s pulp industry. On 8 March 2007, World Women’s Day, more than 1,000 women from Via Campesina occupied plantations belonging to Aracruz, Stora Enso and Votorantim Celulose e Papel, in protest against the expansion of plantations in Rio Grande do Sul. The previous year, about 1,500 women farmers from Via Campesina occupied a tree nursery belonging to Aracruz near Porto Alegre. The farmers destroyed greenhouses and 5 million tree seedlings. Aracruz claimed they caused US$ 20 million worth of damage. Via Campesina describes the act as “a protest, an outcry so that society could comprehend something that it is not seeing, but which is destroying our rivers and our animals, the diversity of nature, and even our lives.”
A decades-long land dispute between the Tupinikim and Guarani indigenous peoples and Aracruz is still not resolved. Aracruz built its first pulp mill on the site of a Tupinikim village and destroyed at least seven other Tupinikim villages to make way for its plantations in the state of Espírito Santo. “When the company came, the people left. They weren’t able to defy it. They were forced to leave and even threatened,” Eugenio Francisco, a Tupinikim of the village of Lancha told researchers from FUNAI, Brazil’s indigenous affairs agency in 1994. “The company took everything,” he said.
The company denies that the Tupinikim and Guarani are indigenous peoples and launched a racist campaign against them through leaflets and billboard advertisements, one of which read, “Aracruz brought progress. FUNAI brought the Indians.”
Quilombola communities in the north of Espírito Santo are trying to reclaim 10,000 hectares from Aracruz. In July 2006, 500 Quilombola villagers reclaimed a cemetery where their ancestors are buried that had been covered in eucalyptus plantations. A Quilombola villager explained what they want from the company: “Aracruz can export its pulp, that’s OK. But people need jobs and to get back their own lives. Aracruz needs to resolve all these problems before it can export.” Another Quilombola villager put it more simply. “I want Aracruz to disappear from here,” he said.
A recent open letter from 48 organisations and individuals protests Veracel’s operations in the south of Bahia: “Over the past years, Veracel has generated a track record of environmental degradation, concentration of land, eviction of thousands of workers from the rural areas to the outskirts of cities, causing significant social and environmental disruptions.”
Veracel has established plantations on the lands of the Pataxó indigenous people in the area of Monte Pascoal. “This company is damaging our environment, co-opting our leaders with distribution of vehicles and promises of benefits with the clear objective of dividing us and continuing with the invasion of our territory,” the letter quotes a Pataxó as saying.
The letter also points out that Veracel’s plantations have “resulted in the disappearance of several rivers and streams, as well as the disappearance of several communities.”
In the region of Sateri International’s Bahia pulp mill the resistance against the company’s activities and expansion plans is growing. The fast growing tree plantations have led to the drying-up of the water sources in a region which already suffered water shortages. The social and environmental impacts are serious. Local communities can no longer grow crops using their traditional agricultural systems.
Workers at the mill point out the non-compliance with workers’ rights guaranteed internationally by ILO conventions which have been ratified by Brazil. On 16 March 2007, construction workers hired for the expansion of the pulp mill at Camaçari went on strike. Apart from demanding higher salaries and better working conditions, workers are also demanding payments for the danger and health risks associated with working on the pulp mill construction site. On the construction site, workers are exposed to the toxic gases produced from the existing pulp mill. “Many workers have almost fainted,” says one of the directors of the trade union. “The company has the obligation to pay, but does not pay.”
Other workers complain that they have colleagues who have skin problems because of the absorption of vapour and chemicals. Workers in the mill describe the unsafe working conditions and the many accidents. Three collective cases are currently going through the courts. The cases refer to the health hazards and dangers at the construction site and criticise the lack of commitment of the company concerning the safety of the workers.
In 1999, as a result of the controversies caused by the plantations and pulp industry in Brazil, citizens, fisher and farming communities, social movements, pastoral groups and churches formed the Alert against the Green Desert Network. In a 2003 letter to Brazil’s President Luiz Inacio Lula da Silva, the Green Desert Network summed up the problems caused by the pulp industry’s industrial tree plantations:
“Over the past four decades, this complex has destroyed the local communities’ way of life. The companies in this sector continue to invade their lands and have caused rural exodus with the consequent dispersion of many communities. In such regions, the rivers have been degraded by pollution caused by wide-spread use of pesticides and a process of desiccation, linked to large-scale plantations, compromising fishing and the quality and quantity of drinking water.”
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The largest investments in new pulp production are taking place in the South of China, in the provinces Fujian, Yunnan, Hainan, Guangxi and Guangdong. Industrial tree plantations are also being established in these provinces to feed these pulp mills.
The southern region of China is largely farmland with some areas of natural forests. Hainan, Guangxi and Guangdong are the main fruit producing provinces in China. Since the manufacturing and export boom started in the 1990s, Guangdong has become one of the highest-earning provinces in China. The economic boom has spread to neighbouring provinces.
Yunnan is known as the “kingdom of plants”. Of the 30,000 types of plants found in China, 18,000 are found in Yunnan. Yunnan is also home to 26 indigenous peoples. Forests in China provide 40% of the fuel for rural households. Nearly 60 percent of China’s forests are collectively owned and they play a critical role in the lives of both their owners and the nation, currently providing half the domestic timber supply and most non-timber forest products. China has been called the most forest-dependent civilization in the world.
Nevertheless, China’s pulp and paper industry is expanding rapidly. Since 1990, 50 per cent of the world’s expansion of paper production has been in China. Its pulp industry is changing from one based on agricultural residues of rice and wheat crops, to the use of wood and recycled paper as raw materials. Before 2000, only ten per cent of China’s pulp was produced from wood. Today more than half of China’s pulp comes from wood fibre.
Since the mid-1990s, thousands of small pulp and paper mills have been closed down, largely in an attempt to control pollution. While it is true that China’s small pulp mills were polluting, it would have been possible to upgrade the mills to reduce the pollution, for example by improving chemical recovery, by reducing the amount of silica going into the waste water and by using alternative pulping techniques. In May 2007, the Chinese government announced that it would be ordering the closure of thousands of small-capacity straw pulp mills across the country, with a total capacity of about 3 million tonnes a year.
This restructuring of the pulp industry in China from small-scale mills to massive mills reliant on wood-based pulp and recycled paper has created a bonanza for Northern consulting firms, machinery suppliers and paper companies. China is the “Promised Land as far as pulp and paper equipment suppliers are concerned,” wrote Pulp and Paper International’s Graeme Rodden in December 2003. Large foreign companies such as UPM, Stora Enso and APP are increasingly playing a role in pulp and paper production in China.
The consumption tiger
When talking about the world’s future markets and resources, China always appears as the consumption tiger, due to its huge population and current low level of per capita paper consumption (compared to Europe or North America). Certainly, China’s consumption of wood products is growing at an alarming rate. Today China is the world’s second largest producer and consumer of paper products, surpassed only by the US. By 2005, consumption of paper per person reached 45 kilogrammes with a total consumption of 58 million tonnes, up from 7.9 million tonnes in 1980. Currently, China produces about 50 million tonnes of paper and board a year – a figure which is expected to increase to almost 70 million tonnes by 2010. But much of the paper produced in China today is exported, in the form of packaging for exports to North America and Europe.
Lacking raw material
China has a limited supply of wood fibre. In 1998, it declared a ten year logging moratorium after a series of massive floods exacerbated by destructive logging throughout the nation’s forests in the previous decades. China can currently supply only about 28 per cent of the raw material demand of its pulp industry, so imports of pulp are booming. The increasing Chinese demand for wood from other countries adds to the problems of illegal logging and deforestation in Indonesia and Russia and to the unsustainable plantation expansion in countries like Brazil. But instead of taking these problems into account, pulp producers in China are developing large-scale mills before securing a sustainable supply of fibre.
Imports of wood pulp reached 7.2 million tonnes in 2004, mainly coming from Canada, Indonesia, Russia, Brazil and the US. To provide more wood for the growing pulp industry, the Chinese government has ambitious goals to expand the area of industrial tree plantations, with plans to spend a total of US$ 8.65 billion for plantation development between 2002 and 2015, including 5.8 million hectares for the pulp industry. Although much of the financing for plantations comes from the Chinese government, since 1981, the development of plantations has been supported by aid from the Australian government. A proposed World Bank project will finance a further 200,000 hectares of industrial tree plantations in Guangxi.
China has about 1.65 million hectares of eucalyptus plantations. Guangxi province is one of China’s largest growers of eucalyptus, with more than 350,000 hectares of eucalyptus plantations. Several companies are establishing new plantations in Guangxi province, including APP, Oji Paper, Sino Forest Group, Feng Lin, Gao Feng Group and Guangxi Plantation Development Company.
Dennis Neilson, director of New Zealand forestry consulting firm DANA, comments that China’s plantation programme is way behind schedule and growth rates of Poplar were in many cases so poor that the government is now discouraging Poplar planting. Despite the massive tree-planting programme, the area of plantations is not sufficient to meet the demand from the industry’s pulp and paper mills.
The massive increase in demand for wood fibre has led to increased pressure on China’s forests. It is also creating competition between land use for food production and the establishment of industrial tree plantations. This is unlikely to change, according to Risto Pitkänen, writing in Botnia’s customer magazine Echo: “Feeding its enormous population puts so much pressure on land use that China has no real scope for a pulping industry based on plantation forests.” Establishing plantations can be a slow and complex business as most of the suitable land is held by households and communities. Also, the cost of growing wood in China is considerably higher than in key competitor countries such as Indonesia and Brazil. UPM, for example, plans to import pulp from Botnia’s pulp mill in Uruguay to UPM’s paper mill in Changshu, China.
New pulp capacities
In spite of the shortage of wood supply, China seems to be building a massive new pulp or paper mill almost every month. Some of the projects currently planned include the following:
- Shandong Chenming plans to start construction of a 700,000 tonnes a year pulp mill in Zhanjiang and to establish 200,000 hectares of eucalyptus plantations. So far it has planted 4,000 hectares.
- In March 2007, Ningbo APP Paper ordered a 250,000 tonnes a year pulp line from Andritz for its pulp mill in Ningbo City, Zhejiang province. The mill will use woodchips from nearby poplar plantations as its raw material.
- APP China plans to build a 300,000 tonnes a year pulp mill in Qinzhou city, Guangxi province.
- APP China is also planning to expand its pulp operations in Hainan, by 780,000 tonnes a year.
- Lee & Man Paper Manufacturing plans to build a 125,000 tonnes a year unbleached bamboo pulp mill in Chongqing.
- Indonesia’s APRIL is planning to add a new 1 million tonnes a year pulp mill to its operations in Rizhou City, Shandong province.
- Oji Paper is planning to build a 700,000 tonnes a year pulp mill at its site in Nantong City, Jiangsu province. The pulp mill is part of a US$ 1.9 billion pulp and paper development.
- Stora Enso is planning to build a 1 million tonnes a year pulp mill in Guangxi province.
Pulp companies expanding in China: UPM, APP, Stora Enso
Several pulp and paper companies have established their own plantation projects in the southern provinces Guangdong, Guangxi and Hainan. Some of the world’s largest pulp producers, including APP, Stora Enso and UPM, have announced that they are planning to develop huge hardwood pulp mills with associated large-scale plantations.
UPM’s paper mill in China relies on pulp imports from Uruguay
When UPM started up its 350,000 tonnes a year paper mill in Changshu, it relied on imported pulp from Indonesia, Finland and Canada. The mill has now expanded to 800,000 tonnes a year and still relies on imported pulp. The Changshu mill will import pulp from Botnia’s pulp mill in Uruguay once it starts up (UPM is a shareholder in the Botnia pulp mill project).
UPM chose to import pulp because of the difficulties of growing industrial tree plantations in China. The company pulled out of a joint venture to build a pulp mill and establish plantations in Guangdong province in November 2004. Christian Cossalter of CIFOR suggests that among the reasons for UPM’s pull out were the limited availability of land for plantations and the difficulty of growing and buying pulpwood at competitive costs in Guangdong province. “The decision to withdraw was made after studies of the local conditions and the availability and cost of wood for a modern large-scale pulp mill were conducted,” writes Cossalter. As it is cheaper to transport pulp over long distances than it is to transport wood, UPM pulled out of the joint venture for a pulp mill in China.
APP’s illegal logging activities in China
APP is attempting to source wood fibre within China. The company is planting eucalyptus on Hainan Island, including protected conservation areas. Greenpeace China notes that since 1997, APP has cleared large areas of forest in Wuzhishan Natural Reserve for eucalyptus plantations. The yield from APP’s plantations is lower than the company anticipated and the total area established is below initial predictions.
In addition to clearing forests in Hainan, Greenpeace has documented how APP has destroyed forests in Yunnan province to feed its pulp mills. In 2002, APP signed an agreement with the Yunnan provincial government and started logging immediately, before receiving permission from central government. The State Forest Administration investigated and found several breaches of China’s Forest Law. In its report, SFA described APP as “problematic”. Greenpeace is demanding that the Chinese authorities immediately stop APP’s planned eucalyptus plantations in Yunnan.
In August 2006, APP signed an agreement to invest more than US$ 90 million in Yunnan Yunjing Forestry and Paper. The deal would have given APP the rights to log in 66,700 hectares of Yunnan’s forest, but in February 2007, the Chinese central government authorities blocked the deal. A State Forestry Administration spokesperson told the media that the state was worried about losing valuable forest assets.
Plantation expansions by Stora Enso
Stora Enso plans to establish 120,000 hectares of plantations in Guangxi province. In 2005, Stora Enso hired UNDP to produce an Environmental and Social Impact Assessment on its proposed plantations project. Although UNDP’s report notes that local communities have serious concerns about the spreading of eucalyptus monocultures it fails to recognise the impacts, and refers to villagers’ criticisms of eucalyptus plantations as “rumours”. The references cited at the end of the report run to nine pages, but include none of the many NGO studies on the social and environmental impacts of tree plantations.
An official of Guangxi Environmental Protection Bureau told China Business Weekly about their concerns about the environmental impacts of this project, including whether the land area of Guangxi is sufficient to support such a large project . Many local environmentalists share the official’s concerns. Without sufficient land, native forests will be cleared to make way for plantations. Already, many cases of forest destruction for plantations were reported in Guangxi in 2005.
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The capacity of pulp mills in Indonesia expanded rapidly during the 1990s, increasing from 1 million tonnes a year in 1990 to 5.9 million tonnes a year by 2001. During this same period, the consumption of paper per person in Indonesia increased from 7.6 kilogrammes to 23.19 kilogrammes. While paper use increased by about three times, pulp production has increased by a factor of almost six. The massive increase in pulp production supplies paper mills in Indonesia, but the enormous increase in capacity has little to do with increased demand for paper in Indonesia. It is for export.
In Sumatra, the pulp and paper industry has contributed to the loss of large areas of tropical rainforest. By 2000, according to CIFOR, the pulp industry had destroyed an area of 835,000 hectares of high biodiversity rainforest. The impact on rural communities and their livelihoods has been devastating.
Pulp companies and their expansion plans
The pulp and paper industry in Indonesia is dominated by two companies, APP and APRIL, which together control more than 75 per cent of total pulp capacity. APP and APRIL both plan to expand their operations in Sumatra this year, and are eager to participate in the national government plan to expand pulp and paper plantations by five million hectares over the coming decade.
- APP plans to increase its pulp capacity by 800,000 tonnes a year.
- APRIL plans to increase its pulp capacity by 600,000 tonnes a year.
Several plans have emerged in recent years to also build new pulp mills in Kalimantan.
- A South Korean company called Korindo has plans to establish a pulp mill.
- A group of Indian and Malaysian investors is reported to be looking at a potential pulp project in Kalimantan.
- In January 2007, Bisnis Indonesia reported that two companies are planning to invest a total of US$ 3 billion in massive new pulp mills. PT Garuda Kalimantan Lestari plans a 1.2 million tonne capacity pulp mill and associated chemical plant in West Kalimantan. PT Kaltim Prima Pulp & Paper plans a 1.2 million tonne capacity pulp mill in East Kalimantan.
- Earlier this year, United Fiber Systems opened a new 700,000 tonne wood chip mill on the island of Pulau Laut off the coast of South Kalimantan. Local fishers in Pulau Laut have already seen the impact of the wood chip mill as coral reefs around the island were destroyed to construct the port for the mill. The wood chip mill is the first stage of UFS’ proposed pulp projects in Kalimantan. UFS is in negotiations to take over the 525,000 tonnes a year Kiani Kertas pulp mill in East Kalimantan and has been running the mill since July 2005. Between 1999 and 2003, the mill relied on timber from native forests for about 60 per cent of its fibre. It has also imported wood chips from Australia. In South Kalimantan, UFS is also planning a 600,000 tonnes a year pulp mill.
The impacts of these plans on the communities and forests of Kalimantan will be devastating. UFS claims that it will only use timber from plantations to feed its operations. But forestry studies by UFS’ hired consultants are classified as “confidential documents”. Research and calculations carried out separately by CIFOR, Down to Earth, and Global 2000 (Friends of the Earth Austria) indicate that the area of plantations is far from adequate to supply UFS’ proposed pulp operations. Large areas claimed by UFS as productive plantations are agroforestry areas managed by local communities, or have poor growth rates due to lack of maintenance and fires.
Plantation expansion with the help of the World Bank
In spite of all the acknowledged problems caused by pulp wood plantations in Indonesia, the government is promoting the establishment of a further five million hectares of pulpwood plantations. The World Bank has announced its support for the government’s plans to expand plantations, rating this as “among the highest priorities”.
The logic behind this plan is that there is not enough plantation wood to supply the huge pulp capacities and companies rely on natural forests as a consequence. CIFOR estimated in 2005 that three-quarters of the timber consumed by the pulp industry in Indonesia was from native forests. “Expansion of pulp processing capacity has occurred much faster than plantation development,” CIFOR points out. The yields from plantations cannot meet the demand from the existing pulp mills and legal supplies of wood from native forests in Sumatra “are rapidly being exhausted”. But instead of recommending a downsizing in pulp mill capacity, the World Bank wants to support the expansion of pulpwood plantations.
Indonesian and international NGOs have criticised the se plans. “The push to establish between five to seven million hectares of industrial plantations will cause tremendous harm to our forests and the women and men whose livelihoods depend on them,” Farah Sofa of WALHI, Friends of the Earth Indonesia, told Environment News Service. WALHI is a national coalition of more than 450 NGOs from across Indonesia. It is demanding a moratorium on further forest conversion and has called on the government to stop all new permissions for industrial timber plantations that will convert forests or cause land conflicts with local communities.
APP and APRIL both plan to expand industrial tree plantations by clearing and draining peat swamp forests. Existing pulpwood and oil palm plantations on peat soils in Indonesia have led to rapid oxidation of the peat soils and extensive fires, releasing billions of tonnes of CO2 into the atmosphere. About 80 per cent of Indonesia’s emissions come from destruction of peat forests and forest fires, making Indonesia the third biggest emitter of CO2 in the world, behind the USA and China.
Both APP and APRIL have also acquired plantation operations in Kalimantan. In October 2004, APP bought the Finantara Intiga plantations in West Kalimantan from Stora Enso. In 2005, APRIL bought PT ITCI and Adindo plantations in East Kalimantan. Both companies may use the plantations to supply fibre to their operations in China. The search for timber to supply their mills is not limited to Indonesia. In 2004, a company associated with APP was caught red-handed logging inside Bokum Sakor national park in Cambodia.
Ongoing deforestation in Sumatra for pulp production
In Riau province , APP’s Indah Kiat mill and APRIL’s Riau Andalan Pulp and Paper (RAPP) both have a capacity of two million tonnes of pulp a year. Deforestation in Riau province has accelerated in recent years, in spite of APP and APRIL’s promises to conserve forests. WWF Indonesia calculates that timber concessions associated with APRIL include 570,000 hectares of forest. APRIL uses 70 per cent native forests (mixed tropical hardwood) in its Riau Andalan pulp mill and pulped the equivalent of 90,000 hectares of forest in 2005, according to WWF Indonesia.
A July 2006 article in the Japanese newspaper The Daily Yomiuri describes the scene at one of APRIL’s logging operations: “Drying tropical timber was stacked in piles between thick tree stumps – as if it were a heap of bones. The place looked like a field that had been hit by a bomb.” In February 2007, police sealed off the piles of native tropical timber ready for pulping at APRIL’s Riau pulp mill, and commenced an investigation into the use of illegal wood by APRIL. As of June 2007, the police investigation was ongoing, and APRIL could not use the piles of mixed tropical hardwood. Apparently this has forced the mill to reduce pulp production by about 30 per cent .
Land Tenure Conflicts
Land tenure conflicts in Indonesia pose significant risks for pulp companies and investors. The national government established much of the national forest estate since the 1970s without respecting the land rights of indigenous communities. Almost all logging and plantation concessions in Indonesia have overlapping claims with indigenous peoples, and conflicts over land use are common.
Indigenous communities have land claims over much of the area that APP and APRIL has already planted. In 2001, APP lost 70,000 hectares of its land to local land claims in Jambi, amounting to about one-quarter of APP’s total concession in that province.
A 2003 report by Human Rights Watch documents violence associated with the pulp industry’s expansion in Sumatra. APP’s plantations, for example, “were established in Riau during the 1980s and 90s largely on land unlawfully seized from indigenous Malay and Sakai communities, without due process and with little or no compensation. These land seizures took place under intimidation by armed police and military agents.”
Since President Soeharto’s dictatorship ended in 1998, communities have started to protest the loss of their lands and livelihoods. These protests “have been met with violent attacks by organized mobs of hundreds of club-wielding company enforcers, trained by and sometimes accompanied by state police,” reports Human Rights Watch.
The government has recently allocated large areas of forest land for industrial tree plantations: 500,000 hectares in South Kalimantan and about one million hectares in East Kalimantan. This is leading to increased land conflicts, as much of these lands are claimed and used by local communities. Clearance for industrial tree plantations is increasing deforestation, threatening local economies, biodiversity and water values.
The allocation of new pulpwood concessions follows a history of land conflict caused by pulp plantations in Kalimantan. In the 1990s, companies belonging to Bob Hasan, the businessman and close friend of Soeharto, built the Kiani Kertas mill and targeted primary forests in East Kalimantan where Bentian indigenous communities lived. The first thing the Bentian communities heard about the proposed plantations was the sound of chain saws in their customary forests. Workers bulldozed their gardens, fruit trees and forests. Ancestral graves were destroyed and looted. The plantation companies then claimed “reforestation funds”, in order to establish plantations on the deforested sites. Much of the land was then burned and abandoned. Hasan’s companies gave no meaningful compensation to affected communities. After Soeharto’s fall, Hasan was jailed for corruption.
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According to government statistics, the country had 41.5% forest cover in 2002, down from 47% in 1992. Other estimates of forest cover are as low as 36 per cent. Forests in Laos have been heavily damaged by logging, roads, bombing during the US war on Indochina and recently hydropower dam construction. Nevertheless, the forests remain an important part of rural villagers’ livelihood systems. Villagers’ main food sources are rice and fisheries, but forests provide important additional products including resin, firewood, medicinal herbs, food and thatching for roofs.
The Lao government has handed over large areas of the country as concessions, many of which are used for rubber plantations, in the South by Vietnamese companies and in the North by Chinese companies.
Industrial tree plantations
Over the past decade, several companies have attempted to develop large scale pulpwood plantations in Laos. All of these plans have one thing in common: they are not intended to provide the raw material for paper production in Laos.
The paper consumption per capita in Laos is among the lowest in the world. In 1980 it stood at 0.31 kilogrammes per person per year and by 2005 it had increased to 0.56 kilogrammes per person per year.
There are no clear figures for the area of industrial tree plantations in Laos because of the lack of any reliable survey data. Even where plantations have been established, many have failed due to poor maintenance.
According to the FAO’s 2005 Forest Resources Assessment, in 1990 there were 4,000 hectares of plantations in Laos. By 2000, the area had increased to 99,000 hectares and by 2005 to 224,000 hectares. Other estimates are far lower – in 2004, the Lao government’s “Forest Strategy to the year 2020” estimated that an area of about 113,000 hectares had been planted of which about 75,000 hectares had survived. But all of these estimates are just that, estimates , as none are based on detailed surveys of rural Laos.
The Forest Strategy 2020 quotes a survey carried out in 2002 , which indicated that growth rates were extremely low (average mean annual increment of 6.2 m3/ha/yr). “Such slow growth rates make tree plantation s non-viable,” the Forest Strategy 2020 comments.
Failed or abandoned plantation projects in Laos are common. In some cases the motivation for obtaining a plantation concession is to log the forest. Once the company has cleared the land a feeble effort is made to plant and then the site is abandoned.
Financial institutions involvement
Despite poor growth rates, lack of reliable data and the fact that establishing plantations is often no more than an alibi for logging the forest, the Asian Development Bank has been one of the main promoters of industrial tree plantations in Laos. In the early 1990s, the ADB part-financed a Tropical Forest Action Plan (TFAP) for Laos, which recommended continued logging and the introduction of industrial tree plantations on logged over and “degraded” forest. Soon after the TFAP was completed, the ADB started looking at the possibility of funding plantations in Laos. The Bank’s Industrial Tree Plantations Project started up in 1993 and was completed in 2003.
According to the Bank’s own reports, the Industrial Tree Plantations Project was a disaster. It created and increased poverty and indebtedness. It led to increased deforestation as forests were cleared to make way for eucalyptus plantations. Loan funds went missing and the Bank started an investigation into corruption in the project.
These problems were published in ADB reports towards the end of 2005, yet the Bank’s Board approved a second tree plantation project for Laos in early 2006. This project aimed to attract more investment in the plantations, pulp and paper industry in Laos, but by January 2007, negotiations between the ADB and the Lao Government had run aground – possibly because the ADB knew that it was being watched closely by NGOs in Laos and internationally. When the Lao Government asked for more time for negotiations, the ADB declined and cancelled the loan. According to a source, the Lao Government did not agree to the conditions that the Bank wanted to attach to the loan.
But even before the project started, the ADB succeeded in attracting at least one multinational corporation to Laos. In August 2004, the ADB supported a Private Sector Consultation Workshop in Vientiane, “to present the investment opportunities to multinational pulp and paper companies”. Representatives from Japan’s pulp and paper giant Oji Paper were at the meeting and within a few months Oji Paper bought up an existing 154,000 hectare plantation operation in Laos from a company called BGA Laos. One-third of the area is to be planted, mainly with eucalyptus plantations. Wood chips from Oji Paper’s plantations will be exported via the port of Vinh in Vietnam to Oji’s pulp mills in China and Japan.
In March 2006, the Indian Aditya Birla Group announced that it will invest US$ 350 million in industrial tree plantations and a 200,000 tonnes a year dissolving pulp mill in Laos. The Lao government has leased 50,000 hectares to Aditya Birla for 75 years.
Stora Enso has commissioned a feasibility study for establishing 35,000 hectares of Acacia and eucalyptus plantations in Savannakhet and Salavane provinces in Laos. The area that Stora Enso is investigating was heavily bombed by the US during the war against Vietnam. Eija Pitkänen of Stora Enso confirms that “Stora Enso will clear all lands it will use from UXO [unexploded ordnance]”.
Pulp giants UPM and APP are also reported to be considering investing in plantations in Laos.
International aid threatens forests and local livelihoods
The Forest Strategy 2020’s comments on industrial tree plantations in Laos are typical of international aid agency support to tree plantations. The report, which was written with support from the Japanese government, states that “Tree plantation development, although strongly promoted by the Government, is still in its early stage. Given favourable national conditions, including climate and land availability, and growing demand in the region, trees from plantation are expected to play a much larger role in the future.”
The Forest Strategy 2020 anticipates an area of 500,000 hectares of industrial tree plantations by the year 2020. The ADB wants to meet this target by 2015.
However, it is a myth that there is a large area of land available for tree planting in Laos. Most of the land that is suitable for industrial tree plantations is already being used by villagers.
While the ADB and the companies claim to be planting on “degraded” forest, as one observer in Laos points out, “degraded forest is often another word for healthy, recovering forest with wide utility value to villagers and biodiverse in flora and fauna”. The ADB’s own project preparation reports confirm this: “Most villagers expressed the opinion that they have no degraded forest land.” In fact the forests are vital to villagers’ livelihoods. “Most farmers use forest land for harvesting logs and bamboo, collecting fire wood and non-timber forest products. Together with rice production and livestock breeding this use of forest is one of the three important main sources of income,” notes the ADB report.
Another ADB report notes that “degraded” forest is in fact land that is used by farmers: “in many cases, such lands were reported by farmers to be areas traditionally used for shifting cultivation”.
However, forests have been cleared to make way for ADB-funded plantations. Villagers have to walk further to collect mushrooms and other forest products and wildlife has been displaced. Although villagers welcome work provided by the plantation company, once plantations are established the company will not employ villagers until the plantations are harvested. ADB-funded eucalyptus plantations in Ban Lao Kha, which were established in 2000 have not grown well. In some places the forest is growing back faster than the eucalyptus trees. In parts of the plantation, the trees have died completely.
“People conclude that the plantations are not for their benefit, but are for the benefit of business,” comments a critic in Laos. “Villagers have lost their land. Eucalyptus plantations are supposed to be reforestation and are supposed to be planted in degraded forests. But villagers say that Eucalyptus plantations have taken away their forests.”
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There are three key issues to be considered regarding industrial tree plantations in South Africa: biodiversity, water and land rights.
South Africa’s biodiversity is not only found inside its national parks; its grasslands contain up to 4,000 plant species – more species than are found in many countries. Industrial tree plantations have replaced vast areas of these grasslands in South Africa, threatening many species found in the grassland ecosystem.
The fast growing plantation trees consume large amounts of water. Local communities living near plantations face sinking water levels and dry wells. The exotic species used for the pulpwood industry have spread into the surrounding environment and along rivers and watercourses .
Under the apartheid regime in South Africa, black people were denied basic human and political rights, including their rights to land. While land redistribution is ongoing, most farmland is still white-owned. The government aims to transfer 30 per cent of farmland back to black South Africans by 2014 , but progress so far has been slow. Through vast areas of plantations, South Africa’s pulp and paper companies are among the largest private landowners in the country.
Pulp companies and their expansions plans
More than 1.5 million hectares of South Africa is covered with industrial tree plantations. The pulp and paper industry is the main driver of the expansion of plantations and consumes over two-thirds of the timber from South Africa’s plantations. More than half of the plantation area is planted with pine, about one-third is eucalyptus and about one-fifth is acacia.
Two companies dominate the pulp and paper industry in South Africa: Sappi and Mondi.
- Sappi (South African Pulp and Paper Industries Ltd) was registered in 1936 and today owns 465,000 hectares of plantations in South Africa (it has a further 75,000 hectares in Swaziland). Worldwide, the company manufactures 5 million tonnes of paper and 3 million tonnes of pulp a year and employs a total of 16,000 people. In South Africa, Sappi is currently expanding its Saiccor dissolving pulp mill by more than 200,000 tonnes a year. The company also plans to expand pulp production at its Ngodwana mill by 225,000 tonnes a year. The company is planning to convert the plantations feeding its mill from pine to eucalyptus.
- Mondi manages 430,000 hectares of plantations. The company was formed in 1967 by Anglo American, one of the world’s largest mining companies. Today Mondi has 35,000 employees in 35 countries. In early 2007, Anglo American announced that it would demerge the company and Mondi would become an independent company. Mondi has a paper mill in Durban and a wood chip mill and pulp mill at Richards Bay. In 2005, Mondi completed a new 720,000 tonnes a year pulp line at its Richards Bay pulp mill.
In addition to these two giants, several smaller companies have sizeable operations in South Africa.
- SAFCOL (South African Forestry Company Ltd) was set up in 1992 to run state-owned plantations in preparation for privatisation.
- Global Forest Products is a joint venture between Mondi and a US investment company, Global Environment Fund, with 67,000 hectares of industrial tree plantations. [*]
- NCT Forestry Cooperative Ltd is a cooperative marketing company, formed in 1949 to represent independent and private tree farmers. Its more than 2,000 members own a total of 300,000 hectares of plantations. In 2004, NCT started up a 360,000 tonnes a year wood chip mill in Durban. In March 2005, Japan’s Hokuetsu Paper Mills bought up 10 per cent of NCT Durban Wood Chips. Two months later NCT signed a contract to supply 300,000 tonnes of wood chips a year to Hokuetsu.
NCT is planning to build a new pulp mill at Richards Bay. The “Pulp United” project started in 2003 as a joint venture with Sweden’s Sodra Cell but two years later Sodra Cell pulled out , apparently because of concerns about the costs of electricity supply to the proposed mill. NCT continued the project and in March 2007, Sweden’s Rottneros Group signed a letter of intent with NCT to build a pulp mill in South Africa. The planned pulp mill has been reduced in size from 300,000 to 140,000 tonnes. Rottneros plans to move its mechanical pulp production line from its Utansjö mill to South Africa. One of the reasons for the move, according to Rottneros, is that energy costs in South Africa are cheaper than in Sweden. In August 2006, Rottneros announced that it would close its plant at Utansjö because of the high cost of electricity.
In addition to producing pulp and paper, exports of woodchips from South Africa are massive. Central Timber Co-operative (CTC) is the world’s largest exporter of woodchips via its woodchip mill in Richards Bay.
Between 1920 and 1960, the state was responsible for most expansion in the area of industrial tree plantations. Communities living on the land were forcibly relocated to other areas. During the 1960s, private companies started establishing tree plantations. In the 1980s, Mondi and Sappi led a new wave of plantation establishment as Sappi built a new pulp and paper mill in eastern Transvaal and Mondi built a pulp mill in Richards Bay.
The government subsidised the expansion of the pulp and paper industry with tax incentives and a General Export Incentive Scheme, which was withdrawn after 1994.
In the early 1990s, the area of plantations increased at a rate of 45,000 hectares a year. Since 1996, the rate has been about 11,000 hectares a year, although a coalition of South African NGOs, Timberwatch, points out that the real amount is higher because this figure excludes illegal, unregistered plantations. Timberwatch estimates that up to 40 per cent of timber plantations may be unlawful because they were not registered before planting started.
The timber industry and government is currently expanding the area of plantations in Eastern Cape Province. Timberwatch reports that an area of 200,000 hectares of new plantations is planned mainly in Eastern Cape, “mostly on community land”. Mondi, for example, has established an area of pine plantations in Maclear and Ugie districts in Eastern Cape.
In neighbouring Mozambique, the government has ambitious plans for industrial tree plantations. A 2006 “National Reforestation Strategy” outlines plans for at least 2 million hectares of tree plantations in the next 20 years. A further 3 million hectares is to be zoned and made “available for potential investors for the development of industrial plantations”. In total, the plan identifies an area of 7 million hectares as suitable for plantations.
Impacts on water, people and biodiversity
Impacts on the environment from plantations in South Africa include the irreversible conversion of species-rich grasslands. Biodiverse landscapes have been replaced by monocultures of tree plantations. Trees from plantations (in particular acacia, but also eucalyptus and pines) have spread outside the plantation areas , invading further areas of natural ecosystems. Timberwatch estimates that the area now covered by exotic trees which have spread from industrial tree plantations , is at least as large as the area of plantations themselves: “There is at least as much unmanaged scrub timber as there is formal plantation.”
Boet Fourie, a former Natal Agricultural Union (NAU) president, describes exotic tree plantations as being like “giant water pumps, which suck up ground water before it reaches the rivers”. Plantations have caused springs, streams and ponds to dry up. John Blessing Karumbidza of the of the University of KwaZulu-Natal, in a recent report for World Rainforest Movement (WRM), talked to villagers in Sabokwe and found that the issue of water came up frequently. One woman told Karumbidza that “The thing is that we compete for water with these plantations. They use up a lot of water. I remember in 1996, the stream close to our garden was running perennially because the eucalyptus trees were not here.”
In 1972, South Africa introduced an Afforestation Permit System in an attempt to address the impact of tree plantations on water resources. Planting trees in wetlands and close to rivers and streams was restricted. But the plantations still use huge amounts of water and impact the rural communities they surround. Although the environmental costs are borne by local communities , the expansion of tree plantations has continued – driven largely by the expansion of woodchip, pulp and paper mills in the country.
As World Rainforest Movement’s Ricardo Carrere and Larry Lohmann note in Pulping the South, the conversion of grasslands to plantations has destroyed vast areas traditionally used by pastoralists. “It has become more difficult for farmers to raise livestock for meat and milk” and “Reeds needed for making mats or cords used for roofing or trays have disappeared after plantations have caused small watercourses to dry up”, comment Carrere and Lohmann .
John Blessing Karumbidza, in his report for WRM, found that security and safety are among the most serious concerns for people living near plantations. “As parents with girl children we worry a lot about the plantations,” a villager told Karumbidza. “There are always strange men wandering around aimlessly and many sexual offences have been reported. So they cannot go to fetch water or firewood any more. Besides, these offences, the plantations are used by thieves to hide and to store their loot. When the police discover these things they come and harass us by searching our houses apartheid style. We are not safe here with these plantations.”
The loss of land and dramatic changes in the landscape caused by industrial tree plantations undermines the culture and identity of rural people. “We are locked here in the midst of plantations as you can see. We are like people who are in a prison,” Chief Mbuyazi in Sabokwe community told Karumbidza. “Whenever you get out of the house , all you see are these eucalyptus plantations. They have robbed us of a sense of community and the typical rural environment to which we are accustomed , which is characterised by diversity. When you think about talking to the ancestors, there are specific trees where we used to take a pot of brewed beer and our offering and then appease the spirits. You cannot do that under a gum tree. They erode our culture by denying us the opportunity to practice our culture .“
“We cry because our children have no clothes and no shoes,” a villager told the Natal Witness newspaper in 1994. “Life has been difficult since the trees came.”
* UPDATE (20 August 2007): York Timber took over Global Forest Products earlier in 2007. During July 2007, 6,000 hectares of York Timber’s plantations were burnt as fires raged through 259,000 hectares of land in KwaZulu-Natal and Mpumalanga.
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The Uruguayan landscape is dominated by grasslands. Sheep and cattle raising as well as agriculture are the main land uses. Today, only three per cent of Uruguay is covered by native forests , and even this small area is threatened. Industrial plantations cover more than one million hectares, almost double the area of native forests. Land distribution in Uruguay is similar to that in Brazil and small farmers have little access to land. The pulp and plantation boom is exacerbating these problems while adding the problem of foreign control over land. In common with industrial tree plantations in other countries in the South, plantations in Uruguay have serious impacts on water supplies.
The pulp mill conflict
In 2006, a major diplomatic row broke out between Argentina and Uruguay when the construction of two pulp mills was started on the Uruguayan side of the Uruguay River. The two mills, with a combined capacity of 1.5 million tonnes a year amounted to Uruguay’s largest ever foreign investment. The Argentinian government took Uruguay to the International Court of Justice in the Hague, arguing that Uruguay had failed to notify Argentina of the proposed pulp mills and is therefore in breach of the 1975 Statute of the River Uruguay.
A final ruling will take two or three years, but the court initially ruled against Argentina by declining to order a halt to the construction of the pulp mills. The court argued that if the pulp mills were to pollute the river, they would only start doing so once construction is completed.
The companies behind the pulp mills, Botnia (Metsa-Botnia and UPM, Finland) and Ence (Spain) both plan to export the produced pulp.
People from Uruguay and Argentina have been protesting the pulp mills for several years. Citizens in Argentina have blocked the international bridge between the two countries as a way of protest. In April 2005, about 40,000 people from Uruguay and Argentina took part in a demonstration on the bridge against the pulp mills. A march against the mill in April 2007, was one of the largest environmental demonstrations anywhere in the world, with 130,000 people participating. Since November 2006, protesters have set up a series of road blocks on the three bridges between the two countries.
As a result of the protests, Ence decided to move the site of its pulp mill to the small tourist town of Conchillas in Colonia, southwest Uruguay. Ence has applied for approval for the Colonia project from the Uruguayan authorities and will produce an environmental impact study if approval is granted. The company has also announced that the proposed mill will have a capacity of one million tonnes a year. Local people oppose the mill and have already started to organise protests against its construction.
The Argentinian NGO Centre for Human Rights and Environment (CEDHA) has made several complaints to the Organisation for Economic Cooperation and Development (OECD), alleging breaches of the OECD’s guidelines for multinational companies. Nevertheless, the International Finance Corporation decided to go ahead with a US$ 170 million loan for the Botnia project. The World Bank’s Multilateral Investment Guarantee Agency (MIGA) agreed to provide political risk insurance covering US$ 350 million. Other financial support includes US$ 230 million from the Finnish export credit agency Finnvera and US$ 70 million from the Nordic Investment Bank. Private banks Calyon (France) and Nordea (Norway/Sweden) are mandated lead arrangers for the IFC loan, and Calyon, Danske Bank and Nordea were mandated to arrange a US$ 393 million revolving credit facility.
A subsidiary of Botnia, Forestal Oriental, has established eucalyptus plantations to supply Botnia’s pulp mill in Uruguay. Botnia claims that Forestal Oriental will supply 90 per cent of the raw material required to run the mill, 70 per cent from Forestal Oriental’s own plantations and the rest from timber bought from other plantation operations. Forestal Oriental and other Botnia subsidiaries in Uruguay own just over 160,000 hectares of which they intend to plant a total of 98,000 hectares with Eucalyptus monocultures.
Forestal Oriental at present produces more than one million cubic metres of wood a year, which is significantly less than the 3.5 million cubic metres that will be required once the pulp mills starts operating at full capacity.
Plantation and pulp expansion
The rate of establishment of plantations in Uruguay peaked in 1997 at almost 60,000 hectares a year and is currently about 10,000 hectares a year. Today, there is a total of about 700,000 hectares of industrial tree plantations in Uruguay – about 70 per cent Eucalyptus and 28 per cent Pine.
Beside the planned projects of Botnia and ENCE , other companies are active in the pulp sector in Uruguay:
- Weyerhaeuser (USA) has established 100,000 hectares of plantations. Weyerhaeuser’s plantations were subsidised through tax breaks on the land and lowered duties on imported trucks and equipment.
- Stora Enso (Sweden-Finland) is also buying up land for plantations in Uruguay. So far the company has established 23,000 hectares and plans to plant a total of 100,000 hectares. The company is also considering constructing a new pulp mill in Uruguay.
- Recently, government officials in Uruguay announced that companies from Canada, the US and Japan are also considering pulp projects in the country.
Plantation development is heavily subsidised
The development of industrial tree plantations in Uruguay is the direct result of a series of government subsidies. The 1987 Forestry Act, produced under the influence of a World Bank structural adjustment policy, provided tax benefits and payments for part of the costs of establishing plantations. During the 1990s, an area of more than 500,000 hectares of plantations was established by companies from Spain, Finland, Canada and the USA. In the 12 years up to the year 2000, the government handed out more than US$ 400 million in tax exemption and direct payments to the plantations industry. On top of this figure, the government also built new roads, ports, bridges and railway lines to transport and export the wood.
In addition to the subsidies from the Uruguayan government, Forestal Oriental’s plantations were supported by the Finnish government in the form of a US$ 7 million loan from Finnfund (whose majority shareholder is the Finnish state: 79.9 per cent directly and 20 per cent through Finnvera – the remaining 0.1 per cent is owned by the Confederation of Finnish Industries).
Botnia’s pulp mill is located in a free trade zone – exempting it from tax. Botnia is attempting to further subsidise its operations through carbon trading and has made an application to the Kyoto Protocol’s Clean Development Mechanism. The company argues that by generating electricity through burning black liquor from the pulping process it will be able to sell 32 MW of electricity to the state electricity utility, UTE. This will replace electricity generated from fossil fuel and therefore “the release of greenhouse gases . . . will be reduced.” Botnia does not explain how it knows that UTE will not use wind or solar energy in the future. In addition, even assuming some greenhouse gas emissions were saved, by trading the carbon credits, Botnia ensures that the emissions will be released somewhere else. Further, the company fails to take into account the greenhouse gas emissions associated with its operations: carbon loss from soils, building the pulp mill, producing the chemicals for the pulp mill, fuel consumption by forest machinery, logging trucks, and shipping the pulp to China once it has been produced.
Botnia’s Managing Director in Uruguay, Ronald M. Beare, says that “Botnia is a great opportunity, both for Uruguay and for the wider region.” But many in Uruguay and Argentina disagree with this assessment. The Uruguayan writer, Eduardo Galeano, describes the development of the pulp industry in Uruguay as being “in the purest Colonial tradition: vast artificial plantations that they call forests, converted into pulp in an industrial process that dumps chemical waste into rivers and makes the air impossible to breathe.”
 “Eastern and Southern Africa Region Forest Investment Forum. Investment Opportunities: Constraints to Investments and Potential Solutions”, The World Bank, Pietermaritzburg, South Africa, 13-16 June 2006.
 This table is based on a revue of publicly available statements in April 2006. An attempt has been made to weed out projects which now seem unlikely go ahead and to add in some that have been announced since April 2006. Some of these projects are expansions of existing pulp mills and others are new pulp mills. The information is intended to be indicative rather than exhaustive. Plans change and many projects are announced which never leave the drawing board. Not all of the projects in the table have received planning permission. No guarantee can be given that the information in this table is complete or (obviously) that all (or any) of these projects actually will go ahead. Further details will be posted on www.pulpmillwatch.org.
 Stora Enso has not yet decided whether to build this pulp mill in Brazil or Uruguay.
 Richard Flanagan (2007) “Paradise Raised”, Sunday Telegraph , 21 April 2007.
 Roberts, Jeremy (2007) “Town devastated as pulp mill project dumped”, The Australian, 20 April 2007.
 Neales, Sue (2007) “SA gets a Tassie-like mill battle”, Mercury, 10 April 2007.
 This figure includes all industrial tree plantations – not just plantations for the pulp industry.
 Know-How Wire, Pöyry Magazine, Issue 1, 2007, page 34.
 Carrere, Ricardo (1997) “The environmental and social effects of corporate environmentalism in the Brazilian market pulp industry“, presentation at "Business Responsibility for Environmental Protection in Developing Countries" organized by the United Nations Research Institute for Social Development (UNRISD) and the Universidad Nacional (UNA), in Costa Rica in September 1997.
 Lang, Chris (2006) “Brazil: Quilombolas protest against Aracruz Cellulose“, World Rainforest Movement Bulletin 103, February 2006.
 “Stora Enso’s operations in Brazil are socially and environmentally unsustainable“, 31 August 2006.
 “Brazil: The Alert Against the Green Desert Network demands a change in the forestry model“, World Rainforest Movement Bulletin 72, July 2003.
 Export of paper in the form of packaging does not show up in the statistics for exported paper from China. When electronic goods, say, are packaged in China then the cardboard box appears in China’s consumption statistics. The cardboard box itself is exported, along with the electronic goods.
 “China’s Subsidization of its Forest Products Industry”, American Forest and Paper Association, July 2004.
 UNDP (2006) “Environmental and Social Impact Analysis Stora Enso Plantation Project in Guangxi, China”, Final Report, 5 February 2006, page 16.
 UNDP (2006) “Environmental and Social Impact Analysis Stora Enso Plantation Project in Guangxi, China”, Final Report, 5 February 2006, page 16.
 “China scraps Indonesia’s Asia Pulp deal”, Bangkok Post , 9 February 2007.
 “Stora Enso, the social responsibility of paper giant”, China Business Weekly , 27 April 2006.
 Barr, Christopher (2000) “Profits on Paper: the Political Economy of Fiber, Finance and Debt in Indonesia’s Pulp and Paper Industries”, Centre for International Forestry Research (CIFOR) and WWF-International’s Macroeconomics Program Office.
 Barr, Christopher and Christian Cossalter (2005) “Pulp and Plantation Development in Indonesia. An Overview of Issues and Trends,” Centre for International Forestry Research (CIFOR) Seminar for EC Asia Pro Eco Project, Brussels, December, 2005.
 Barr, Christopher and Christian Cossalter (2005) “Pulp and Plantation Development in Indonesia. An Overview of Issues and Trends,” Centre for International Forestry Research (CIFOR) Seminar for EC Asia Pro Eco Project, Brussels, December, 2005.
 “Indonesian Forest Plan Angers Environmental Groups“, Environment News Service, 23 February 2007.
 Hooijer, A., Silvius, M., Wösten, H. and Page, S. (2006) “PEAT-CO2, Assessment of CO2 emissions from drained peatlands in SE Asia”, Delft Hydraulics report Q3943 in cooperation with Wetlands International and Alterra.
 Barr, Christopher and Christian Cossalter (2005) “Pulp and Plantation Development in Indonesia. An Overview of Issues and Trends,” Centre for International Forestry Research (CIFOR) Seminar for EC Asia Pro Eco Project, Brussels, December, 2005.
 Human Rights Watch (2003) “Without Remedy: Human Rights Abuse and Indonesia’s Pulp and Paper Industry“, January 2003.
 A report on Voice of America, for example, states that forest cover in Laos declined from 48% in 1992 to 36% in 2007. Songrit PhonNgern (2007) “Laos Cracks Down Hard on Illegal Logging“, Voice of America, 23 May 2007.
For a discussion of the problems inherent in statistics of forest cover, see Chris Lang (2001) “Deforestation in Vietnam, Laos and Cambodia“, in Vajpeyi, D.K. (ed.) (2001) Deforestation, Environment, and Sustainable Development: A Comparative Analysis . Praeger: Westport, Connecticut and London, pp. 111-137.
 Sector Assistance Program Evaluation for the Agriculture and Natural Resources Sector in the Lao People’s Democratic Republic, SAP: LAO 2005-17, Operations Evaluation Department Asian Development Bank, December 2005.
Project Completion Report LAO: Industrial Tree Plantation Project, Project Number: 20067, Loan Number: 1295, Asian Development Bank, November 2005.
 Chris Lang and Bruce Shoemaker (2006) “Creating Poverty in Laos: The Asian Development Bank and industrial tree plantations“, A World Rainforest Movement Briefing Paper, April 2006.
 Eija Pitkänen, Vice President, Sustainability Communications and CSR, Stora Enso, email to Chris Lang, 15 May 2007.
 “Tree Plantation for Livelihood Improvement Project: Final Report”, TA No. 3794-LAO, MIDAS Agronomics, Champa Lao Consulting, Scandiaconsult Natura, CIRAD Foret, October 2003, page 42-43.
 Sector Assistance Program Evaluation for the Agriculture and Natural Resources Sector in the Lao People’s Democratic Republic, SAP: LAO 2005-17, Operations Evaluation Department Asian Development Bank, December 2005, page 36.
 Garforth, Mike and James Mayers (2005) “Plantations, Privatization, Poverty and Power. Changing Ownership and Management of State Forests”, Earthscan, London, page 228.
 Nuñez, Raquel and Vera Ribiero (2006) “Mozambique: Paving the way for industrial tree plantations“, World Rainforest Movement Bulletin 107, June 2006.
 Cited in John Blessing Karumbidza (2005) A Study of the Social and Economic Impacts of Industrial Tree Plantations in the KwaZulu – Natal Province of South Africa, World Rainforest Movement.
 Marko Janhunen, Vice President, Communications & Public Relations Project, Oy Metsä-Botnia Ab, email to Chris Lang, 15 May 2007.
 For an overview of the subsidies to the Botnia project, see Chris Lang (2007) “Subsidies and the Botnia pulp mill“, Presentation at Sustainable pulp production in Latin America or just pulp fiction? organised by The Greens/EFA and the Heinrich Böll Foundation, European Parliament, Brussels, 16 May 2007.
 “Uruguay: The Botnia pulp mill project intends to profit from climate change“, World Rainforest Movement Bulletin 109, August 2006.