Paper and pulp industries
South-America's total output of paper and board in 1995 was 12.5 million tons and total output of pulp 9.3 million tons. Average increase in output has been approximately 7% per year. Brazil produces 48% of South-American paper and board and 62% of pulp. Brazil has 45 pulp mills of which 13 sulfate, 1 semi mechanical, 1 sulfite and 30 mechanical and 220 paper and board mills.
Brazil is the biggest producer of paper and pulp in South-America. It is the eleventh largest paper and board producer in the world (5.8 million tons in 1996) and seventh largest pulp producer (5.9 million tons in 1996). The main geographical areas in the paper and pulp industry are the states of São Paulo, Paraná and Santa Catarina.
Sulfate and soda chemical pulp form 90% of total pulp production. Brazil is self-sufficient in pulp and produces it also for export. Brazil also uses recycled paper as a fiber source for pulp production. In 1995 1.76 million tons were collected, of which 60% was packing paper and board.
The Brazilian paper and pulp sector is comprised of nearly 200 companies, which together employ over 64,000 people in the paper and pulp industry and a further 40,000 people in forestry. Most companies in this sector are privately-owned. Foreign-owned companies account for about 6% of the output.
Three major groups in the paper industry are Klabin, Suzano and Votorantim. Their production is approximately 37% of Brazil's total paper production. The largest integrated pulp and paper producer in Brazil is Klabin. Klabin's Monte Alegre Mill in Paraná is the largest forestry complex in Latin America. The biggest pulp manufacturers in Brazil are Aracruz with 1 million tons per year, Suzano, Klabin and Votorantim. They produce 60% of Brazil's total pulp production. The Klabin group is the leader in packing grade papers (29%) and tissue paper (25%). Suzano produces newsprint, printings and cartonboard. It also manufactures writings and tissue papers. Votorantim is the leader in printings and writings and specialty papers.
The Brazilian ecosystem is quite sensitive and because of this, the paper industry's production is based on the use of wood from plantations. At the same time, the paper industry also safeguards supplies and ensures consistent quality. Brazil has increased its forested area for commercial plantations from 47 million in 1986 cubic meters to 107 million cubic meters in 1995. Simultaneously they use 36% less natural forests.
The total area of forest plantations used by the pulp and paper industry is 1.5 million hectares, of which 61% is eucalyptus and 36% pine. Brazilian paper consumption in 1995 was 5.34 million tons with an increase of 17% from the previous year. Imports of paper and board have almost doubled from 415,000 tons in 1994 to 808,000 tons in 1995.
As a result of improvements in the purchasing power of Brazil's citizens, consumption of hygiene and sanitary products has increased by 16% annually.
The newsprint market grew about 18% in 1995. In the same year, 21% of paper and board and 33% of pulp production was exported.
Consumption of paper and board in Brazil is currently about 35 kg per capita. Differences are enormous between the north and south-east parts of the country. For instance, consumption of newsprint is 10kg per capita in São Paulo but only 200g per capita in the Amazonas. In Western Europe, consumption of paper and board is 173 kg and in North-America 321 kg per capita.
Agriculture
The rapid expansion of agriculture has led to problems such as soil degradation, water pollution and pest-control imbalances due to the heavy use of fertilizers and pesticides. There is a significant market for modern biocides, new-generation agro toxins and improved irrigation techniques.
The rapid expansion of agriculture has led to problems such as soil degradation, water pollution and pest-control imbalances due to the heavy use of fertilizers and pesticides. There is a significant market for modern biocides, new-generation agro toxins and improved irrigation techniques.
Legal and Institutional Framework
The backbone of Brazilian environmental policy is found in the 1988 Constitution and the 1981 National Environment Policy Act. The Constitution of 1988 instituted for the first time in the country's history a specific chapter on the environment.
At the federal level, planning and coordination responsibilities are vested in the Ministry of the Environment and Amazon Affairs. Operational and monitoring responsibilities rest with IBAMA, the Brazilian Environmental Agency, under the Ministry of the Environment. CONAMA - the National Environment Council - include representatives from the federal, state and local agencies, as well as from the private sector and the non-governmental organizations.
CONAMA drafts the basic guidelines for environmental protection and regulations for the preparation of environmental impact assessments and reports.
The government demands a report on the environmental impact of any proposed activities that are potentially harmful. Environmental consulting is likely to become a promising market, due to more strict environmental regulations and the environmental licensing requirement for economic activities with an impact on the environment. However, the level of common interest in environmental issues in Brazil cannot be compared to what it is in more developed countries.
The Amazon Region
Brazilian environmental problems have attracted international attention with pollution and deforestation endangering the Amazon, the world's largest tropical forest. The amount of rainforest in Brazil is around 200 million hectares and is estimated to decrease by 0.5% to 1.0% annually. The main reason for this is said to be the burning of forests and land for cattle rising and other purposes. The pulp and paper industry uses mainly its own planted forests that are located in southern parts of the country. However, many of these forests may earlier have been natural forests.
Brazilian environmental problems have attracted international attention with pollution and deforestation endangering the Amazon, the world's largest tropical forest. The amount of rainforest in Brazil is around 200 million hectares and is estimated to decrease by 0.5% to 1.0% annually. The main reason for this is said to be the burning of forests and land for cattle rising and other purposes. The pulp and paper industry uses mainly its own planted forests that are located in southern parts of the country. However, many of these forests may earlier have been natural forests.
The desertification is spreading in some areas of the north-east Brazil due to deforestation and mining activities. In the Amazon River, the mercury used to extract gold is also causing damage to nature. During the 90's, the Brazilian government has launched ambitious programs to protect the Amazon region from illegal forest and mining activities. However, much remains to be done to ensure the sustainable development of this area in the future.
ENERGY
The availability of cheap, imported energy provided the impetus for Brazil's economic transformation, which began in the 1950's and accelerated during the late 1960's. However, the 1970's oil crisis sparked a drive for energy self-sufficiency, with hydroelectric schemes, the production of sugar-based fuel alcohol, the development of nuclear resources and the stepping-up of oil and gas output.
The availability of cheap, imported energy provided the impetus for Brazil's economic transformation, which began in the 1950's and accelerated during the late 1960's. However, the 1970's oil crisis sparked a drive for energy self-sufficiency, with hydroelectric schemes, the production of sugar-based fuel alcohol, the development of nuclear resources and the stepping-up of oil and gas output.
Now Brazil is moving steadily towards a reform of the energy sector. Brazil is not pressed by the risk of an immediate energy shortage or a critical deterioration of services. At the moment the energy production is in the hands of state-sector organizations, but there are plans for extensive privatization in power generation; whereas power distribution is not to be privatized.
Electric Sector
The electricity production in Brazil is highly concentrated in hydroelectric power stations. Total installed electrical generating capacity in 1995 was 54.8 GW, excluding the self producers. More than 95% of this is generated by hydroelectric plants. Total electrical consumption in Brazil in 1994 was 226 TWh. More than half of this, 52%, is consumed in the southeast region. The southeast region also accounts for 46% of the nation's electric power production.
The electricity production in Brazil is highly concentrated in hydroelectric power stations. Total installed electrical generating capacity in 1995 was 54.8 GW, excluding the self producers. More than 95% of this is generated by hydroelectric plants. Total electrical consumption in Brazil in 1994 was 226 TWh. More than half of this, 52%, is consumed in the southeast region. The southeast region also accounts for 46% of the nation's electric power production.
There are two separate integrated transmission systems. One for the north and northeast and other for the south, southeast, center, east of Brazil. Most of Brazil's territory is still not covered by an integrated electric grid; it therefore faces an inadequate supply from local generators, most of them using diesel and fuel oil.
The Itaipu power plant is a specialty in Brazil's power generation. It is the largest hydroelectric plant in the world. The Itaipu power plant is located on the Paraná River on the Paraguay-Brazil border close to Iguacu Falls. Brazil and Paraguay divide equally the 12.6 GW power production from Itaipu. An other significant hydroelectric power plant is Tucuruí Dam, capacity of 3.9 GW, located in the south-east of the Amazon basin.
Natural Gas
At present, the Brazilian gas market is served by domestic production. However, an everlasting Bolivia - São Paulo - Curitiba - Pôrto Alegre gas pipeline project will apparently come true this century. Petrobrás is constructing this USD 1.8 billion project in cooperation with foreign oil companies and has promised that the pipeline will be in operation by the end of 1999. Also, the northeast is soon to be linked by a pipeline from Salvador - Bahia to Fortaleza - Ceará and in the south and southeast a new pipeline will link Belo Horizonte - Minas to the Campos - Rio de Janeiro - São Paulo trunk line. With these new pipelines, the share of gas in the supply of energy will increase from 2.4% up to as much as 10%.
Oil
At the beginning of the 1980's, Brazil created a quite utilitarian energy plan, to restrain the intolerable burden of oil imports on the trade balance. In addition to replacement of gasoline by alcohol and oil by electricity, coal and biomass, the energy plan included improving national oil production. These facts helped to reduce oil imports radically. In 1995 Brazil produced 712,200 barrels per day. This was about half of the nation's consumption.
Privatization of Petrobrás is not being envisaged, but any private, national or foreign company will be able to go into partnership with Petrobras.
Nuclear power
Nuclear power has a minor role in Brazil's energy supply. Today, there is only one nuclear power plant in operation. Angra I, 624 MW, in Rio de Janeiro State's supplies less than 20% of the Rio de Janeiro States power needs.
Economic Growth and Energy Consumption
The stabilization of the economy anticipates a new surge of economic development which may induce a rise in the energy consumption growth rates. Most estimates are that to meet the growth of demand, it will require investments of the order of USD 10 billion per year until the year 2000. Investments are necessary to increase generation capacity from 54.8 GW to 80 GW. Without this expansion the country runs the risk of reaching the next century faced with a serious energy shortage.
Main Business Opportunities
Lack of public investment capability, almost certain economic expansion and adjustments during the restructuring period of the energy sector, will open a large field for investments on new power projects and privatization. Light, distributor in Rio de Janeiro, and Escelsa in Espríto Santo have already been privatized. Other state utilities will be privatized in Rio de Janeiro and São Paulo and hydropower plants will be tendered. Two big gas pipeline projects, Amazon Project and Brazil-Bolivia Natural Gas Pipeline, offer business opportunities.
- A. Jonathan Buhalis
