São Paulo – Mining company Vale, the Brazilian Development Bank (BNDES), Funcef and Petros (pension funds for employees of the Federal Savings and Loans Bank and of the oil company Petrobras, respectively), announced today (5th) that they are going to establish Vale Florestar S.A, one of Brazil’s largest reforestation funds.
With a capital of 605 million Brazilian real equivalent to US$ 344 million (40% for Vale and 20% for each stakeholder), the fund will aim to reforest a total area of 450,000 hectares in the Amazon by 2022, of which 150,000 will be allocated to industrial forests, and 300,000 to protection and recovery of native forests.
the Vale Florestar project was created in 2007, by Vale, to promote reforestation of degraded areas with native and exotic species, and has already invested 230 million real in recovery actions. “We want to speed up this project, and that is why we need partners,” said Roger Agnelli, president of Vale, in a press conference.
Presently, Brazil has 4.6 million hectares of eucalyptus forests, whereas the demand for this type of wood in the country is 114 million cubic metres per year, resulting in an annual deficit of 2 million cubic metres of eucalyptus logs.
“According to our calculations, the return will be higher than 10% per year,” stated Wagner Pinheiro, president da Petros, regarding the fund’s return forecasts.
“We are certain that this is a profitable deal,” said Guilherme Lacerda, president of Funcef. “We cannot fool around by making a deal of this kind that does not offer an attractive rate of return,” he added.
Roger Agnelli linked the fund’s profitability to the growing deficit in the country’s wood production. “Profitability is increasing on a daily basis. We believe that in the next few years, the price of wood should go up. Profitability translates into one cubic metre of growth per day,” claimed the president of Vale.
According to the executive, more than just an environmental project, Vale Florestar is a social project. “This means employment, an alternative, and opportunities for the local communities,” he declared.
“There already are people in Bahrain (an Arab country located in the Gulf) who are willing to invest. The same applies to China and Japan,” said Agnelli while mentioning foreign investors who have expressed intentions of taking part in the fund.
To the BNDES’ Environment director, Eduardo Fingerl, the institution’s participation in the project is proof of its concern with social and environmental activities.
The project comprises the municipalities of Dom Eliseu, Ulianópolis, Paragominas, Rondon do Pará, Abel Figueiredo, and Bom Jesus do Tocantins. According to the Ecological Economic Zoning of the state of Pará, these cities are located in a zone of consolidation and expansion of productive activities, in an already deforested territory.
Presently, the project is already in effect at 41 local farms by means of lease agreements with Vale. All participating properties are environmentally legal, and the company is waiting for other ones to be regularized so that it may sign similar agreements, or even purchase the areas. Currently, the Vale Florestar operations counts on 1,500 employees, and is expected to generate up to 4,000 direct jobs when production reaches its peak.
The fund’s financial structuring will be carried out by company Global Equity Administradora de Recursos, which will also be in charge of locating and assessing new investment opportunities. The fund’s establishment awaits approval from the Brazilian Securities and Exchange Commission (CVM).
*Translated by Gabriel Pomerancblum
