Christmas came early for Suzano, but at the cost of the world’s most biodiverse savannah: the Cerrado biome in Brazil. Last Friday, the International Finance Corporation (IFC), an arm of the World Bank, approved a USD 725 million loan to Suzano to build a new giant pulp mill project in Mato Grosso do Sul, in Brazil’s Cerrado biome. The overall grant is lower than what the company had originally requested, and IFC is pitching in USD 250 million, the remaining USD 475 million will be received from other banks. The mill is planned for a capacity of 2.55 million tons per year. The company has already acquired land, but has plans to acquire more to reach a total landbank of 600,000 hectares. Suzano is the major global producer of market pulp, and has a legacy of social and environmental harms.

Last week, 40 environmental civil society organisations (CSOs) sent a letter to the IFC, urging them not to approve the loan to Suzano because of the serious environmental and social impacts that the project would have in the region. 

The CSOs warned the IFC that the “Cerrado Project”, as well as the nearby development of further pulp expansion, has numerous and serious faults, amongst others: 

  • It will not reduce but increase poverty. For any new job it will create, it will take away many more, due to its extensive acquisition and use of land. While eucalyptus plantation work generates 1 to 2.7 jobs per 100 ha, the same surface feeds many families living on subsistence agriculture.
  • It is posing serious risks to the environment. Eucalyptus plantations are monoculture plantations and host little biodiversity. Their development by ploughing removes the remaining native Cerrado stands.
  • As it expands its plantations on previous pastures, it is actually fueling deforestation by pushing the cattle ranch industry towards the forest frontier, as demand for meat is not declining.
  • Its industrial plantations are depleting the local water table by consuming up to 30 litres per tree per day, on a scale of millions of trees. The deep root system of Cerrado vegetation plays a crucial role in retaining that water table. This is why the Cerrado is called ‘the cradle of waters’, preserving much of the water of Brazil. This deep-roots system of Cerrado vegetation plays a crucial role in retaining that water table and is eliminated by ploughing, and the Cerrado capacity to provide water to the subcontinent may collapse in less than 30 years.
  • Its “zero fossil fuel technology” will not reduce GHG emissions, but increase them, producing more emissions per unit of energy than coal. Uptake from eucalyptus plantations will only partially and temporarily offset the loss of natural vegetation and thus not effectively offset the carbon-intensive emissions from the pulp mill.
  • The new plantations, which inherently are very poor in biodiversity, will be used to produce carbon credits, providing additional profit for the company. If instead, native vegetation were to be allowed to regrow in these areas, it could store much more carbon, so the eucalyptus plantations actually have a high opportunity cost when it comes to carbon storage. 
  • Drying out the land also increases the risk of massive forest fires, exacerbated by the characteristics of eucalyptus, whose bark, in the presence of wind, may carry burning embers many kilometers away.
  • The mill will discharge persistent organic pollutants (POPs) in the fluvial system, and poison the local environment with pesticide air spraying over the plantations.
  • Far from strengthening the competitiveness of Brazil’s pulp and paper sector, it will add further support to a highly subsidised industry that is chronically relying on public money. 
  • Finally, there has been no real consultation with affected communities. Even worse, we could not find any indication that Suzano is planning on it. The project documentation also does not contain any sufficient research about remaining indigenous people in the area.

In short, Suzano’s “Cerrado Project” is not bringing the supposed benefits to development, poverty reduction, is not reducing climate emissions, nor increasing competitiveness. It doesn’t meet IFC standards and purposes, and therefore it doesn’t deserve this huge allocation of IFC’s resources. EPN therefore regrets the board’s decision to proceed with the Suzano loan. 

In the area between Ribas do Rio Pardo and Três Lagoas there are more mills, run or planned by different companies such as the Chilean giant Arauco and Eldorado, controlled by the notorious Indonesian group Asia Pulp & Paper (APP). Within a decade the production of eucalyptus pulp, has exploded from zero to more than 7 million tons per year. This is now the epicentre of pulp expansion in Brazil, hosting nearly a million hectares of eucalyptus plantations and two processing plants. This is why the impact of this mill is much worse.

Alongside a detailed briefing about the project, EPN has published in-depth research revealing the impacts of the ongoing and massive expansion of the pulp & paper industry in the area where the mill is planned. Within a microregion of 5 municipalities, two huge mills have been already built. One of them is now expanding to a second production line, while two more brand new mills are planned. Because of this explosive growth and its impacts, EPN and our partners will continue to scrutinise the activities of the Arauco, APP and Suzano – and their buyers and financiers.