0718

urgewald * cee bankwatch network * friends of the earth international
18 july 2003

eib pulp plans are no fiction

ngos urge the eib not to finance brazilian pulp mill project

Two months ago Stora Enso Oyj and Aracruz Celulose S.A. announced their decision to go ahead with the construction of a 900 000 tons per year eucalyptus pulp mill for Veracel Celulose S.A. at Eunápolis in the state of Bahia, Brazil. Both companies have a combined 50 per cent stake in the project and will be entitled to half of the mill's output.

The European Investment Bank, whose environmental performance and transparency is highly questioned by the NGOs, has still not provided information about the project on its website. In a recent letter to the NGOs, however, it has admitted that it is considering financing the mill with a loan of up to EUR 60 million.

The project would be the largest single line bleached eucalyptus pulp mill in the world. Aracruz is already one of the world's largest producers of bleached eucalyptus pulp (2 million tons/year). However, it is well known for causing land rights conflicts, occupying a large area of fertile agricultural lands, preventing agrarian reform and legitimising large-scale land-holding in the states of Espírito Santo and Bahia.

Barbara Happe from Urgewald says, "The project will magnify the existing conflicts with rural communities and the indigenous people in the region. It will also increase the demand for large-scale monoculture eucalyptus plantations. Promoting such an export- orientated agro-industrial development model will also further aggravate the existing environmental problems in the region, e.g. water shortage, soil degradation, loss of biodiversity."

In October 2001 the EIB approved a EUR 32,7 million loan for the planting of eucalyptus forests in the state of Bahia for Veracel Celulose SA. According to currently available information the decision was based on an environmental impact assessment (EIA) carried out in 1995. The new pulp mill project would appear to be going ahead on the basis of this eight years old EIA.

Magda Stoczkiewicz, who leads the EIB campaign for Friends of the Earth International and CEE Bankwatch Network adds, "Over the last few years we have been pointing out fundamental problems with EIB transparency and its, at times, blatant lack of environmental and social concern when backing projects. If, as it claims, it takes its environmental responsibility seriously the EIB will not finance this project. We hope President Maystadt will personally take a close look at this case"

For more information contact:

Barbara Happe, Urgewald: +49 172 6814474

Magda Stoczkiewicz, CEE Bankwatch Network/Friends of the Earth International: +31 652 41 03 23

Marcelo Calazans, FASE-Brazil: +55 27 33226330 or +55 27 32237436

Available upon request :

- The NGO letter to President Maystadt
- Declaration from the II National Meeting of the Alert against the Green Desert Network, a movement in Brazil that campaigns against the expansion of monoculture eucalyptus tree plantations.