The Veracel pulp mill in Brazil jointly owned by Swedish-Finnish forest giant Stora Enso and Fibria has been accused of illegal activities and environmental crimes. The company, which is planning to increase its operations in Brazil, has vehemently denied the charges. Meanwhile Stora Enso is planning an expansion of pulp production also in Uruguay.

Stora Enso faces hundreds of law suits owing its wood procurement and pulp mill operations in Brazil. The company says it is not breaking the law and is currently applying for an environmental permit to construct a new mill and raw timber plantation aimed at doubling its pulp production.

The Veracel Mill jointed owned by Stora Enso and Brazil’s Fibria is located in the state of Bahia. It is surrounded by about 100,000 hectares of eucalyptus plantations.

A local prosecutor Joäo Alves da Silva Neto in the mill’s home town of Eunàpol says the company engages in illegal operations. In his view, the question is much greater than environmental offences. Neto says the company is engaged in money laundering and tax evasion.

Stora Enso’s Latin American Operations Director Nils Gräfström says Brazilian laws are not being violated. He says the charges against the company stem from, for example, ideological differences. The company has appealed against lower court decisions but the process could take years.

Opposing Views on Mill Impact
The Veracel mill in Bahia is one of the largest and most profitable in the world. Stora Enso says local residents have also benefitted from the mill’s social programmes such as education.

However groups supporting the poor claim otherwise. They say wherever Stora Enso treads, poverty soon follows behind.

Brazil’s Landless Workers Movement(MST – Movemento dos Trabalhadores Rurais Sem Terra) claims foreign companies arrive in Brazil during periods of economic growth but leave behind only poverty and other problems. Calling itself “a Guevarist movement,” the MST actively campaigns for land and agricultural reform.

Veracel and particularly the wood plantations, which have caused Stora Enso headaches also in China, divide opinions in Brazil. The militant MST movement has occupied plantations and set up camps.

Land reform has been in progress in Brazil for two decades but critics say it is too slow.

For its part, Fibria claims it brings development to those areas where it establishes mills and plantations. Stora Enso also sells its pulp mill project in China’s Quangxin Province in the same way.

The new pulp plant to be constructed nearby the Veracel Mill should be operational by 2015. This presupposes adequate plantation of eucalyptus trees three years earlier subject to the granting of environmental permits.

Expansion in Uruguay
Stora Enso’s expansion in Brazil is not the only project in hand in Latin America. Visiting Uruguayan Foreign Minister Luis Almagro says the Finnish-Swedish forest giant will be granted a license to construct a pulp mill also in his country. He told YLE he was aware of Stora Enso’s difficulties in Brazil and China.

Foreign Minister Almagro has met with senior management officials from Stora Enso and UPM-Kymmene during his visit to Helsinki as well as Finland’s Foreign minister Alexander Stubb.

Top of his agenda is Stora Enso’s plan to build one of the world’s largest pulp mills in Uruguay. Already the company owns the required eucalyptus plantations together with the Chilean Arauco company.

Almagro told YLE he was aware of Stora Enso’s difficulties in Brazil and China.

”We must ensure a similar situation does not arise in Uruguay. We have implemented extensive supervisory measures following earlier disputes concerning pulp mills,” he said.

In his opinion, Uruguay and the forest companies need still to discuss technical specifications as well as the environmental and sociological impacts of the mill project.

Just a year ago, Uruguay and Argentina were engaged in a war of words over the Finnish Metsä-Botnia pulp plant construction in Uruguay. The dispute was taken to the International Court of Justice at The Hague. Now the mill is owned by UPM-Kymmene.

Strong Arm Tactics in China?

Stora Enso's plantation in China has also been accused of strong-arming local farmers. The company turned a blind eye to abuses by middlemen who threatened locals into handing over their land, according to a study by two American research organizations.

Some farmers received less money than promised or were unaware their property was transferred. Stora Enso says it's reviewing agreements with subcontractors, saying any violence is "totally unacceptable."

(Yle, 12/10/2010)