Ergilio Claudio-da-Silva Jr Ergilio Claudio-da-Silva Jr São Paulo, Brazil São Paulo, Brazil Corporate Technology Manager, Corporate Technology Manager, Aracruz Celulose SA Aracruz Celulose SA
Opportunities and Threats to Opportunities and Threats to Opportunities and Threats to the Forest Industry in the South the Forest Industry in the South the Forest Industry in the South The Marcus Wallenberg Prize Symposium Stockholm, November 14th, 2007 Ergilio Claudio-da-Silva, Jr. 2 Aracruz Celulose S. A. - Brazil E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
Congratulations, Prof. Ove Nilsson Eucalyptus flowers 3 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
HIGHLIGHTS • The Industry in the South – major numbers and trends • Key characteristics of this industry – in general – in the South • A successful business case • What's expected from our industry/ demands by scenarios around us • Threats and Opportunities – an analysis based on ' key characteristics ' • How may the future look like 4 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
FOREST PRODUCTS INDUSTRY IN THE SOUTH 5 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
FOREST PRODUCTS INDUSTRY IN THE SOUTH WHERE'S THE ACTION? TODAY'S NUMBERS AND TRENDS... 6 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
BHKP Production and Delivery Costs CIF West Europe, Q2 2 0 0 7 Source: Hawkins Wright 7 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
BEKP market share of total hardwood demand 1990-2006 Hardwood Demand - 1990 Hardwood Demand - 2006 Other ( Tropical) Other ( Tropical) 2% 13% NBHK 28% Euca 32% NBHK 44% SBHK 9% Euca 50% SBHK 22% Total Volum e: 1 1 m illion tons Total Volum e: 2 2 m illion tons South: 3 4 % South: 6 3 % Source: PPPC * Numbers based on demand 8 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
Main Pulp & Paper Producers – watch the 'southerners'... P&B 2 0 0 6 In thousand tonnes Pulp – 2 0 0 6 Plantation Forests - 2 0 0 6 1 USA 82.628 In thousand tonnes total area, million ha 2 China 56.000 1 USA 52.926 1 China 45 3 Japan 30.951 2 Canada 25.397 2 India 32 4 Germany 21.679 3 China 16.310 All Planted Forests in 20 5 Canada 19.499 the South 4 Finland 12.619 3 Russia 17 6 Finland 12391 5 Sweden 12.103 4 USA 16 7 Sweden 11.737 6 Brazil 11.100 5 Japan 10 8 South Korea 10548 7 Japan 10.839 6 Canada 6 9 France 10331 8 Russia 7.460 7 Brazil 5,7 10 Italy 9.998 9 Indonesia 5.468 8 Chile 2 11 Brazil 8.750 10 India 3.351 Sources: FAO, Bracelpa / PPI 9 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
SO... SO... WHAT ELSE WHAT ELSE CAN WE SAY TODAY CAN WE SAY TODAY ABOUT THIS INDUSTRY : ABOUT THIS INDUSTRY : 10 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
THE FOREST PRODUCTS INDUSTRY : THE FOREST PRODUCTS INDUSTRY : an Agribusiness an Agribusiness � Sustainable � Capital Intensive � Extremely Competitive 11 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
THE FOREST PRODUCTS BUSINESS THE FOREST PRODUCTS BUSINESS � Sustainable - in everything we do – starting with our raw materials, our processes, our actions � Capital Intensive – intelligent investments and cost reduction are everyday concerns – clever definition of technology of production units � Extremely Competitive - costs, energy management, product differentiation, services, knowledge management ( human knowledge doubling every 9 months – in Bioenergy , every 3 months ! ) 12 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
THE FOREST PRODUCTS INDUSTRY THE FOREST PRODUCTS INDUSTRY WHAT HAVE WE ALL OBSERVED LATELY IN THE 'SOUTH'? 13 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
THE FOREST PRODUCTS INDUSTRY : THE FOREST PRODUCTS INDUSTRY : It is cheaper to produce in Southern Hemisphere Research and Technological developments have led to significant � planted forest productivity gains ( genetics + forest management ) in the last 35 years - from 20 to 40-50 m³/ha/year Shorter harvesting cycles � Short distances from planted forests to pulp mills � Low costs and fiber quality - key factors for competitiveness Large scales - dilution of fixed production and distribution costs � Pulp quality : developed technology for differentiation/ new � fiber uses Modern, 'state of the art' production units � Capital costs Even with a relative disadvantage for the southern hemisphere � producers, the region still displays a significant structural advantage Smart solutions must be applied to every production line, and this � requires experienced, competent human resources 14 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
THE FOREST PRODUCTS INDUSTRY THE FOREST PRODUCTS INDUSTRY in the South in the South THEN, WHAT ? HOW DID WE GET HERE ? or... WHAT ARE THE MAJOR ACHIEVEMENTS AND LEARNINGS, SO FAR ... THAT WE SHOULD PURSUE, TOWARDS THE FUTURE ? 15 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
THE FOREST PRODUCTS INDUSTRY THE FOREST PRODUCTS INDUSTRY in the South in the South let me tell you about an interesting 'case story' from a 'forest industry in the south' ... 16 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
THE FOREST PRODUCTS INDUSTRY in the South THE FOREST PRODUCTS INDUSTRY in the South THE ARACRUZ EXPERIENCE 17 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
ARACRUZ: A BUSINESS CASE ARACRUZ: A BUSINESS CASE CENTERED ON CENTERED ON Competitiveness and and Competitiveness Value creation , , Value creation both supported by INNOVATION both supported by INNOVATION and SUSTAINABLE PRACTICES and SUSTAINABLE PRACTICES 18 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
In the begining the begining, , In Innovation for: for: Innovation 1 - - Survival Survival 1 2 - - Model Definition Model Definition 2 • Quality / / Product Differentiation Product Differentiation • Quality • Productivity / / sustainability sustainability • Productivity 19 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
Land Use History Land Use History Pastures Atlantic Rainforest Eucalypt Post Aracruz Period before Aracruz 20 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
General aspect General aspect of of the first planted forests established by Aracruz the first planted forests established by Aracruz 21 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
Canker disease 22 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
Defining most adapted species • E. grandis from Atherton, Australia • E. urophylla from Flores Island, Indonesia • GU hybrids 23 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
Clonal propagation at commercial scale 24 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
... 24 months !!! ... 24 months !!! 12 meters 12 meters Clonal planted forest: higher productivity / uniformity 25 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
Sustainable Forest Management • Exclusive use of planted forests for pulp and lumber productions • Soil and plant interactions – nutrition balance • Monitoring of insects and pests - biological controls • Biodiversity balances • Interspersing of planted forests and native reserves • Maintenance of understory vegetation • Preservation of water resources 26 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
Product Focus � Long term commercial relationships with key players � Target on high value added and consumer end products � High quality, homogeneous pulp .... technology � Product development ... technology � High quality service 27 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
Shareholder Value 13 11.3 adt/ha/year 10.2 11 8.1 9 6.4 7 5 70's 80's 90's 00's Decade 28 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
Presently: : Presently Innovation to to Innovation strengthen the strengthen the competitive competitive advantages. . advantages 29 E. Claudio-da-Silva Jr. - MWP Symposium 2007 E. Claudio-da-Silva Jr. 2007
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