History / Overview

provided by Richard W. Hall

Champion International began to establish a presence in Brazil in 1959. Champion expanded its operations throughout Brazil. One significant operation called Amcel was based at the mouth of the Amazon in the Brazilian state of Amapa. Champion established a significant amount of pine and eucalyptus plantations as part of this project. Champion built a chip exporting facility that would allow it to ship wood chips via large ocean going vessels. Champion exported its first load of chips from Amcel into the United States in 1998.

When International Paper (IP) acquired Champion in 2000, IP assumed control of Championís Brazilian assets. At the time of the acquisition, this included a million and a half acres of forestland. Amcel accounts for approximately 200,000 acres of forestland. Some industry insiders make note that Championís Brazilian operations were the most profitable operations within the company and were the primary focus of the IP acquisition.

Though the Amcel operation has been growing both pine and eucalyptus, the focus has shifted primarily to eucalyptus production. Amcel produces chips from eucalyptus urograndis. This is a hybrid eucalyptus of eucalyptus grandis and eucalyptus urophyla (it is interesting to note that there are more than 600 different eucalyptus species). IP is using clonal technology developed primarily in Brazil to propagate this type of eucalyptus. These trees are grown in high-yield plantations with an average rotation of seven years. They grow at a rate of about 50 cubic meters per hectare per year or approximately 15 Ė 20 tons per acre per year.

IP plans to ship approximately one million tons of eucalyptus chips to its mills along the U.S. gulf coast over the next three years. IP has contracted with a Japanese shipping firm to transport these chips for the next three years. It is possible that this contract could be expanded 10 to 15 years. Amcel has the capability of producing two million tons of eucalyptus per year.

Though the Amcel operation produces a significant amount of eucalyptus, the primary eucalyptus region in Brazil is actually located further south along the Atlantic coast in the states of Bahia, Minas Gerais, and Espirito Santo. One of the largest and most well known companies in Brazil is Aracruz, a company that specializes in eucalyptus pulp. Aracruz is currently the largest producer of eucalyptus pulp in the world. Aracruz also has a significant amount of eucalyptus plantations.

Eucalyptus was first introduced into Brazil in the early 1800ís. Various types of eucalyptus, primarily grandis and associated hybrids, are well-adapted for Brazils warm tropical and sub-tropical climates have been used for a range of purposes. Eucalyptus began to be accepted as a raw material for making paper in the early 70ís. Acceptance of eucalyptus has increased significantly to the point where in some paper grades it is now the preferred fiber, particularly woodfree paper grades.

Like other hardwoods, eucalyptus can be broken into short fibers. In fact, eucalyptus fiber has the shortest length of commercially available hardwood species. This enables papermakers to produce fine paper with highly desirable characteristics. Such characteristics include: low coarseness, high fiber count per gram, and resistance to collapse. These characteristics are ideal for producing printing and copier papers and other fine papers. The high fiber count per gram and low coarseness also make eucalyptus ideal for producing soft tissue.

Costs associated with paper production also decrease as a result of using eucalyptus. Because paper makers are able to work with a homogenous source of fiber rather than a mixed blend, such as the oak gum blend from the southeast U.S., they have better control of the production process and are able to produce higher quality paper for a lower price per ton.

Since its initial acceptance back in the 1970ís eucalyptus has become a dominant source of fiber for paper producers. Because of the favorable characteristics associated with paper produced with eucalyptus fiber as well as the tremendous advantages associated with growing eucalyptus plantations, the market for eucalyptus based paper products will continue to grow throughout the world. Regions that have the ability to grow eucalyptus in large, high-yield plantations will have an increasing competitive advantage in the hardwood pulpwood markets.