Chile is by far the dominant woodchip exporter in South

1
Latin Americas Role in the International
Woodfiber Markets

• Presented to the 6th International
• Woodchip Conference
• Haikou City, China
• by Bob Flynn
• Robert Flynn Associates
• November 15, 1999

2
Chile is by far the dominant woodchip exporter in
South America

• Chile accounted for 56 of woodchip exports from
  Latin America in 1998.
• Chiles share of woodchip exports has declined
  from 83 in 1995.
• Profile of Chiles woodchip industry will be
  reviewed by the Chile delegation at the
  conference.

3
Chile has also been an important pulplog exporter

• Chile accounted for about 9 of Latin American
  pulplog exports in 1998, down from 18 in 1995.
• Chile exports Eucalyptus globulus pulplogs to
  Europe and Radiata pine logs to Japan.
• Volumes in the first half of 1999 in Chile----
  up sharply for Eucalyptus (260,000 m3, up 270),
  stable for pine.

4
Brazil has the largest area of fast-growing
plantations in Latin America

• Major areas of surplus Eucalyptus fiber - due to
  delays in pulp projects, improved yields,
  changing end-uses (e.g. charcoal).
• Many plantations uneconomic to consider for
  woodchip exports - high costs of freight to
  ports.
• Chip exports only of pine and acacia to date.

5
There are only two chip exporting companies in
Brazil
AMCEL (Champion International) exports caribbean
pine chips from a public port in Santana, near
Macapa in northeast Brazil. TANAC exports Acacia
mearnsii chips from Rio Grande port in far
southern Brazil. New company - MITA (Mitsubishi
and Seta) will begin exporting acacia from Rio
Grande.
6
AMCEL is the only chip exporter in the world to
ship to 3 continents

• AMCEL currently producing just Caribbean pine,
  but is planting only Eucalyptus urograndis.
• Total ownership 430,000 ha, of which 215,000 are
  plantable.
• Eucalyptus exports could begin in 2004.
  Possible future shipments to US South???
• New facility being developed - private port of
  Icomi.
• Reducing shipments to European board producers.
• Plantations clustered close to chip export
  facility.
• Minimum draft 32 feet, maximum 37 at current
  loading dock.

7
TANAC S.A. and Sumitomo benefited from
slow-down effect

• Exports began in 1996, with a relatively smooth
  start-up, and have been strong for 3 years.
• As Japanese customers sought to slow down
  shipments in 1998, TANACs 34-day sailing time to
  Japan became an advantage, and several additional
  vessels were added to the annual plan.
• Chips flow from chip plant via short conveyor to
  a large grain loading facility---loading is
  efficient. Major drawback is 300 km average road
  haul for the pulplogs, but TANAC is planting
  closer to the port.
• Draft at loading dock 42 feet minimum

8
New Acacia chip exporter to begin operations in
2000

• Estimates of Acacia plantation area in southern
  Brazil range from 60,000 to 180,000 hectares.
• SETA is the other major owner/user of acacia for
  tannin production in the region. They have
  exported pulplogs in the past, and have explored
  chip exports for several years.
• Reportedly, they will begin producing chips at
  Taquari, about 90 km from Porto Alegre. They
  plan to transport chips by barge down to Rio
  Grande Port, where they will use the Tergrasa
  facilities.
• Start-up expected March or April, target of
  200,000 BDMT.

9
Brazil is a major exporter of Eucalyptus pulplogs

• In the mid-1990s, some pine and acacia pulplogs
  were exported from Brazil --- unlikely to be
  repeated.
• Primary eucalyptus pulplog exporters have been
  Aracruz and Copener. This volume mostly comes
  from Bahia, and is E. grandis or E. urograndis.
• Riocell, with an estimated 1.0 million cubic
  meter annual surplus of eucalyptus, began
  exporting to Morocco this year. Total volume in
  1999 is 80,000 m3, with plans for 250,000 m3 next
  year. Would like to begin chip exports.

10
Ecuador - Expoforestal

• Exporforestal began exporting E. globulus chips
  through Sumitomo Corp in 1995.
• Very low cost wood, but long (350 km) trucking
  distance on slow mountain roads.
• Chip plant near loading dock. Chips conveyed
  across street to concrete pad in port. Low
  investment (portable cranes, similar set-up to
  San Vicente in Chile.
• Chip plant capacity is 20,000 BDMT per month,
  but annual shipments have been 160-170,000 BDMT.

Draft is 37 feet, but must be maintained with
frequent dredging.
11
Ecuador - Unlikely to be major force in woodchip
supply

• Total of only 50,000 ha of Eucalyptus
  plantations in the country. Location is
  scattered through mountains, relatively low
  growth rates, and a non-functioning plantation
  incentive program.
• Existing resource base primarily owned by
  indigenous groups, not private companies.
• Other companies have investigated new chip
  export business, but with little success (e.g.
  ALPACA).
• Some Eucalyptus pulplog exports to Europe
  continue---- volumes never more than 100,000
  cubic meters per year, now less.

12
Argentina Uruguay Few chip exports, but major
pulplog exports

• Numerous companies, Japanese and other, have
  studied chip export potential, but only one
  facility operating to date Desarrollos
  Forestales, operating at the port of Necochea
  This company is owned by Inversiones Forestales
  CCA, of Chile.
• Volumes have consistently averaged 120,000 BDMT.
  
• Good potential to expand E. globulus/E. viminalis
  plantations in region near Necochea, but land is
  expensive. Eucalyptus in other regions, e.g.
  Entre Rios, heavily used by particleboard
  producers.
• No other chip exports expected from
  Argentina/Uruguay in 1999/2000.

13
Argentinas plantation area expanding, but this
will have little impact on exports

• Argentinas eucalyptus resource is concentrated
  in the states of Entre Rios, Corrientes, and
  Buenos Aires.
• Pulplogs are exported primarily from Entre Rios,
  This area is now experiencing an expansion in
  particleboard production, which will compete for
  euc fiber.
• Pine is located too far from ports to consider
  for export. Poplar/willow plantations in Delta
  have surplus, but no interest in export.

14
Uruguay has a very large, and growing, surplus of
Eucalyptus grandis and globulus

• Plantation incentive program has helped develop
  300,000 ha of eucalyptus plantations in Uruguay.
• Major landowners include foreign companies ENCE,
  Shell, Kymenne, West Fraser, Otegui Group
  (Uruguayan company), and numerous local and
  foreign private investors. Weyerhaeuser is
  planting large are of pine, with some eucalyptus.

• No pulp projects yet announced for Uruguay.

15
Most pulplog shipments involve two-port loading

• Shallow (17-foot draft) in Rio Uruguay requires
  partial loading, with topping off primarily in
  Montevideo.
• Pulplog exports from Argentina Uruguay have
  averaged about 1.2 million m3 for the past
  several years.
• Significant price premium for E. globulus.
• No new markets developed despite intense efforts
  (e.g. USA).
• Eucalyptus supply in Argentina stable, with more
  going to particleboard in the future. In
  Uruguay, harvest is expected to reach 6 or 7
  million m3 in the next 10 years.

16
A few companies now dominate pulplog export
market in Argentina/Uruguay

• Tile (Otegui Group) is the largest pulplog
  exporter. Their plantations are now too far from
  port to be favored supply.
• Las Pleyades (ENCE) has plans to develop its own
  private port on the Uruguay River, possibly
  including woodchips.
• Deforsa is Desarrollos Forestales, the woodchip
  exporter operating in the port of Necochea.
  Owned by Inversiones Forestales CCA of Chile.
• Savinor was a major Argentine exporter, but
  volumes have reduced in last two years.

17
Venezuela - Will chip exports ever happen?

• There are over 500,000 hectares of caribbean
  pine plantations in eastern Venezuela, mostly
  owned by regional government corporation CVG
  Proforca.
• Numerous pulp and wood panel projects have been
  announced over the years, to utilize the fiber in
  these small, relatively slow growing trees, but
  nothing concrete has been accomplished to date.
• Stone Container and Venepal formed a JV in the
  early 1990s, (Veneston), and spent millions of
  dollars to develop a chip export facility. Stone
  has now walked away from the deal, which
  reportedly still needs several million dollars
  more to complete. The government has threatened
  to take away timber supply agreement if someone
  doesnt assume control of the project. Potential
  volume was 330,000 BDMT. Nothing positive is
  likely to happen in the next year or so,
  especially with the new, more radical government.

18
Costa Rica - Gmelina Still Available

• Ston Forestal turned over to local manager,
  Stone Container walks away.
• Only one small shipment of Gmelina arborea chips
  made to Japan in 1998. Loading area forced away
  from chip plant by Greenpeace. Mid-stream
  loading from barges required due to shallow
  draft.
• About 14,500 ha planted. Some logging being
  done to support nearby Faber pencil slat plant.
• Customers needed - no experience necessary!

19
Guatemala - Simpson Plantations also available

• 7500 hectares of gmelina established to provide
  pulplog exports for Simpsons Texas pulpmill.
  Government refused to issue license to permit
  pulplog exports.
• Simpson exploring alternative uses.
• Plantations available for interested party---
  chip exports not a possibility.

20
Mexico - Eucalyptus exports in 2002?

• Temple-Inland has been exploring alternative
  uses of the eucalyptus fiber it is growing in
  Southeastern Mexico (E. grandis).
• Woodchip exports may begin as early as 2002,
  more likely 2003, to an as-yet unspecified
  customer in the US South. Volumes expected to
  reach 300,000 BDMT annually.
• Pulsar Group continues to push massive 300,000
  hectare plantation development scheme. Little
  accomplished to date. Anticipate some eucalyptus
  fiber available for export.
• Bamboo fiber available in Mexico --- no
  international interest.

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Questions?
Bob Flynn Robert Flynn Associates PMB330, 6824
19th St. West University Place, WA 98466 Email
bflynn_at_aa.net Email bobgflynn_at_aol.com Website
www.latco.org/flynn