Twenty years of successful Eucalyptus gene splicing in Brazil is paying off in terms of new investments flooding into the pulp and paper industry and into nonwovens for Brazil’s booming middle class in the northeast region.
With an estimated 54% of the population now in the middle class, the Brazilian consumer market is increasing rapidly. Last year 2.7 million people moved into the middle class market, according to a study by BNP Paribas bank group.
Among major nonwovens companies in the country, Kimberly-Clark Brazil is building a new distribution center at Camacari, in Bahia state at a cost of R$100 million, or about $49 million, which is expected to open in December. K-C built its first distribution center in the region in Recife, Pernambuco state in 2008.
The new Bahia K-C investment also complements two other distribution centers and four manufacturing facilities the company has in more southern areas of the country, where most economic development has occurred until this decade. The manufacturing locations include: Eldorado do Sul, in Rio Grande do Sul state; Correia Pinto, in Santa Catarina state; and Suzano and Mogi das Cruzes in Sao Paulo state.
“This investment helps define our Bahia-Maranhao axis. The northeast region has great potential; in the last two years, our sales have increased 30% there,” said Kimberly-Clark president in Brazil, João Damato, in December 2011 when the company initially announced the project.
While the northeast region represented only 18% of K-C’s sales in 2011, the region is projected to expand to represent 30% of national sales. Last year, K-C sales were up 14% overall and positioned Brazil as the company’s third-largest national market, following the U.S. and Mexico.
In July 2011, Companhia Providencia also announced plans for a new nonwoven factory in Pouso Alegre, Minas Gerais state, an investment worth $60 million.
Brazil now produces an estimated 14 million metric tons of wood pulp, primarily from Eucalyptus, but new investments are expected to increase this level to 20 million metric tons by 2020. Major players in the pulp market include Eldorado Brasil, which is building a new cellulose plant at Três Lagoas, in Minas Gerais state; Suzano; and Veracel, which is building a new plant at Imperatriz, in Maranhao state, in the northeast region.
Part of the inspiration for K-C’s investment in Bahia is a new $660 million investment in acrylics and superabsorbent polymers by BASF at Camacari, for which construction began earlier this year. Similarly, rising pulp and paper feedstock investments by Akzo-Nobel in several areas of the country will supply new pulp plants.
AkzoNobel’s Eka Chemicals is investing $112 million inside the fence of the new Eldorado pulp plant to provide chemical feedstocks and some energy, with a September startup planned. AkzoNobel is also investing $100 million within the fence of the new Veracel pulp plant, in the same type of arrangement, with a third-quarter 2013 startup target. Veracel is a joint venture between Brazil’s Fibria and Swedish-Finnish Stora Enso Oyj.
Charles W. Thurston covers Latin American developments ranging from environmental stewardship and new technology implementation to global financing.
Brazil Attracts Pulp, Nonwoven Investments
Natural resources as well as a growing middle class make this country an appealing venture.
By Charles W. Thurston, Contributing Writer