Suzano to invest US$ 1.3 billion in renewable energy
Valor Econômico 07/30/10
Suzano Papel e Celulose is paving the way to get to 2024, year in which it completes 100 years since its foundation, with operation and recognition not only as a pulp and paper producer but as a forestry-based company. After increasing its bet in biotechnology, with the purchase of the British Futuragene for US$ 82 million, the company controlled by the Feffer family announced yesterday the creation of Suzano Energia Renovável (Renewable Energy), in an investment of US$ 800 million in the first phase of the business. Another US$ 500 million will be invested in the operation, amounting to US$ 1.3 billion invested by end of the decade.The new company is born focusing on the production of wood pellets, which are used for energy generation, and on the European market. Until 2014, Suzano Energia should have three plants for pellets, each with capacity to produce 1 million tons a year. After that phase, the annual income of the company should turn around US$ 480 million. Another US$ 500 million that will be invested in the increase of the production to 5 million tons a year, through the implementation of two new productive units should come from the cash generated by Suzano Energia. Thus, at the end of the second stage of investments, the annual earnings of Suzano Energia might get to US$ 800 million.
The new company will be headed by André Dorf, Executive who is in Suzano Papel for 7 years, where he holds the office of Executive Director of Strategies, New Businesses and Investor Relations. According to Dorf, the capital structure of Suzano Energia is still under study and "all possibilities", including an IPO and a partnership with investment funds or other companies, are being analyzed.
The decision on the means to fund the new operation should be known soon, since Suzano is beginning, forthwith, to seek land for the planting of the forests that will feed the first three pellet plants, installed somewhere in the Brazilian Northeast . Each unit will require 30 thousand hectares of forests - compared to 130 thousand hectares required to supply a pulp plant -, with a harvest cycle of no more than three years.
The choice of the European market is due to the potential demand for renewable energy, by reason of goals and incentives granted in the region. According to Dorf, at least 2.7 million of 3 million tons Suzano Energia may produce in 2014 are already covered by memorandums of understanding with the European energy generators. Pellets are dried and pressed wood particles, whose calorific power is equivalent to twice that of chips and logs.