EMPRESAS CMPC
CELULOSE RIOGRANDENSE - SITE VISIT
NOVEMBER 18th 2014
AGENDA
I.
Guaíba Mill Introduction
Walter Lidio – CEO CMPC Celulose Riograndense
II.
Guaíba 2 Project
Luis Llanos – CFO Empresas CMPC
III.
Market Pulp Outlook
Luis Llanos – CFO Empresas CMPC
IV.
Forestry Management
Fernando Hasenberg – CFO CMPC Celulose Riograndense
V.
Port & Pulp Logistics
Fernando Hasenberg – CFO CMPC Celulose Riograndense
VI.
Stakeholders’ Relationship
Walter Lidio – CEO CMPC Celulose Riograndense
I.
GUAÍBA MILL INTRODUCTION
GUAÍBA: BUILDING ON 46 YEARS OF HISTORY
1968
The Norwegian group
Borregaard set up its
first eucalyptus
plantation.
1972
Start up of the
Guaíba industrial
plant.
1975
The plant’s control
passed to
Sulbrasileiro/
Montepio da Familia
Militar and renamed
Rio Grande
Companhia de
Celulose do Sul –
Riocell.
2000
OCTOBER, 2009
Klabin buys 100% of
the company stock.
The corporate name
is changed to Klabin
Riocell S.A.
New updates in plant.
CMPC acquires the
Guaíba unit from
Aracruz for US$1.37
billion.
1982
2003
Riocell S.A. is
acquired by the
holding KIV
Participações, formed
by private groups
Klabin, Iochpe and
Votorantim.
Important updates in
the plant.
Aracruz Celulose
bought the plant,
changing the mill’s
name to Guaíba Unit.
DECEMBER,
2009
Celulose
Riograndense took
control of the plant.
DECEMBER,
2012
Approval of the
Guaíba II Project for
US$2.1 billion.
2Q15
Startup of Guaíba 2
Line
4
THE GUAÍBA 2 PROJECT WILL BE ONE OF THE MOST EFFICIENT IN THE PULP
INDUSTRY
State of the art
technology
High yield forestry base
Strategic Location
Upgrade CMPC’s existing logistics
Economies of Scale
Guaíba
Terminal
Rio Grande
Terminal
5
II. GUAÍBA 2 PROJECT: EXECUTED BY A
COMPANY WITH EXPERTISE IN LARGE
SCALE PROJECTS, IN A UNIQUE LOCATION
Guaíba 2 Project –September, 2014.
THE PULP PROCESS IN BRIEF
1
3
2
7
4
6
10
7
5
8
9
11
13
12
14
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GENERAL OVERVIEW
Line 1 (actual) – 450,000 ton/year
Line 2 (Project) – 1,300,000 ton/year
Line 1 + Line 2 – 1,750,000 ton/year
8
DESIGN CRITERIA OF GUAÍBA 2
Raw material:
Eucalyptus
Annual
production:
Design
capacity:
1.3 million
ADtB/year
4,080
ADtB/day
Operation days:
354 days/
year
Design
efficiency:
90%
9
IMPLEMENTATION STRATEGY
The defined strategy for the project is:
Process Areas –
Technology Driven EPC
concept
Turbo generators, Chlorine
Dioxide Plant and Chlor
Alkali Plant
Balance of Plant and
Complementary Plants
EPCM concept
Vendor is responsible for
the entire project including
engineering, procurement
construction and erection
EPS concept
complemented with the
necessary
interconnections as an
EPCM
Consulting company hired
for developing the
engineering, procurement,
construction and
management
10
MAIN CONTRACTORS
AREA
TYPE
SUPPLIER
Wood yard
EPC
Demuth
Cooking & Fiber line
White Liquor Plant
Recovery Boiler
Evaporation Plant
Pulp Drying & Baling
Distributed Controlled System
EPC
Valmet
Water Treatment Plant
Effluent Treatment Plant
Boiler Feed Water Treatment Plant
EPC
Veolia
Power Distribution
EPC
Siemens
Bay of 230 kV line
230kV Transmission line
230kV Substation
EPC
WEG
Turbo generators
EPS
Siemens
Chlorine Dioxide Plant
EPS
Chemetics
Chlor Alkali Plant Expansion
EPS
UHDE
Balance of Plant
Complementary Plants
EPCM
POYRY
11
THE GUAÍBA MILL WILL HAVE 30MW OF EXCESS CAPACITY TO SELL TO
THE NATIONAL GRID
Tie Line 230KV
Main Characteristics
CMPC’s connection to the National Grid
Function: to connect the
Guaíba mill to Guaiba 2
substation
Length: 6 Km
Total Towers: 21
Quantity of Land owners: 13
Main contractor: WEG
Normal operation: 61MW
(imported) and 30MW
(exported)
12
THE GUAÍBA MILL WILL REQUIRE A MAXIMUM OF ~8,700 PEOPLE
Total workers (as of Oct. 2014)
8,668
8,668
8,242
7,796
7,650
7,300
7,2567,338
6,663
5,915
4,890
4,354
3,263
6,200
5,000
3,500
2,586
2,354
302 465 478
717 883
1,625
1,146
1,800
360
133
Priority to hire local manpower
CMPC has a Qualification Manpower Program to qualify 3,600 construction workers and 2,400
mechanical workers
13
CRG HAS A CITIZEN COMPANY ATTITUDE, STIMULATING THE GENERATION OF
LOCAL EMPLOYMENT
Total workers (as of Oct. 2014)
8,668
Guaíba City
13%
Guaíba's
surroundings
5%
Other states
of Brazil
65%
Other
regions of
Rio Grande
do Sul
17%
14
THE PHYSICAL COMPLETION OF THE PROJECT SHOWS THE COMMITMENT
OF CRG TO START UP ON 2Q15
As of the end of October 2014 the physical completion of the Guaíba 2 project was
82.3%
100
90
82.3%
80
70
%
60
50
40
30
20
10
0
15
THE DISBURSEMENTS OF THE PROJECT SHOWS THE COMMITMENT OF CRG
AND CMPC TO BE ON BUDGET
Figures in US$ million
133
118
97
90
49
50
57
118
92
69
57
138
76
80
52
28
3
1
4
1
10
Capex 2013: US$446 million
Capex 2014 (YTD-SEPT ‘14): US$876 million
US$778 million to be disbursed by 3Q15
16
THE GUAÍBA PROJECT CONSIDERS A DIVERSIFIED FINANCING PLAN WHICH
IS MOSTLY COMPLETED
Financing Plan
Capital Increases:
• US$500 million in June 2013
• US$250 million in July 2014
144A Debt Issuance: US$500 million
BNDES Credit: BRL$ 2,510 million
• BRL$ 1,000 million disbursed
ECA Financing: US$340 million
• US$ 265 million disbursed
Sale of non-core assets:
• Bicecorp: US$106 million
17
WHAT’S NEXT?
MAIN MILESTONES
Recovery Boiler – Hydraulic Test
Start the harvesting for line 2
Wood Yard – Start up line 1
Recovery Boiler – First ignition
Recovery Boiler – Initial pipe blowing
Dryers – Test with pulp
Turbo generator 5 – Startup
Guaíba North Port
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III. MARKET PULP OUTLOOK
MARKET PULP COMMENT
Market Pulp demand (9M14 vs. 9M13)
4.2%
2.4%
Global demand for pulp increased 1.9% in 3Q14 from 2Q14
and 2.6% compared to 3Q13. If we compare 3Q14 with 2Q14:
• Chinese demand grew 4.4% (172 Th. tons), Latam demand
increased 7.9% (64 Th. tons), North American demand grew
3.0% (57 Th. tons), European demand increased 1.3% (57
Th. tons). Other Asian countries demand felt 3.2% (86 Th.
tons)
0.5%
0.4%
BSKP and BEKP inventories at 26 and 37 days as of the end of
September 2014
-0.6%
-0.9%
North
America
Western
Europe
Latin
America
Japan
China
Other Asia
Positive change in demand trend since mid May. BHKP price
increase announced for October
8.1%
0.0%
1.4%
Pulp inventory days
-0.8%
37
34
34
34
33
1Q13
2Q13
3Q13
4Q13
34
-5.5%
32
-25.0%
Northern
Softwood
Southern
Softwood
Radiata
Softwood
Northern
Hardwood
Southern
Hardwood
Eucalyptus
Source: PPPC, World Chemical Market Pulp Global 100 Report – September 2014
Source: PPPC
1Q14
2Q14
3Q14
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NEW BEKP CAPACITY IN THE 4OO+ MILLION TONNES FIBER MARKET
Fiber World Consumption required to
produce 403 million tons of
Paper&Board
Recovered
Paper
234 million
tons
(56%)
Virgin Pulp
183 million
tons
(44%)
Virgin fiber used to produce Paper&Board
(million tons)
Integrated
124
million tons
(68%)
Market Pulp
59 million
tons
Market Pulp consumed to
manufacture Paper&Board - 2013
(million tons)
BSKP
24
BHKP
28
(32%)
Mec
5 UKP
2
417 million tons of
total fibers
[Containerboard: 146 million tons]
[P&W: 109 million tons]
59 million tons of
market pulp
Sulphite
28 million tons of
BHKP
[BEKP: 16.8 million tons]
[Guaíba II: 1.3 million tons]
[Other P&B: 86 million tons]
[Tissue: 32 million tons]
[Newsprint: 31 million tons]
Source: RISI 5-year Forecast (2013-2018) - December 2013
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IV. FORESTRY MANAGEMENT: CRG HAS
QUALITY ASSETS WITH SCOPE FOR HIGHER
PRODUCTIVITY IN THE FUTURE DUE TO ITS
INNOVATION AND EXPERTISE
OUR FORESTS ARE CONCENTRATED IN RIO GRANDE DO SUL
The Guaíba Mill will be 100% self sufficient in terms of
wood. Our forestry base is concentrated in 3 blocks:
• Guaíba ~ 115 kms from the mill by truck
• Sao Gabriel ~ 325 kms from the mill by truck
• Losango *~ 160 kms by truck + 250 kms by
barges from the mill
Our plantations in brief:
Average equivalent
distance:
distance 180 kms from the
mill
In regime MAI*:
43m3/ha/year
Losango *subject to CDN approval
* MAI = Mean annual increment
Sylviculture: 60%
clones and 40%
seeds
(shift to clones)
Our own plantations are
FSC™ certified
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OUR FORESTRY STRATEGY IS BASED ON A LONG TERM VISION
Strategic:
Long Term Plan
Tactical:
5 Year Plan
Operational:
Annual Program
Evaluation
-
Shows the sustainable levels of harvesting
Assess the need to buy land
Forest management decisions
Austral Model (Lineal)
Plantations ready to be harvested
-
Harvesting Program
Transportation routes
Equipment and workers needs
-
Production quotes by contractor
Monthly and weekly wood supply
Equipment transfer
Optilog model
-
Annual program evaluation
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WHEN PLANNING, OUR HARVEST SHALL:
Ensure
sustainability
Be flexible
Ensure supply
levels to our
operations
Meet
environmental
requirements
If the long-term is
over- emphasized
immediate
opportunities can
be lost
If the short-term
is underemphasized there
could be a loss in
timber flow
sustainability
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OUR FORESTS SHOULD FEED THE GUAÍBA MILL WOOD NEEDS
CMPC’s forests in Brazil should produce in the range of 7 million m3 of pulpwood per year
The Guaíba mill should require approximately 6.2 million m3 of pulpwood per year
•
The excess of wood could be sold to third parties
•
Could feed a possible debottlenecking, among other uses
Approximately 80% of the wood
required will come by truck (the one coming
from the Sao Gabriel and Guaíba areas)
All truck traffic will use the private
road,
road without overload and negatively
impacting the Castelo Branco Avenue and
the Guaíba community
20%
20% (mostly from Losango) should
enter the mill by barges coming from the
Pelotas terminal
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ELECTRICAL ROAD CONSTRUCTION STATUS
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GENETIC & SYLVICULTURAL ADVANCES TO FURTHER IMPROVE YIELDS
“Old” type of plantations
20 m3/hectare/year
“New” type of plantations
43 m3/hectare/year
It is important to combine
several kinds of species that better adapt to weather
and soil conditions in order to maximize the amount of pulp tons per hectare and
to reduce climate, pests and other risks
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GENETIC & SYLVICULTURAL ADVANCES TO FURTHER IMPROVE YIELDS
Uniformity of
wood
Increased
productivity per
hectare
Better adaptation
to environmental
stress (dry and
cold areas)
Ability to work
with resistance to
diseases and
pests
Reduced costs for pulp production (less
purchase of land, lower cost of harvest,
etc.)
29
FORESTRY TECHNOLOGY: ENABLING GROWTH OPPORTUNITIES FOR THE
FUTURE
Gains in pulp production per hectare:
Hybrid clones
MAI Pulp (tons of pulp /hectare / year)
Cloning
18
16
14
12
10
8
6
4
2
0
1 9 80
1 9 90
2 0 00
2 0 1212 -2020
Forestry technology will enable CMPC to produce improved hybrid clones that
should further increase our pulp productivity in the coming years
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V. PORT AND PULP LOGISTICS
EXTERNAL LOGISTICS
The external logistics of the Guaíba Mill will be:
Domestic Market
by trucks
(250,000 t/y)
Mill
(1,750,000 t/y)
Guaíba Mill
warehouse
by containers
(300,000 t/y)
All Weather
Terminal
by barges
(1,500,000 t/y)
Rio Grande
Port
Break Bulk
(1,200,000 t/y)
~260 kms
32
ESTIMATED SCHEDULE
Estimated schedule for logistics’ start up:
PHASE 1
2Q15: Start up
Guaíba 2 and Guaíba
port (pulp terminal).
PHASE 2
January 2016: Start
up Pelota’s Port.
PHASE 3
2017: Enlargement
and drag of the Rio
Grande Port &
CMPC’s Warehouse
construction at the
Rio Grande Port
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GUAÍBA PORT – ALL WEATHER TERMINAL
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BARGES CYCLE (WITH AND WITHOUT WOOD SUPPLY)
The logistic plan after the Guaíba 2 Line projects movement of 1.5 million tons of pulp per
year by barges and 1.2 tons of wood from/to the Guaíba port respectively
In the design there are 3 established port terminals: Guaiba, Rio Grande and Pelotas.
There is an outsourced water transport service which connects these terminals through
the Laguna de los Patos
Barges Cycle (hr)
Guaíba (pulp)
Docking / Decoupling
Pulp load
Guaíba- Rio Grande Trip
Rio Grande
Docking / Decoupling
Pulp unload
Contingencies(rain, strong fog, among others)
Rio Grande- Pelotas trip
Rio Grande- Guaiba trip
Pelotas
Docking / Decoupling
Wood load
Pelotas – Guaiba trip
Guaíba (wood)
Docking / Decoupling
Wood unload
Barge cleaning
TOTAL
With
wood
Without
wood
2
8
20
2
8
20
2
8
5.6
4
2
8
5.6
20
2
8.1
20
2
10.4
4
96.1
65.6
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RIO GRANDE TERMINAL
A project was designed to meet pulp logistics demands at Rio Grande Port: discharge
barges, storage, ship loading and container stuffing
Priority Berthing for Pulp Vessel
Private Berthing for
Barges
The pulp will be stored in warehouses with static capacity of 83,000 ton.
Pulp bales in the warehouses will be moved by forklifts and transportation from warehouses to
36
the ship's side will be done by trucks.
36
CONTAINERS MANAGEMENT
To comply with the 300,000 tons/year of containers’ demand CMPC will have a team
exclusively dedicated to containers. Our logistic operator will operate a permanent covered
area between the C4 and C5 warehouses with a concrete platform which will allow CMPC to
load simultaneously up to 6 containers in trucks
37
37
RIO GRANDE PORT
38
RIO GRANDE PORT
39
LOGISTICS & SERVICES: LOGISTIC NETWORK
13 Main
Ports
Long term freight
contacts
+transhipments
with specialized
shipping companies
Flexibility
Permanent Stocks
and quick response
in Europe, Asia and
Americas
40
CMPC AIMS TO LEVERAGE ITS GLOBAL CUSTOMER BASE AND SUPPLY
CHAIN TO COMMERCIALIZE GUAÍBA PULP
Most of the Guaíba additional capacity should go into existing CMPC customers worldwide
Additional outreach to establish customer relationships in less-penetrated markets for CMPC
such as United States and Middle East
All the above should be reached based on CMPC Pulp strengths:
400+ Customers
in 35+ countries
Balanced mix
of Softwood and Eucalyptus Kraft pulp
Industrial operations
in Chile & Brazil
Committed
global network of sales representatives
Long term
commercial relationships with customers
Outstanding
Logistics, service and customer relationships
41
VI. STAKEHOLDERS’ RELATIONSHIPS
CELULOSE RIOGRANDENSE PRINCIPLES
All decisions and actions are guided by ethical values and business principles,
principles
respecting each stakeholder that interacts with our operations
Investors
Clients
Suppliers
Workers
Principle N°1:
Principle N°2:
Citizen
company
Innovative
company
Principle N°3:
Principle N°4:
Ethical
company
Professional
company
Media
Local
authorities
Community
Integrity / Communications
NGOs
Environment
I
n
t
e
g
ri
t
y
/
C
o
m
m
u
n
i
c
a
ti
o
n
s
43
COMMUNICATIONS: A KEY TOOL IN OUR RELATIONSHIPS WITH STAKEHOLDERS
Celulose Riograndense works on a
positive agenda to neutralize and
minimize impacts
Press & Other communications channels:
- Work’s newspaper, folders, “announcement car”, press consultancy service, monthly
meetings with community counselling, 24 hours communication channel, link
“acompanhe a obra”, monitoring and answers on local networks, guided visits to the
work, weekly neighbors external visits
Work on
local culture
Work with
local
authorities
Work with
surrounding
communities
Work with other
critical publics
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CMPC AND CELULOSE
RIOGRANDENSE STRONGLY
BELIEVES IN SUSTAINABILTY
SOME OF THE INICIATIVES
REGARDING THIS PRINCIPLE ARE:
SOCIAL RESPONSABILITY INICITIVES
Professional qualification
program: ~10,000 people
•
Citizen Company attitude
providing social inclusion with
insertion in the labor market
•
Generating income to the
local economy, families and
to the city
•
Shortage of labor market
•
Cost reduction by allocating
with labor force from other
regions and countries
Relation with indigenous
communities
•
•
Pioneers in leading
promoting buy-local in Rio
Grande do Sul
Citizen Company attitude,
stimulating the development
of local productive chains
possible
•
Generation of local
employment, taxes and
income to the city
•
Integration with RS State
Government
•
Nine municipalities with CRG
forest plantations have
indigenous peoples, including
Quilombos (these
communities were contacted
and mapped)
•
They have fluent
communications with CRG
•
A complete study on local
indigenous communities was
prepared for Imaflora
Stimulus to local
suppliers
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SOCIAL RESPONSABILITY INICITIVES
Education program
Fabrica de Gaiteros
This project has distributed over
•
8 million notebooks to students in public
schools in 39 cities
•
Eucalyptus honey
CRG encourages small scale
honey farmers to place their
beehives in eucalyptus plantations.
The product remains the property of
the beekeepers, with around 8% of
the honey obtained is distributed by
CRG to APAES schools
Youths are taught in the art of playing
diatonic accordions, popularly known in
the region as a “gaita de 8 baixos”,
stimulating social inclusion, as well as
and the music and culture of Rio
Grande do Sul State
•
Music in the factory
•
Every month, artists from Rio
Grande do Sul (selected through
voting done by the neighbors of
the factory) are invited to show
their artistic skills to the factory's
neighbors
Gaia joven
•
This program aims at providing
Children in the Pantano Grande
region with a direct approach to
sustainable practices
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Other initiatives
•
Preventive health program (PESC), Forest trails, Open door visit program, “Floresta é vida” Program, “Guaíba limpo”
(cleaning margins of Guaíba lake), Pulp & Paper technicians course, “Oficinas na Escola” (mechanic office at school),
Journalists actualization seminars, Some NGOs and organizations' events , among other initiatives.
47
CLOSING COMMENTS
CMPC CELULOSE RIOGRANDENSE WILL BASE ITS STRATEGY IN:
1. Continue smooth execution of Guaíba 2 expansion
2. Maintain and promote positive labor relations
3. Ensure strict control of costs and timeline
4. Manage balance sheet to control leverage
5. Prepare customer base for additional supply of pulp
49