EMPRESAS CMPC CELULOSE RIOGRANDENSE - SITE VISIT. NOVEMBER 18 th 2014

Transcription

1 EMPRESAS CMPC CELULOSE RIOGRANDENSE - SITE VISIT NOVEMBER 18 th 2014

2 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

3 I. GUAÍBA MILL INTRODUCTION

4 GUAÍBA: BUILDING ON 46 YEARS OF HISTORY 1968 The Norwegian group Borregaard set up its first eucalyptus plantation The plant s control passed to Sulbrasileiro/ Montepio da Familia Militar and renamed Rio Grande Companhia de Celulose do Sul Riocell Klabin buys 100% of the company stock. The corporate name is changed to Klabin Riocell S.A. New updates in plant. OCTOBER, 2009 CMPC acquires the Guaíba unit from Aracruz for US$1.37 billion. DECEMBER, 2012 Approval of the Guaíba II Project for US$2.1 billion DECEMBER, 2Q Start up of the Guaíba industrial plant. 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. Celulose Riograndense took control of the plant. Startup of Guaíba 2 Line 4

5 THE GUAÍBA 2 PROJECT WILL BE ONE OF THE MOST EFFICIENT IN THE PULP INDUSTRY State of the art technology High yield forestry base Economies of Scale Strategic Location Upgrade CMPC s existing logistics Guaíba Terminal Rio Grande Terminal 5

6 II. GUAÍBA 2 PROJECT: EXECUTED BY A COMPANY WITH EXPERTISE IN LARGE SCALE PROJECTS, IN A UNIQUE LOCATION Guaíba 2 Project September, 2014.

7 THE PULP PROCESS IN BRIEF

8 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

9 DESIGN CRITERIA OF GUAÍBA 2 Raw material: Eucalyptus Annual production: 1.3 million ADtB/year Design capacity: 4,080 ADtB/day Operation days: 354 days/ year Design efficiency: 90% 9

10 IMPLEMENTATION STRATEGY The defined strategy for the project is: Process Areas Technology Driven EPC concept Vendor is responsible for the entire project including engineering, procurement construction and erection Turbo generators, Chlorine Dioxide Plant and Chlor Alkali Plant EPS concept complemented with the necessary interconnections as an EPCM Balance of Plant and Complementary Plants EPCM concept Consulting company hired for developing the engineering, procurement, construction and management 10

11 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 Water Treatment Plant Effluent Treatment Plant Boiler Feed Water Treatment Plant EPC EPC Valmet 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

12 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

13 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 7,2567,338 7,300 6,663 6,200 5, ,586 2,354 1,625 1,146 3,263 4,890 4,354 5,000 3,500 1, Priority to hire local manpower CMPC has a Qualification Manpower Program to qualify 3,600 construction workers and 2,400 mechanical workers 13

14 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

15 % 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% 82.3% 15

16 THE DISBURSEMENTS OF THE PROJECT SHOWS THE COMMITMENT OF CRG AND CMPC TO BE ON BUDGET Figures in US$ million Capex 2013: US$446 million Capex 2014 (YTD-SEPT 14): US$876 million US$778 million to be disbursed by 3Q15 16

17 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 A 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

18 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 18

19 III. MARKET PULP OUTLOOK

20 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) -0.6% North America -0.9% Western Europe Latin America 0.4% 0.5% Japan China Other Asia 8.1% BSKP and BEKP inventories at 26 and 37 days as of the end of September 2014 Positive change in demand trend since mid May. BHKP price increase announced for October 0.0% 1.4% Pulp inventory days -0.8% -5.5% Northern Softwood Southern Softwood Radiata Softwood Northern Hardwood -25.0% Southern Hardwood Eucalyptus Source: PPPC, World Chemical Market Pulp Global 100 Report September Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Source: PPPC 20

21 NEW BEKP CAPACITY IN THE 4OO+ MILLION TONNES FIBER MARKET Fiber World Consumption required to produce 403 million tons of Paper&Board Virgin fiber used to produce Paper&Board (million tons) Market Pulp consumed to manufacture Paper&Board (million tons) Recovered Paper 234 million tons (56%) Virgin Pulp 183 million tons (44%) Integrated 124 million tons (68%) Market Pulp 59 million tons (32%) BSKP 24 BHKP 28 Mec 5 UKP 2 Sulphite 417 million tons of total fibers [Containerboard: 146 million tons] [P&W: 109 million tons] [Other P&B: 86 million tons] [Tissue: 32 million tons] [Newsprint: 31 million tons] Source: RISI 5-year Forecast ( ) - December million tons of market pulp 28 million tons of BHKP [BEKP: 16.8 million tons] [Guaíba II: 1.3 million tons] 21

22 IV. FORESTRY MANAGEMENT: CRG HAS QUALITY ASSETS WITH SCOPE FOR HIGHER PRODUCTIVITY IN THE FUTURE DUE TO ITS INNOVATION AND EXPERTISE

23 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 kms by barges from the mill Our plantations in brief: Average equivalent distance: 180 kms from the mill Sylviculture: 60% clones and 40% seeds (shift to clones) In regime MAI*: 43m 3 /ha/year Our own plantations are FSC certified Losango *subject to CDN approval * MAI = Mean annual increment 23

24 OUR FORESTRY STRATEGY IS BASED ON A LONG TERM VISION Strategic: Long Term Plan - Shows the sustainable levels of harvesting - Assess the need to buy land - Forest management decisions - Austral Model (Lineal) - Plantations ready to be harvested Tactical: 5 Year Plan - Harvesting Program - Transportation routes - Equipment and workers needs Operational: Annual Program Evaluation - Production quotes by contractor - Monthly and weekly wood supply - Equipment transfer - Optilog model - Annual program evaluation 24

25 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 25

26 OUR FORESTS SHOULD FEED THE GUAÍBA MILL WOOD NEEDS CMPC s forests in Brazil should produce in the range of 7 million m 3 of pulpwood per year The Guaíba mill should require approximately 6.2 million m 3 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, without overload and negatively impacting the Castelo Branco Avenue and the Guaíba community 20% (mostly from Losango) should enter the mill by barges coming from the Pelotas terminal 26

27 ELECTRICAL ROAD CONSTRUCTION STATUS 27

28 GENETIC & SYLVICULTURAL ADVANCES TO FURTHER IMPROVE YIELDS Old type of plantations 20 m 3 /hectare/year New type of plantations 43 m 3 /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 28

29 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

30 FORESTRY TECHNOLOGY: ENABLING GROWTH OPPORTUNITIES FOR THE FUTURE Gains in pulp production per hectare: MAI Pulp (tons of pulp /hectare / year) Cloning Hybrid clones Forestry technology will enable CMPC to produce improved hybrid clones that should further increase our pulp productivity in the coming years 30

31 V. PORT AND PULP LOGISTICS

32 EXTERNAL LOGISTICS The external logistics of the Guaíba Mill will be: Domestic Market by trucks (250,000 t/y) by containers (300,000 t/y) Mill (1,750,000 t/y) Guaíba Mill warehouse All Weather Terminal by barges (1,500,000 t/y) Rio Grande Port Break Bulk (1,200,000 t/y) ~260 kms 32

33 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 : Enlargement and drag of the Rio Grande Port & CMPC s Warehouse construction at the Rio Grande Port 33

34 GUAÍBA PORT ALL WEATHER TERMINAL 34

35 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) With wood Without wood Guaíba (pulp) Docking / Decoupling 2 2 Pulp load 8 8 Guaíba- Rio Grande Trip Rio Grande Docking / Decoupling 2 2 Pulp unload 8 8 Contingencies(rain, strong fog, among others) Rio Grande- Pelotas trip 4 Rio Grande- Guaiba trip 20 Pelotas Docking / Decoupling 2 Wood load 8.1 Pelotas Guaiba trip 20 Guaíba (wood) Docking / Decoupling 2 Wood unload 10.4 Barge cleaning 4 TOTAL

36 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 the ship's side will be done by trucks

37 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

38 RIO GRANDE PORT 38

39 RIO GRANDE PORT 39

40 LOGISTICS & SERVICES: LOGISTIC NETWORK 13 Main Ports +transhipments Long term freight contacts with specialized shipping companies Flexibility and quick response Permanent Stocks in Europe, Asia and Americas 40

41 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: Customers in 35 + countries Industrial operations in Chile & Brazil Long term commercial relationships with customers Balanced mix of Softwood and Eucalyptus Kraft pulp Committed global network of sales representatives Outstanding Logistics, service and customer relationships 41

42 VI. STAKEHOLDERS RELATIONSHIPS

43 CELULOSE RIOGRANDENSE PRINCIPLES All decisions and actions are guided by ethical values and business principles, respecting each stakeholder that interacts with our operations Investors Clients Suppliers Principle N 1: Citizen company Principle N 3: Ethical company Media Local authorities Principle N 2: Innovative company Principle N 4: Professional company Community Workers NGOs Environment I n t e g ri t y / C o m m u n i c a ti o n s Integrity / Communications 43

44 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 44

45 CMPC AND CELULOSE RIOGRANDENSE STRONGLY BELIEVES IN SUSTAINABILTY SOME OF THE INICIATIVES REGARDING THIS PRINCIPLE ARE:

46 SOCIAL RESPONSABILITY INICITIVES Professional qualification program: ~10,000 people Relation with indigenous communities 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 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 Stimulus to local suppliers 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 46

47 SOCIAL RESPONSABILITY INICITIVES Education program This project has distributed over 8 million notebooks to students in public schools in 39 cities 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 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 Gaia joven This program aims at providing Children in the Pantano Grande region with a direct approach to sustainable practices Fabrica de Gaiteros 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 Barba Negra Reserve CRG created this this nature reservation to to thank the the Riograndense people for for the the kind reception offered when the the company was established in in the the state. Located in in Barra do do Ribeiro this this reserve has has 2,4 2,4 thousands hectares and a a rich biodiversity 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

48 CLOSING COMMENTS

49 CMPC CELULOSE RIOGRANDENSE WILL BASE ITS STRATEGY IN: 1. Continue smooth execution of Guaíba 2 expansion 2. Maintain and promote 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