Survival of the Fittest: Adapting Business Strategies for Growth

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1 Survival of the Fittest: Adapting Business Strategies for Growth JARI CELULOSE, PAPEL E EMBALAGENS S.A. Luis Fernando Laranja DVM, M.Sc., Ph.D. Director Ouro Verde Amazônia CHINA NATIONAL MATERIALS DEVELOPMENT & INVESTMENT CORP.

2 Grupo Orsa Overview Ownership: 30 years of existence and 100% Brazilian capital; Revenues: 800 Million USD in 2010; Jobs (direct and indirect): empolyees; Certification: ISO 9001, ISO 14001, FSC (Forest Stewardship Council), Ecocert Organic. One of the largest Brazilian organizations in the paper, pulp and packaging sector; Worldwide reference in Sustainable Forest Management of native forests in the Amazon region; Utilizes the 3P s (People, Profit and Planet) Business Management Model; The Group devotes 1% of its annual gross revenues, regardless of its financial results, to Fundação Orsa activities JARI CELULOSE, PAPEL E EMBALAGENS S.A. CHINA NATIONAL MATERIALS DEVELOPMENT & INVESTMENT CORP.

3 Social Commitiment 1% OF GROSS REVENUES IS DEVOTED TO JARI CELULOSE, PAPEL E EMBALAGENS FUNDAÇÃO S.A. ORSA ACTIVITIES CHINA NATIONAL MATERIALS DEVELOPMENT & INVESTMENT CORP.

4 3Ps Management Model JARI CELULOSE, PAPEL E EMBALAGENS S.A. CHINA NATIONAL MATERIALS DEVELOPMENT & INVESTMENT CORP.

Where we are Orsa Florestal/PA 545 K hectares of FSC certified native forests Ouro Verde / MT e PA Non Timber Forest Products Fundação Orsa Grupo Orsa Social Enterprise - headquarters in Alphaville /

the FSC JARI Rio Verde GO 120k t/year of boxes GRUPO ORSA Headquarters Alphaville/SP JARI - Nova Campina SP 180 k t/year of Kraftliner e White-Top papers JARI CELULOSE, PAPEL E EMBALAGENS S.A. JARI Suzano-SP 162 k t/year boxes Capital: 100% national.

5 Where we are Orsa Florestal/PA 545 K hectares of FSC certified native forests Ouro Verde / MT e PA Non Timber Forest Products Fundação Orsa Grupo Orsa Social Enterprise - headquarters in Alphaville / SP JARI - Munguba PA 410 k t/year of eucalyptus Kraft pulp certified by the FSC JARI - Manaus SP 60 k t/year of boxes JARI Paulínia SP 72 k t/year boxes 138 k t/year of recycled papers certified by the FSC JARI Rio Verde GO 120k t/year of boxes GRUPO ORSA Headquarters Alphaville/SP JARI - Nova Campina SP 180 k t/year of Kraftliner e White-Top papers JARI CELULOSE, PAPEL E EMBALAGENS S.A. JARI Suzano-SP 162 k t/year boxes Capital: 100% national. Itapeva-SP Forestry Unit CHINA NATIONAL MATERIALS DEVELOPMENT & INVESTMENT CORP. 35 k ha of pine plantations JARI - Franco da Rocha- SP 48 k t/year of recycled papers. Jobs: 9,000 direct and indirect. Turnover: R$ 1.5 billion in 2010.

6 Jari Project Original project developed by an American billionaire (Mr. Daniel Ludwig); Currently covering an area of 1,365,000 hectares; All deforested (110 thousand hectares) area were cleared in the 70s and 80s; Acquired in 2000 by Grupo Orsa (public statement proposing Zero Deforestation); Approximately 100,000 inhabitants living mainly in the towns of Monte Dourado, Almeirim (Pará state) and Laranjal do Jari & Vitória do Jari (Amapá state); Unique infrastructure: planned town, 9,000 km of roads, 70 km of railroads, private port and airport. ALMEI RIM LARANJAL DO JARI VITÓRIA DO JARI An Unique Mosaic of activities in a large tropical forest : Eucalyptus Plantation Native Forest Management Non Timber Forest Products Agriculture Vale do Jari area is equivalent to the area of half the size of Belgium.

7 Ouro Verde Amazônia Health and Taste from Amazon Forest to your table

Ouro Verde Amazônia Business Overview We process Brazil Nuts and

tasteful and unique food products; Our pillars are: high quality

involvement of local communities; We believe that R&D investment is

8 Ouro Verde Amazônia Business Overview We process Brazil Nuts and Açai Berry, transforming these Amazon heritage into healthy, tasteful and unique food products; Our pillars are: high quality products, fair trade, environmental respect and effective involvement of local communities; We believe that R&D investment is the best solution to transform the rich biodiversity assets of Amazon in real business.

9 Ouro Verde Amazônia Our products and upsides Unique Products Exotic Taste/Gastronomy Health Appeal Amazon Conservation Social Responsibility/Fair Trade Very Low Carbon Industry Shelled Brazil nut Brazil Nut Extra Virgin Oil Brazil Nut Butter Brazil Nut Meal

native communities of Amazon, which are the suppliers of raw Brazil

10 Ouro Verde Amazônia Competitive Advantage Organic Certified by Ecocert; Strong connection and relationship with several different native communities of Amazon, which are the suppliers of raw Brazil Nut (partnership with UNDP, GTZ, Amazon NGOs); Invest in R&D (Value-Added Products).

Ouro Verde Amazônia Environmental & Social Impact * Fostering the development of Brazil Nut supply chain we create OPPORTUNITIES, EMPLOYMENT AND REVENUE for native communities using the real

11 Ouro Verde Amazônia Environmental & Social Impact * Fostering the development of Brazil Nut supply chain we create OPPORTUNITIES, EMPLOYMENT AND REVENUE for native communities using the real BIODIVERSITY ASSETS of the Amazon forest. We buy Brazil Nuts from 400 families located in the Amazon We pay PREMIUM PRICES (average of 3 last crops = 50% over Market Price) Example: UNDP project We work together with six local communities (three Indian tribes, one rubber collectors community and two settlements of agrarian reform) to protect more than two million acres of Amazon Forest through the sustainable harvest of Brazil Nuts.

12 Ouro Verde Amazônia What is the secret? Organization of the Production Value Chain Premium Price for suppliers based on better quality/organic nuts Logistics Intelligence Added Value Products (R&D)

13 Grupo Orsa s investment in Ouro Verde Amazônia Jan/2009 Grupo Orsa invested US$1 million and became a shareholder of OV Amazonia (51%); Gross Revenue jumped from US$ /yr (2008) to US$ /yr (2009) and US$ (2010). R$ R$ R$ R$ R$ R$ R$ R$ 500 R$ - Evolução da Receita da Ouro Verde R$ 000)

14 Why did these two companies come together? Mutual Aid: A Factor of Evolution (Peter Kroptkin): "survival of the fittest = supporting co-operation rather than competition the fittest was not necessarily the best at competing individually, but often the community made up of those best at working together

15 Why is Grupo Orsa interested in Brazil nut processing? Why is the Amazon important to Grupo Orsa? Grupo Orsa owns two very important companies in the Amazon Region: - JARI CELULOSE (60 thousand ha of Eucalyptus plantation + Paper Pulp Factory / Gross Revenues = US$ 300 million) - ORSA FLORESTAL (545 thousand ha of FSC certified forest + Wood Processing Plant / Gross Revenues = US$ 25 million) Considering its strong investments in the Amazon decided to expand its activities in the region investing (2009) in the Non Timber Forest Product (NTFP) industry through an investment in Ouro Verde Amazônia. RATIONALE of Grupo Orsa investment in NTFP: 1) ECONOMICS: Identification of a non-traditional opportunity of good business from the financial perspective. 2) STAKEHOLDER INVOLVMENT: Importance of a good relationship with communities living in the surroundings of Jari project. (Brazil Nut harvesting is one of the most important source of income for native communities of the region) 3) PHILOSOPHY: Grupo Orsa's commitment to Impact Investing principles.

16 How does it help improve Grupo Orsa s bottom line? What are some of the strongest benefits from working with Ouro Verde Amazônia? By investing in Ouro Verde Amazônia, Grupo Orsa: 1) Improved its corporate image in the region generating indirect benefits for the other main business (paper pulp and certified wood) 2) Mitigated risks of relationships with other stakeholders in the region 3) Identified a new business opportunity that can generate up to US$ 30 million (total revenue)

17 Lessons Learned What were some of the critical challenges of working with a small firm like OV Amazonia? 1) How to deal with a small company in a business environment focused on big deals. 2) Different management style, based more on personal and informal relationships than in formal contracts and official documents. 3) How to understand the need for rapid decisions associated with a lack of planned operations done in advance. How to Overcome these critical points? - There is no ready recipe...adaptive Behavior is the right answer!

18 Projeto Jari (Grupo Orsa Operation): An Unique Model for the Amazon A Large Private Project in the middle of the rainforest A Public Commitment with Zero Deforestation A Unique Mosaic of economic activities: LARGE SCALE PROFITABLE SUSTAINABLE - HIGH SOCIAL IMPACT - SYNERGIC BUSINESS. Planted Forests + Native Forest Management + Non Timber Forest Products + Agriculture The Largest and most significant Social & Environmental Lab of Tropical Forest in the World

19 Thank you! Building Bridges in the Amazon... JARI CELULOSE, PAPEL E EMBALAGENS S.A. Luis Fernando Laranja DVM, M.Sc., Ph.D. Director Ouro Verde Amazônia CHINA NATIONAL MATERIALS DEVELOPMENT & INVESTMENT CORP. lflaranja@grupoorsa.com.br

MAHOGANY STORY. THE STORY OF MAHOGANY mahogany. Forward

MAHOGANY STORY. THE STORY OF MAHOGANY mahogany. Forward THE STORY OF MAHOGANY mahogany The tree is found in about 1.5 million square kilometres of the Amazon rainforest, particularly in the area to the south of the Equator. In this area it is very thinly spread.