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Postcard From Brazil, Part II: Suzano – The Materials Giant

Engaging and spending time with the companies in which we invest is key to our long-term success as an active fund manager. This is especially true when it comes to investing in emerging markets, where impressive operations can be found beneath the surface. One such example is Suzano, which is one of the largest vertically integrated producers of pulp and paper products made from planted eucalyptus in Latin America. Its impressive portfolio of sustainable products includes coated and uncoated printing and writing paper, paperboard, tissue paper, market pulp and fluff pulp to name but a few. Even more impressive is the company’s best practice in sustainable forest management.

Back to Mother Nature

Owned by Suzano and managed by the NGO, Instituto Ecofutoro, the Parque das Neblinas is an environmental reserve spanning seven thousand hectares. In the 1940s, its virgin Atlantic forest was logged for its charcoal to be used by the local steel mills, and when the virgin forest faded, eucalyptus was introduced and grown instead.

Acquired by the company in the 1960s, the area proved challenging to manage productively, so Suzano set out to manage the area with assisted natural regeneration. In essence, a few seeds were planted and nature did the rest but overseen by active forest management and rangers. Today, the park is an excellent example of how to return productive land to nature.

“There are no bad species, only bad management”

While the park serves an important part of Suzano’s broader social purpose to educate and transform people’s relationship with nature, the company is also on a broader mission in Brazil, namely to secure lasting biodiversity.

Suzano is building 500 metre wide corridors in the three biomes in which it operates: the Atlantic Forest, the Brazilian Savannah and the Amazon. These corridors will connect used land and are also meant to combat what Suzano sees as the biggest risk to biodiversity - habitat fragmentation with loss of resilience of species.

At the same time, the park reflects what Suzano considers to be a critical business rationale for long-term commercial success. Their eucalyptus plants are often grown interchangeably with native forest, where the wellbeing of the native forest is integral to the health of the company’s economic assets. It serves an important role in managing physical climate risks.

The impressive Limeira mill

A two-hour drive from Parque das Neblinas lies Suzano’s Limeira mill. The nearby city is home to 300,000 people and is an important industrial hub in the interior of the São Paulo state. The largest operation in the mills’ product portfolio is paper production, with 140 trucks providing 7,300 cubic metres of wood a day. The supply originates from Suzano’s own eucalyptus farms which have an average of only 200km radius - demonstrating the cost effective integrated model of the investment case.

Each year, the Limeira mill produces an impressive 400,000 tonnes of market pulp, 400,000 tonnes of paper and 290,000 tonnes of integrated pulp products. The scale of Suzano’s operations becomes even more impressive when taking into account that the Limeira mill is one of Suzano’s smallest.


On a guided tour of the premises, the contrasts once again become clear - the exterior is not representative of the interior of the mill. The efficiency is impressive, as is the humidity and heat as the paper is dried. Approximately 1,200 employees work at the site, in three rotating shifts, using a highly automated production process. Watching the paper being produced, we learn that once the pulp sheets have been formed, it takes just 4.5 minutes for the sheets to go from drying process to finished product.

Perhaps even more impressive than the sheer scale of Suzano’s operations at Limeira, is the on-site R&D department, consisting of 40 highly skilled research technicians. Their intense focus and purpose is clear: to find the next potentially disruptive usage for Suzano’s products, spanning fashion and textiles to makeup and cosmetics.

After two intense days spent with Suzano, the company's sustainable investment case has become even more clear. Again, we are reminded of the importance of engaging with our long-term holdings in one of the most exciting emerging markets the world has to offer.

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