Report of uruguayan forestry sector - Uruguay Forestal 2011.pdf · start up of forestry multinationals in the frame of fiscal incentives. ... important was arranged between FOSA and

Report of uruguayan forestry sector

Basic information and statistics to 2011

Ing. Rosario Pou

1 .Forestry ecosystems in Uruguay

According to official data from Dirección General Forestal, uruguayan forestry sector covers a total area of 1.721.658 ha , 752.158 corresponding to natural forests and about 1 million of hectares of plantation forest, with high percentage of eucalyptus (676.096 plus 274.568 ha of pines).

1.1. Natural forests

Natural forest has not lumber value, and laws have regulated its logging ,with higher area of this type of forest cover. For many years and specially during the world wars, natural forests provided fuelwood. In the following chart, forest density of different type of natural forests is shown:

Serrano: represent trees and bushes that grow in the rocky places, in the Eastern and northern Uruguay. Ribereño: Forest that appears protecting riversides and streams Quebrada: Appear at the rocky places, but at the deeper soils, in valleys Parque: Associated with ribereño forests, in the western part of the country, it appears on alcaline soils, mainly. All these forests are hardwood, heterogeneous and highly antrophic. There are more than 200 species belonging to several families, but most of them with low commercial value. Sebastiania brasiliensis (blanquillo) and Scutia buxifolia (coronilla) as well as Prosopis (algarrobo ) appear to be the most valuable species.

The following chart shows density, dominance and frequency of the most important 5 species in each area:

1.2. Forestry plantations

Forestry economy is based in the development of plantations: most of them based on incentives of last forestry law, approved in 1987 and implemented in 1990.

It is based in two species; Pines and Eucalyptus, and concentration on specially pre-determined soils.

During the period 1990-2010 plantations grew to 1 million hectares:

There is first phase: 1990-2001 that can be explained as investors interests, start up of forestry multinationals in the frame of fiscal incentives. From 2002 to 2005 plantation rate lowered as consequence of the economic crisis as well as the lack of industrial development. In this period, incentive started to lower and disappear.

During this period, mergers and active sales were frequent and uruguayan forestry sector changed, as well as the forestry soils, that experienced some changes.

Since Botnia (now UPM) pulpmill start up, the improvement of sawmills and board industries´capacity and the Montes del Plata pulpmill project, from 2006 on there is an important increment of planted and replanted area.

Dominant species is eucaliptus, even for lumber production: intensive management including pruning and thinning are used, with long rotations (20 years for eucaliptus and 25 for pines) finishing with a stock of about 200 to 250 trees per hectare, producing knot free lumber. Pulpwood species initially was leaded by Eucalyptus globulus which now concentrates in south and eastern Uruguay; Eucalyptus grandis and now Eucalyptus dunii planted area is growing fast.

1972- Priority soils areas

Forestry soils from 1987 to 2006

1

Forestry soils, 2006

2011

Grupos incluidos en 2011

Forestry soils 2011

1. Forestry laws – Permissions needed for planting

Forestry law approved in 1987 and posterior decrees may be seen in the Ministry of Agriculture web page: www.mgap.gub.uy

An important fact is the establishment of a Forest Registration procedure, and the possibility of pledge forests; that means that forest investment can be separed from the soil, permitting different type of combination. Is a way worldwide known as “surface rights”.

Tax excemptions: Up to now, only there is income tax exoneration if the forests are qualified as “quality forests”. This fact is for all planted species, meaning they will be managed in a long period, with final scope of producing lumber.

Official permissions: Every forestry Project must be presented at the Dirección General Forestal, following an specified procedure: If plantation area is larger than 100 has, it also need the approval of the Dirección Nacional de Medio Ambiente (Environment permission).Legal information proving the ownership of the land must be presented as well as information related to soils (CONEAT Information)1

3, Companies

1 CONEAT: Comisión Nacional de Estudios Agroeconómicos de la tierra: www.mgap.gub.uy

Actually, after land and forest sales and mergers, there are more than 1 million of hectares planted, of which, about 35% is managed by Forestal Oriental (UPM) and Montes del Plata (Stora Enso & Arauco). Besides companies´mergers and purchases, there have been important renting contracts; one of the most important was arranged between FOSA and Caja de Jubilaciones y Pensiones de Profesionales Universitarios2 and 25.000 of land was purchased by FO in NE Uruguay, Cerro Largo.

These two companies originally planted in western Uruguay, but now have plantations on the North, NW, East and Central Uruguay,with specially designed logistic projects for wood transportation.3

About 15% if planted land is being intensively managed for lumber production: Weyerhaeuser, Fymnsa and COFUSA, located in North and Northestern Uruguay.

About 20% of plantations belong to TIMO´S

GFP GMO FAS Phaunos RMK

GMO and GFP started their plantations in Northern Uruguay, but at the present, most of them (excepted GMO) have their lands in other parts of the country, mainly East and NE.

2 30 year long renting contract for 18.000 has

3 La Paloma port Project of FO/UPM

Company Owner use of wood 5.000 5.000-10.000 10.000-50.000 50.000-100.000 > 100000

Caja Notarial de Jubilaciones y Pensiones pension funds sawmill/pulp

COFUSA Otegui Group sawmillForestal Atlantico Sur Harvard Equities variousForestal Caja Bancaria pension funds variosFORESTAL ORIENTAL UPM pulpForesur group of small owners pulpFymnsa Balerio/Phaunos sawmillGFP GFP variousGMO GMO sawmill/boardsGrupo Forestal chilean owners pulpLos Eucaliptos Zicuñaga Group pulpMontes del Plata Stora Enso/Arauco pulpPosco Posco sawmillPraderas Rojas Phaunos variousProfores small owners pulpPropietarios del centro small owners variousRivermol Sr.Felix Máscolo pulpRMK RMK Timberlands variousSierras Calmas ENCE pulpWeyerhaeuser Weyerhaeuser boards

Main companies information and scale of plantations (in planted hectares)

4. Industries

Forest industries developed are few, but with high technology. This is due to actual age of forests (most of processed wood in sawmills and board mills is produced in thinnings), and products are exported to external markets (local market is very small scale).

There are 2 large sawmills: Fymnsa (pines,Rivera) and URUFOR (eucaliptus, Rivera).

4 medium scale (Tingelsur S.A, in Rivera Free Zone, Forestal Caja Bancaria in Paysandú, Maserlit and Agüia in Río Negro).

There are two plywood boards mills in Tacuarembó (Weyerhaeuser and Urupanel) and one MDFmill (Urupanel).

A 1 million tons/yr pulpwood in Rio Negro - UPM

Under construction a 1,3 million tones/yr pulpmill in Colonia (Montes del Plata).

Older paper mills are located in Colonia (FANAPEL), Soriano (PAMER) and Canelones (IPUSA). Ipusa was purchased three years ago by CMPC Group4 and invested in tissue paper manufacturing.

During the last 3 years, starting with UPM mill start up, electric power generated with forest biomass started to show its potential. To this mill from 2007 other companies started cogeneration: Weyerhaeuser and Bioener (Urufor) in Northern Uruguay, Fymnsa (not yet inaugurated) , There are other 2 that use forest biomass purchased in the market : Fenirol (Tacuarembó) and Liderat (Paysandú).

It seems this trend will continue, as there is a couple of projects in preparation and the intention of the government to promote this type of power generation.

4 Chilean company

5. Exports

Forestry products exports raised in the last three years, with a very important impact on uruguayan economy as can be seen in the following graphic, that compare forestry exports with agriculture and livestock:

Starting as roundwood,forest export now cover high added value products as pulp, and during nexts years it appears this tendency will be increased, Information from 2010;

product thousands of U$S pulpwood roundwood 17.257 not pulping roundwood 16.284 pine roundwood 1.782 pellets 116 boards 41.023 chips 124.414 sawn timber 40.809 MDF 13.259 paper and boards 80.274 Preserved wood 418 pine chips 564 pulp 919.974 total 1.256.174

Uruguay forest products exports cover more than 60 countries:

0 10.000 20.000 30.000 40.000 50.000 60.000

AUSTRALIA

ECUADOR

INDIA

TAIWAN

PUERTO RICO

DINAMARCA

PERU

PARAGUAY

NUEVA HELVECIA

COREA DEL SUR

SUECIA

BELGICA

MARRUECOS

COLOMBIA

INDONESIA

CHILE

REINO UNIDO

VIETNAM

ESTADOS UNIDOS

MEXICO

BRASIL

NORUEGA

PORTUGAL

ESPANA

ARGENTINA

Series1

6. Forestry sustainability in Uruguay

The development of the forestry sector in Uruguay, started with a design of sustainable management that is being considered with most of plantations and industries certified by FSC5

Besides this every day livestock production, honey, resins and essential oils productions show sustainable management that provide profitability to various stakeholders .

Forestry development brought the installing both small and médium size service companies, providing trained workers´jobs in low populated areas assuring best working conditions; with a very important social impact.

5 Forest Stewardship Council