Forestry Industry

December
Forestry Industry
Investment Opportunities in Uruguay
2011
1. Why invest in the Uruguayan forestry industry?
1.1. Attractive features of the country’s forestry industry
Uruguay is located at the same latitude as other major forestry developments in the southern
hemisphere. Uruguay’s climate is similar to that of Australia, New Zealand, South Africa and the
central regions of Argentina and Chile and features weather and soil characteristics that ensure
very good levels of competitiveness on an international scale. For example, the rapid growth of
Eucalyptus plantations enable shorter felling frequencies (starting from nine years) to provide
proper quality levels for the final product.
Uruguay has a stable legal framework that is beneficial for investments in the industry and has
a national good practices code for forestry to achieve sustainable production and to meet
international requirements1.
The country features a suitable road network that enables connections to major production
centers and staging areas at major ports.
Agriculture, forestry and pasture development are promoted to integrate management and
development of forestry with livestock raising and agriculture activities. This enables a diverse
range of products and staggered income: livestock, seed, harvesting and forage reserves in the
short term, and quality wood in the medium and long term.
The sector has a 20-year history and qualified labor is available. Exports currently account for
13% of the country’s total exports.
Currently, 885,000 hectares of forestry plantations account for 5% of the national territory.
However, only 21.5% of the area declared as forestry priority has been planted.
High quality wood is produced on Uruguayan plantations and is used for cellulose pulp
production as well as for solid wood products.
The currency exchange market is open and there are no limits on foreign currency trading.
Investments can be made in any currency.
There are no restrictions on hiring foreign staff (except for companies located at Free Trade
Zones where 75% of employees must be local). Residency permits can be obtained in three
months and anyone who has entered the country legally can obtain one and start working even
1
Approved in 2004 the National Code for Good Forestry Practices was developed by the Forestry Bureau, the Inspector
General of Employment and Social Security, the National Environment Bureau, the National Agricultural Research
Institute, the Forestry Department of the University of Agronomy, the Uruguayan Association of Agricultural Engineers,
the Uruguayan Forestry Contractors Association and the Society of Foresters. Available at
http://www.mgap.gub.uy/Forestal/cod_fores.pdf
2
during the application process. Citizens from most western nations do not require visas to visit the
country.
A strategic geographic location at the heart of MERCOSUR (free trade area between Argentina,
Brazil, Paraguay and Uruguay) and near Chile and Bolivia, with excellent river, sea, highway and
air connections.
An attractive legal framework for trade that allows the use of individual enclaves or a
combination of various modalities (Free Trade Zones, Free Ports and Free Airport regimes and
Bonded Warehouses), where no customs duties or taxes are due on imports or exports.
2. Forestry industry in Uruguay
2.1. Major features
The forestry industry in Uruguay consists of various activities that range from seed and seedling
production to the final shipment of finished products. The sector includes at least four industrial
chains: cellulose and paper, finished wood (treated round wood, sawn wood, boards, carpentry
for construction, furniture, moldings, etc.), the chemical industry (resins, essential oils, bioplastics,
etc.) and energy production. Forestry activities, as well as the extraction and development of
wood products, accounted for 3.5% of Uruguayan GDP in 2010. Activities in the forestry industry
include:
Agriculture (forestry), which includes the production of reproductive material and
seedlings in nurseries, tree planting and intermediate treatment for forests and
harvesting.
Manufacturing activities
Transport and logistics
Picture No. 1: Forestry industry activities
Agricultural
Nurseries and reproductive material
Planted and native forests
ACTIVITY
Sawmills
Mechanical transformation
Chips and pellets
Manufacturing
Cellulose - paper
Energy
Logistics and transport
Source: Uruguay XXI
3
Carpentry for construction
Boards
Panels
Pulp
Paper and cardboard
The Uruguayan forestry industry is characterized by a strong vertical integration that covers
agricultural and industrial activities and all intermediate processes through the final sale of
products.
Some large export companies supply themselves with a large portion of raw materials in
comparison to others which buy raw materials from third parties. The largest sawmills use mainly
domestic raw materials and direct production towards foreign markets, while smaller mills focus
mainly on the domestic market.
Paper manufacturers produce both for foreign and domestic markets. These companies have their
own pulp production mills for in-house supply for the paper production process.
Power generation from forestry residue (biomass) is among the activities related to the industrial
phase that became more relevant and have significant future prospects due to the increase in raw
material supply and State policies in the area. Currently, some sector companies have electricity
generation plants that use biomass. For example, UPM generates 110 MW with 32 MW of excess
for the national grid. Bioener (a Urufor company) has a 12 MW capacity, while Weyerhaeuser has
an installed capacity that ranges between 10 and 12 MW. Montes del Plata pulp mill, that will
start operating in 2013, will be self-sufficient in terms of power, generating around 160MW of
clean and renewable energy of which approximately 90 MW will
be used to meet the industry’s energy needs. The surplus
(between 55 and 75 MW of power) will be fed back into the
national energy grid, providing an equivalent to an average
consumption of 200,000 households.
2.2. Personnel employed
Personnel employed in the forestry sector in 2010 reaches 13,000 workers in silviculture. In
addition, the mechanical transformation industries (Sawmill and Panels) employ 3,500 workers
and the cellulose industries (Pulp, Paper & Cardboard and Chips) 2,500, comprising a total number
of 19,000 employees.2
Taking into account indirect employment (employment of service providers, mostly transport and
logistics), we amount to a sum of 21,400, which is an equivalent to 1.3% of the country’s
employed population. It is important to highlight that personnel employed in the forestry sector
2
Industrial chains based on Forestry Industry, Planning and Budgeting Office, Ministry of Industry and Energy, Industry
Bureau, February 2011.
4
has almost doubled in the last five years, hence proving the potential this sector has to generate
employment mainly for people who live inland.
Table No.1: Job Positions in the different forest-based industrial activities3
Sub-sectors
Sawmills
Panels
Pulp
Paper and cardboard
Chips
Industry sub-total
Transport and logistics
Silviculture
Total
2005
2007
2009
2010
1,311
1,326
1,797
360
4,794
1,242
5,000
11,036
1,650
1,548
390
1,635
360
5,583
1,718
8,500
15,801
1,415
1,356
390
1,460
345
4,966
2,070
13,000
20,036
1,641
1,912
390
1,704
360
6,007
2,401
13,000
21,408
It is important to mention that the construction of the Montes del Plata pulp mill will generate an
average of 3,200 direct jobs with a maximum of 6,000 people. Once concluded, 500 employees
will work on the pulp mill premises. Furthermore, it is expected to generate 5,000 indirect jobs.
2.3. Current legislation4
Plantation and other activities linked to forestry activities are regulated under law 15,939 dated
December 28, 1987, regulatory decrees and further amendments thereto. This law establishes
that natural and artificial forests in forestry priority areas declared as “protective” and “yielding”5
included in “quality wood projects” determined by the Ministry of Livestock, Agriculture and
Fishing (MGAP), enjoy the following tax benefits:
Income derived from exploitation is not included in the calculation of Corporate Income
Tax (IRAE).
Value or size of forestry priority areas will not be considered for the determination of the
taxable amount of Wealth Tax (IP).
Rural real estate tax (tax on land) exemption.6
3
Industrial chains based on Forestry Industry, Planning and Budgeting Office, Ministry of Industry and Energy, Industry
Bureau, February 2011.
4
Law No. 15,939 available at http://www.mgap.gub.uy/Forestal/15.939.htm. Decree No. 220/06 dated July 10, 2006
available at http://www.mgap.gub.uy/Forestal/DECRETO%20220_006%20Modificacion%20Decreto%20191_06.pdf
5
In accordance with law 15,939, protective forests are defined as those that have the basic objective of conserving the
soil, water and other renewable resources. Yielding forests have the basic objective of wood productions and are of
special national interest due to their location or type of wood or other forestry products that can be obtained from
them.
6
Law
No.
18,245
dated
December
27,
http://www.mgap.gub.uy/Forestal/Ley18245ContribucionInmobiliariaRural.mht
5
2007,
available
at
To be eligible for the abovementioned tax benefits, the Forestry Bureau (DGF) of the MGAP must
approve the management and organization plan for the exploitation and regeneration of forests.
Any amendment to the management and organization plan must be previously approved by the
DGF.
2.4. Forested area
Forestry activities in the country have grown in a sustained manner over the last 20 years. Despite
being a relatively young sector, over the years the surface area has risen 30 times to
approximately 950,000 hectares by 2010.7 In addition, some 750,000 hectares of native forest
exist in the country, leading to a total forested area of 1.7 million hectares, approximately. The
total area deemed of forestry priority covers 4 million hectares8, around 23% of the total
agriculture-livestock area of the country (see Map 1).
Picture No. 2: Forest priority areas – Year 2010
Source: Pike Forestry Consultants
7
Source: “Monitoreo de los Recursos Forestales Inventario Forestal Nacional”, August 2010. This work is the result of
the first stage of national forestry inventory. In this stage, 26% of the total area of inventoried forests was assessed.
From 4,769 sample points proposed for Uruguay, 1,242 sample plots were installed and assessed. This accounts for an
area of inventoried forests of almost 450,000 hectares.
8
6
Decree No. 191/106 available at http://www.mgap.gub.uy/Forestal/ModificacionDecreto452_988de16_06_06.pdf
The type of soil, the climate and the distance to production departure points have an effect on
forestry plantation characteristics. This divides the country into three regions in accordance with
criteria established by the DGF:
South-East Region: departments of Colonia, Flores, San José, Florida, Canelones, Montevideo,
Lavalleja, Maldonado and Rocha.
North Central Region: departments of Artigas, Rivera, Tacuarembó, Durazno, Cerro Largo and
Treinta y Tres
West Coast Region: departments of Salto, Paysandú, Río Negro and Soriano.
The South-East region is closest to the port of Montevideo, favoring the departure of forestry
products by sea. The area is strongly influenced by the sea, with an absence of extreme
temperatures. This has led to a better adaptation of species sensitive to extreme temperatures,
such as Eucalyptus globulus. The main purpose of plantations in this area is pulp production.
Therefore the production cycle is short and requires little trimming.
The North Central region is the largest forested area with 46% of the total artificial forests in
Uruguay. This area has frosts in winter and higher temperatures in summer and due to its sandy
soil, it is appropriate for Eucalyptus grandis and Pinus species. Wood in this region is mainly
produced for mechanical transformation.9 Major departure points for wood production from this
region depend on product location and type and include Paysandú, Fray Bentos and Montevideo.
The West Coast region also has frosts in winter and sandy loam to sandy soils. In this region,
plantations of the Salicaceae, Eucalyptus and Pinus species coexist. These have a slightly lower
yield in this area as compared to the northern region. The main destination for production from
this area is wood pulp.10 Ports and bridges used for forest product transport include Fray Bentos,
Nueva Palmira and Paysandú.
9
This is mainly due to the business strategy of the main companies of the region, such as Weyerhaeuser Company
(USA), GFP, GMO and COFUSA.
10
7
By the company UPM.
Table No. 2: Total forested area and forestry priority area per region, in thousands of hectares 2010
Region
North Central
West Coast
South-East
Departments
Forested area
as of August
2010
Artigas, Rivera, Tacuarembó,
Durazno, Cerro Largo and
Treinta y Tres
Salto, Paysandú, Río Negro and
Soriano
Colonia, Flores, San José, Florida,
Canelones, Montevideo,
Lavalleja, Maldonado and Rocha.
Total
Forestry
priority area
Forestry priority
area available for
planting
410
2.177
1.741
262
633
387
213
1,304
1,017
885
4,114
3,145
Source: Uruguay XI based on data from DGF of MGAP and Pike Forestry Consultants.
Picture No.3: Map of forested area in Uruguay11
The
departments
of:
Rivera,
Tacuarembó,
Paysandú, Río Negro and Lavalleja contain the
largest number of forested hectares, between
100,000 and 200,000 hectares.
Followed by Salto, Soriano, Durazno, Florida,
Treinta y Tres, Rocha and Maldonado with 55,000
to
100,000
forested
hectares.
The
other
departments have between 10,000 and 55,000
forested hectares.
Most of Uruguay’s plantations are of the
Eucalyptus and Pinus genera. 70% of the country’s
total forested area corresponds to the Eucalyptus
genus (with a majority presence of three subspecies), followed by Pinus with 28% of said area,
leaving 1% of the Salicacea family.
11
8
Source: Forestry Bureau, Ministry of Livestock, Agriculture and Fishing - 2007.
Table No.3: Species type according to region - 2010
Region
North
Central
West
Coast
SouthEast
Department
Artigas, Rivera,
Tacuarembó, Durazno,
Cerro Largo and Treinta y
Tres
Salto, Paysandú, Río Negro
and Soriano
Colonia, Flores, San José,
Florida, Canelones,
Montevideo, Lavalleja,
Maldonado and Rocha
Pinus
Eucalyptus
grandis
Eucalyptus
globulus
Other
Eucalyptus
and
Salicacea
Total
43%
23%
26%
8%
100%
19%
42%
28%
11%
100%
14%
6%
69%
11%
100%
Source: Uruguay XXI based on data from the DGF of MGAP.
2.5. Extraction and production
Wood extraction in Uruguay had a strong growth until 2008, from 5.7 million m 3 in 2005 to 9.4
million m3 in 2008. Due to the decline in global demand and a drop in export prices since the 2009
international crisis, extraction volumes in the country fell to 8.4 million m3 in 2009. This decline is
tightly linked to the decline in wood extraction for pulp production. In 2010, wood extraction
reported higher values than the preceding years, 11.8 million m3, later registering a recovery of
the figures observed years before.
As for production, a decline was also reported in chip production in 2009 and, to a lesser degree,
in sawn wood and boards. Specifically, the decline in wood chip production was due to the fact
that the main purchasers of this product in 2008, Japan and Finland, made no purchases in 2009.
This may be associated to the temporary closure of some pulp mills due to the international crisis.
In 2010, there was an increase in the production of all forest industry products, reporting similar
values in Chips and Cellulose Paste in 2008 and higher value in Sawn wood, Wood boards and
Paper and Cardboard.
9
Chart No.1: Round wood extraction volume (1000m3)12
Wood fuel, including wood for
charcoal
Industrial round wood
(bulk wood)
10000
2.500
2.400
8000
2.430
2.300
6000
2.200
2.100
2.210
2.111
2.000
2.210
7841
6080
4000
2.062
3497
2000
1.900
734
0
1.800
2006
2007
2008
2009
2006
2010
5143
3929
1150
1030
1547
2007
2008
Wood pulp
2009
Sawlogs
2010
1168
Table No. 4: Production volume of wood-derived products
PRODUCTION FOR DOMESTIC CONSUMPTION AND EXPORTS
Product
2006
2007
2008
2009
2010
383
280
2,283
1,143
2,274
293
308
284
264
346
WOODBOARDS (1,000 m )
50
162
175
142
199
PAPER Y CARDBOARD (1,000 metric tons)
113
107
107
101
117
WOOD PULP (1,000 metric tons)
34
50
1,129
882
1,100
3
CHIPS (1,000 m )
3
SAWN WOOD (1,000 m )
3
Source: Forestry Bureau, MGAP and National Customs Bureau of Uruguay
2.6. Export sector13
Forestry accounted for 12.5% of Uruguay’s total exports in 2010 and has significant prospects for
future growth. Despite the fact that the 2009 international crisis caused a drop in sector exports
both in volume and value, exports still exceeded US$ 700 million in that year. In 2010 export
values achieved US$ 1 billion, a similar figure to 2008 (record breaking year). From 2008 onwards,
the main export product of the industry was wood pulp, which in 2010 accounted for 64.5% of
total industry exports, in second place were wood chips accounting for 13% of the total, followed
by paper and cardboard with 9.3% in 2010.
12
13
10
Source: Forestry Bureau, MGAP
Appendix No. 2 shows a chart with the main industry exports destinations for 2009
Chart No. 2: Uruguayan forestry product exports in 2010 – US$ millions14
The following charts show the forestry sector product performance between 2006 and 2010 in
dollars and in tons. It is important to clarify that Cellulose pulp has not been included since its
values are outside the scale used, therefore they are displayed in chart No.5.
Millon of US$
Chart No. 3: Forestry product export performance – US$ millions
400
350
300
250
200
150
100
50
0
2006
2007
2008
2009
2010
Paper and cardboard
56
52
66
69
93
Round wood
75
93
36
24
38
Chips
72
67
163
79
131
Sawn wood
28
30
30
26
40
Wood boards
0
34
47
32
54
Source: Uruguay XXI based on data from the Customs Bureau of Uruguay.
14
11
Source: Uruguay XXI based on data from the Customs Bureau of Uruguay.
Chart No. 4: Forestry sector export performance15 - thousands of tons
3.000
Thousands of tons
2.500
2.000
1.500
1.000
500
0
2006
2007
2008
2009
2010
Round wood
1492
1440
418
289
392
Chips
1087
984
1676
852
1478
Sawn wood
98
90
72
58
81
Wood boards
33
75
88
72
107
Source: Uruguay XXI based on data from the Customs Bureau of Uruguay.
Cellulose pulp exports have grown year after year, showing its peak performance in 2008 as UPM
(ex Botnia SA) established in Uruguay, at which time figures reached US$ 1.025 million an
equivalent to 1,297 thousand tons. In 2009 and 2010, the values in dollars and tons decreased.
Nonetheless they continue to represent a high level of export. It is important to mention that
Cellulose pulp exports exit the country via Nueva Palmira Free Zone once sent from the pulp mill
located at Fray Bentos Free Zone.
Chart No. 5: Wood pulp export performance16
1.600
1297
1.200
1025
800
921
519
647
764
400
13 18
0
2007
US$ Million
15
16
2008
2009
2010
Thousands of tons
Note: idem
Data regarding exported volumes were provided by the Customs Bureau of Uruguay and average prices used were
taken from FAOSTAT. 2007: US$ 703/ton. 2008: US$ 790/ton. 2009: US$·536/ton. 2010: US$ 847/ton.
12
Source: Uruguay XXI based on data from the Customs Bureau of Uruguay.
The following table displays the main product destinations for the forestry sector for 2010. As it
can be seen destinations are varied, with outstanding sales of chips to Spain and Portugal
achieving US$ 50 million and US$ 44 million and sales of cellulose pulp to the Netherlands and
China for US$ 394 million and US$ 227 million, respectively.
Table No. 5: Main export destinations of the Uruguayan forestry sector 2010
Product
FOB US$ million
%/total
Subtotal
12
12
5
28
32.1%
30.6%
11.9%
74.5%
Total
38
100%
Spain
49,9
38.2%
Portugal
43,6
33.4%
Norway
27,9
21.4%
Subtotal
121
93.0%
Total
131
100%
U.S.A.
10
24.4%
Indonesia
5
12.6%
China
5
11.5%
Subtotal
19
48.4%
Total
40
100%
México
16
29.6%
United Kingdom
8
14.2%
Argentina
6
10.9%
Subtotal
30
54.8%
Total
54
100%
Argentina
52
56.0%
Brazil
21
21.9%
Paraguay
7
8.0%
Subtotal
80
85.9%
Total
93
100%
394
227
26
60.9%
Subtotal
647
100%
Total
647
100%
Round wood
Chips
Sawn wood
Wood boards
Paper and cardboard
Country
Vietnam
Portugal
China
Netherlands
Cellulose
China
Uruguay
Source: Uruguay XXI based on data from the Customs Bureau of Uruguay.
13
35.1%
4.0%
2.6.1. Exporting companies17
It is estimated that there are around 800 companies in the forestry sector at an industrial level 700 of which are part of the product manufacturing chain and the remainder from the cellulose
production chain. It has been noticed that 50% of the companies are small businesses, although
some are large sized corporations.
It is important to highlight that the first two companies account for almost 50% of Uruguay's total
exports, Compañía Forestal Oriental S.A. and Forestal Atlántico Sur S.A. The main exporting
companies are listed in the following table showing their participation in the whole forestry
sector.
Table No.6: Exporting companies (annual % share -2010)
Exporting companies
COMPAÑIA FORESTAL ORIENTAL S.A.
FORESTAL ATLANTICO SUR S.A.
FABRICA NACIONAL DE PAPEL S.A.
SIERRAS CALMAS S.A.
INDUSTRIA PAPELERA URUGUAYA S.A.
LOS PIQUES S.A.
URUPANEL S.A.
COMPAÑIA FORESTAL URUGUAYA S.A.
EUFORES S.A.
URUFOR S.A.
COMERCIALIZADORA GRUPO FORESTAL
FORESUR G.I.E.
DANK S.A.
CAS.A.BO S.A.
CAJA DE JUBILACIONES BANCARIAS
PAMER S.A.
MADERAS ASERRADAS DEL LITORAL
SAGRIN S.A.
RIO TUMBES S.A.
IMNSUR LTDA.
ASOC AGRAG DE RESP LTDA. DE PRO
PIKE Y CIA COMERCIAL LTDA.
Other
Total
% of total
33.2%
10.3%
7.1%
6.3%
5.7%
4.9%
4.7%
4.1%
3.6%
3.5%
3.3%
3.2%
2.0%
1.1%
0.9%
0.8%
0.6%
0.4%
0.3%
0.3%
0.3%
0.3%
3.2%
100.0%
Source: Based on data from the Customs Bureau of Uruguay
17
Industrial chains based on Forestry Industry, Planning and Budgeting Office, Ministry of Industry and Energy, Industry
Bureau, February 2011.
14
2.7. Forestry sector prices18
Cellulose pulp exports constitute 65% of the forestry sector, consequently international prices of
this product will be analyzed first. BHKP cellulose international price rose between 2000 – 2007
(an average of US$641 per ton). In 2008 there was a considerable drop as a result of the
international crisis, recovering by the end of 2009 achieving higher values in 2010 than those
reported in the previous years. By mid 2011, after achieving very high levels, cellulose
international price underwent severe downward adjustments in the last months. Despite these
drops, prices remained high from a historical perspective.
BHKP cellulose international price was US$858 per ton in July 2011, setting the highest value in
the course of this year and hardly 6.5% lower than the achieved record in July 2010. Nevertheless,
in the last months and in a highly volatile financial market environment (which was also reflected
in agricultural commodity prices) a considerable slump in cellulose international market value
could be observed.
Chart No. 6: Cellulose pulp international price US$/ton
1000
800
750
600
400
200
0
Celullose BHKP
With regard to Uruguay's wood chip export price, it maintained a stable performance until 2008,
it then showed a remarkable growth during the second quarter of 2008 reaching US$ 105.7 per
ton. In the course of 2011, in line with the cellulose market trend, Uruguay’s wood chip export
price decreased in the following quarters, after showing a significant increase in the first quarter
by 17.3% in comparison to 2010's final quarter.
18
15
Source: Prepared by Uruguay XXI based on data from Deloitte. October 2011.
Meanwhile, round wood for pulp export price remained steady throughout the whole period, in
average a value of US$ 45.5 per ton (2005 - 2011) could be observed. Maximum value was
reached in the third quarter of this year, US$ 58.7 per ton.
Chart No. 7: Wood for pulp US$/m3and wood chips US$/ton export prices
120
100
80
60
40
20
0
round wood for pulp US$/m3
Chips US$/ton
On the other hand, sawn wood international prices showed an unstable course. Non-conifer sawn
wood price sustained an upward trend from 2009, reaching its maximum in August 2011 with US$
974/m3. However, conifer sawn wood reported a downward trend, showing the lowest value in
August 2007 at US$ 249.
Sawn wood export prices had different performances. They did not report major fluctuations,
however non conifer international price experienced significant variations, showing a steady
decline during the second quarters of each year. During the third quarter of 2011, the price stood
at US$350.3 per ton.
Chart No. 8: Sawn wood international price US$/m3
Sawn Wood non conifer
US$/m3
Sawn Wood - conifer
Conífera US$/m3
1200
400
350
1000
300
800
250
600
200
150
400
100
200
50
0
0
Sawn wood - Non conifer (Malasya)
US$ / m3
16
Sawn wood - conifer (E.U.A.)
US$ / m3
Chart No. 9: Sawn wood export prices US$/ton.
500
450
400
350
300
250
200
150
100
50
0
Sawn wood - conifer
US$ / m3
Sawn wood - Non conifer
US$ / m3
2.8. Investments in forestry industry19
Investment projects in the forestry industry submitted to the Investment Act Application
Commission (COMAP) for tax exemptions, showed irregular development between 2005 -2011.
Forestry industry investments are linked to wood extraction and the industrial phase (boards,
fibers, solid wood products, wood pulp, energy generation, etc.).
It is important to highlight that from 2007 onwards with the approval of the decree 455 that
regulates chapter III of the Promotion and Protection of Investment Act (16,906), a very favorable
and attractive investment environment for the country was created. Due to this reason, in the
forestry industry projects presented reached in 2007 US$ 107.3 million, and in 2008 it increased
to US$173.1 million.
The main project presented in 2007 was by Los Piques S.A., for an amount of US$70 million (60%
of total investments), to expand production capacity. In 2008, the outstanding project to build
Punta Pereira Free Zone with US$ 92 million was presented, accounting for 65% of the total.
During the January to August 2011 period, projects submitted to COMAP reached US$225.3
million. The main project was also related to Punta Pereira Free Zone, accounting for 80% of the
total, equivalent to US$178 million.
19
Source: Wood pulp – wood forestry complex (2008). Value Chains (I), Productive Board. Forestry Agenda 2009.
Rosario
Pou
&
Asociados.
Websites:
www.upmuruguay.com.uy;
www.weyerhaeuser.com;
www.montesdelplata.com.uy; www.cofusa.com.uy; www.urupanel.com; www.af.com.uy; www.geosylva.com;
www.harvest.com.uy; www.agrifox.com.uy
17
Chart No.10: Projects submitted by COMAP. 20
Data in Millions of US$
250
225
200
173
150
107
100
50
17
5
3
2005
2006
14
0
2007
2008
2009
2010 Ene-Ago
2011
Projects approves for COMAP
Below are some of the main companies with a share in the forestry industry:
UPM
The Finnish company, UPM, is one of the largest wood pulp manufacturers
worldwide. In 2009, UPM acquired the major stake in Botnia S.A., which began
operations in Uruguay in November 2007.
It is located at the shore of Uruguay River, four kilometers north of the city of Fray Bentos.
Production capacity is one million tons per year of bleached pulp from Eucalyptus short fiber. Pulp
exports are shipped by barge from the mill to the deep water port at Nueva Palmira and
transferred to transoceanic ships bound to Europe and Asia. The company has a subsidiary
company, Compañía Forestal Oriental S.A., that provides most of the wood for the cellulose pulp
production process (nearly 70% of raw materials comes from company-owned forests).
Investment carried out by UPM was approximately US$ 1,200 million.
“UPM’s cellulose mill in Fray Bentos is competitive on a worldwide basis, along with the leading
countries, Brazil, Chile and some Asian countries”, claimed engineer Ronald Beare, UPM general
manager. “At the same time, it is also a modern plant and this is important because clients like to
acquire companies that have state-of-the-art production facilities, which means that it will last
through time. Key elements to keep clients are: permanence in the market which is obtained by
having good industrial facilities, a good product and reliability. This is what UPM has.”
20
18
Source: Prepared by Uruguay XXI based on data from COMAP.
WEYERHAEUSER
Weyerhaeuser, a US-based company, is one of the largest forestry and
wood companies in the world. It has operations in 13 countries and
employs over 18,000 people worldwide.
Weyerhaeuser established itself in Uruguay in 1996 by acquiring part of the shares in Colonvade
S.A. In 2001, the company expanded its assets with the purchase of Los Piques S.A. from the West
Fraser Timber Company of Canada and Associates. In 2006, Weyerhaeuser Uruguay was
established and in 2007, the company obtained 100% of assets of Colonvade S.A. and Los Piques
S.A. companies.
Currently the company operates in various areas such as forest plantation management, planning
and inventory, harvest, logistics and transport, and timber yielding product trade.
The company’s total land base is 139,000 hectares, 75,000 of which are planted in the
departments of Rivera, Tacuarembó, Cerro Largo, and Treinta y Tres. In 2010 the company
produced approximately 350,000 m3 of pieces suitable for peeling and another 350,000m3 of
pieces suitable for sawing and pulping. Plywood production reached 110,000m3.
It also has a power co-generation plant that is fed by sub-products of its own production process.
The plant’s generation capacity is 12 megawatts and the company’s consumption needs range
between five and six megawatts. The remainder can be sold to the state power distribution
company.
MONTES DEL PLATA
A forestry company founded in 2009 in Uruguay for the purposes of
producing cellulose pulp. The company came about from the
association of two of the most notable forestry companies in the
world: Arauco and Stora Enso. The companies, made up of Swedish
and Chilean capital, respectively, are equal partners in Montes del Plata.
Montes del Plata is currently developing a sustainable forestry base to supply the required raw
materials for a cellulose pulp mill to be built in Punta Pereira in the department of Colonia (190
km from Montevideo).
The company has a total of 250,000 hectares - 135,000 of which are planted, while the remaining
are either not planted or are biology conservation areas, native forests or native species such as
19
Yatay palm tree lands or Santo Domingo wetlands, conservation areas in which the company
carries out environmental monitoring activities and projects. In the pulp mill construction process
3,200 direct jobs will be created throughout 24 months with a peak of around 6,000. Once the mill
is operating, there will be 500 employees at the site. Furthermore, it is estimated that around
5,000 indirect jobs will be created. The mill is expected to produce 1.3 million tons of cellulose per
year and it will start operating in 2013.
Montes del Plata investment is estimated to be approximately US$ 1.9 billion in the mill and US$
700 million in land. The plant will begin operations in the first quarter of 2013. This investment
will be attributed to FDI corresponding to 2011, 2012 and 2013.
COFUSA (Compañía Forestal Uruguaya S.A.), URUFOR and BIOENER
These companies produce, process and sell high quality Eucalyptus grandis wood. They are
located at northern Uruguay and are part of the same Uruguayan business group.
Cofusa specializes in genetic improvement, seedling, nursery, planting and silviculture
management of the forest (pruning, thinning and harvesting).
Urufor processes saw timber from COFUSA plantations. Its forestry activities comprise
sawing, drying and manufacturing of half-finished product from Eucalyptus grandis.
Bioener is a cogeneration power plant that produces energy from forest biomass of 12
MW and sells power to UTE and supplies URUFOR with stream needed in the board drying
process. Uruguay’s average power consumption is of approximately 1,200 MW/hour.
Bioener's capacity accounts for approximately 1% of the country’s average power usage.
URUPANEL
Urupanel is owned by a Swiss investment fund, located at northern Uruguay.
It began operations in 2004 and today it is one of the top exporters of
plywood in the country. Urupanel invested US$ 56 million in 2004 and US$ 20 million in 2007 for
the installation of a new industrial plant to manufacture MDF plywood boards. This plant began
operations in 2009. In 2010 this company’s exports reached 4.7% of total forestry industry
exports.
20
GLOBAL FOREST PARTNERS LP (GFP)
GFP structures, executes and administers forestry investments on behalf of institutional investors.
The fund manages a portfolio of more than US$ 2.5 billion. GFP operates in Chile, Brazil, New
Zealand, Australia, Singapore and Uruguay. The company is present in our country with four
funds, with an investment of approximately US$ 150 million.
GMO RENEWABLE RESOURCES
GMO Renewable Resources is a US-based company with offices in Uruguay since 2001 GMO
administers investment funds with a branch (Renewable Resources) exclusively dedicated to
forestry investments. Currently, the company administers three investment funds. The assets
(plantations) are in northern Uruguay (departments of Rivera, Tacuarembó and Cerro Largo) with
37,000 hectares - 25,000 of which are planted. Investment made amounts to US$ 90 million.
RMK TIMBERLAND GROUP
RMK Timberland Group, established in 1981 in Georgia, United States of America, is an
investment fund exclusively focused on the forestry business. It operates as the commercial unit
of Regions Morgan Keegan Trust and Morgan Asset Management. It is engaged with the
development of investment portfolios and general management of forestry resources in different
parts of the world. The group began activities in Uruguay in 2005 with the creation of the
Southern Cone Timber LLC fund and the establishment of Taurion S.A. Later, the group added
plantation management with the Criollo Madera company (Monte Fresnos S.A.) and Bosques del
Sur (Ponte Tresa S.A.). Wood production by these companies is used for cellulose pulp, sawn
wood, energy and other uses for the domestic market and exports. Total assets of RMK in
Uruguay are approximately 40,000 hectares - about 62% of which corresponds to forestry
plantations mainly located at forestry priority lands.
Other companies:
PHAUNOS TIMBER FUND LIMITED: Phaunos is a British fund operating in Uruguay through
Pradera Roja S.A., Caldrey S.A. and Aurora Forestal Limited companies.
Pradera Roja S.A. owns 12,000 hectares of Eucalyptus plantations for the supply of
cellulose pulp mills and sawn wood markets.
Caldrey S.A., located in southern Uruguay, focuses on services to increase forestry
productive capacity. Investment made amounts to US$ 5 million.
21
Aurora Forestal Limited focuses on planting mixed-age pine trees in Uruguay. The
company has 19,500 forested hectares in the department of Rivera and performs
operations in a saw mill in the department of Tacuarembó. Investment made amounts to
US$ 35 million.
NEVOPARK: Nevopark Company invested US$ 7 million in 2007 for the installation and operation
of a splitting mill to meet domestic and foreign demand for wood chips.
CHIPPER: Chipper Company was born from the association of Foresur and Grupo Forestal
companies in 2004. Chipper has 40,000 hectares of Eucalyptus globulus plantations and a chipping
mill capable of processing 470,000 BDMT per year (sales measurement unit equivalent to one ton
of dry fiber). Investment made in the chip production mill in Montevideo amounts to US$ 2.6
million. Production is bound to Japan and the Scandinavian Peninsula (Sweden and Finland).
IPUSA: IPUSA is a domestic paper company that was acquired in 1994 by the Chilean CMPC
Holding Company. IPUSA invested US$ 1.4 million in 2006 and US$ 939,000 in 2007 for the
construction of two paper manufacturing machines, round wood conversion lines, napkin
conversion and product conversion for institutional consumption. In 2008, IPUSA invested US$ 7
million and in 2010 US$ 2 million.
AGRIFOX S.A.: Agrifox is a Uruguayan forestry company with plantations in central and northern
Uruguay. It began activities in Uruguay in 2005 and focuses on harvesting and exporting round
wood. Major export destinations are Vietnam, China, India and the Philippines.
FORESTAL CAJA BANCARIA: Forestal Caja Bancaria began forestry activities in 1964, when it
acquired the first 6,000 hectares in Paysandú for pine and eucalyptus plantations. Currently, the
company carries out forestry, industrial and livestock activities on 18,000 hectares. In 2008, the
company invested US$ 2.7 million in the construction of a new sawmill, expansion of drying
chambers, acquisition of mobile machinery and enhancement of the areas of influence. The
company has a sawn wood capacity of 100,000 m3 of round wood per year and a drying capacity of
20,000 m3 per year.
22
Industry-related service companies include:
PIKE CONSULTORA FORESTAL: Founded in 2002, Pike offers complete consulting services for
forestry projects. Services include, but are not limited to, industrial opportunity assessment
studies, plantation valuation, wood availability reports, environmental impact studies, FSC
certification and forest fire prevention plans.
AGROEMPRESA FORESTAL: A domestic company located in northern Uruguay, Agroempresa
Forestal offers consulting services, plantation administration, planting services, brush control, ant
control, pruning, etc.
"We work with FSC certification in every fund. This guarantees that the company operates
under responsible environmental and social practices showing respect for the most
demanding communities. It is common for the certification to be a market requirement, in
our case it is requested by our investors, who want their capital to be invested in a
responsible manner.” ALBERTO VOULMINOT, Director of GFP Forestry Investments .
Forestry Agenda 2011.
GEOSYLVA: Starting activities at the beginning of 2002, Geosylva is a service company focused on
the forestry industry. It is mainly focused on forestry consultancy, sales and services including, but
not limited to, development of executive investment projects and business plans, assessment of
forestry projects, quality control and audits, advisory and training for forestry management and
custody chain.
HARVEST: A joint venture between Phaunos Timber Fund Limited (PTFL) and Union Capital Group
(UCG), Harvest offers services to the domestic forestry industry, mainly mechanized harvesting
through a clear cutting system with processors, self-loading tractors and loaders.
CARBOSUR: Carbosur is a Uruguayan company founded in 2000. It offers specialized services in
the area of climate change, with an emphasis on mitigating this global environmental problem.
The company specializes in greenhouse gas inventories and offers emission inventory services and
carbon footprint estimates for companies and their products. Carbosur has strategic alliances with
Pike Consultora Forestal (Uruguay), Factor CO2 (a company from the Basque Country specialized in
climate change), Maradei Pike (Argentina) and two Guatemalan organizations (Energía y Medio
Ambiente and Fundación Naturaleza para la Vida). It is also member of Markit, one of the main
registers for creation and sale of carbon certificates.
23
INFOREST SERVICIOS FORESTALES. The main purpose of the company is to offer comprehensive
professional service focusing mostly on the forestry and agricultural field, to cater for customer
and market needs and to provide consulting support at all times always considering different
alternatives to improve business, through the sustainable use of natural resources.
MUNDIAL FORESTACION: Mundial Forestación is a Uruguayan company focused on producing
Eucalyptus globulus genetic material. The company has capacity for 30 million plants (seeds and
clones) and is one of the largest nurseries supplying the national market. According to company
director Rogerio Aguiar, “traditional plantations of Eucalyptus globulus in Uruguay yield around 12
to 17 m3 per hectare per year. Using clones enables the possibility of doubling this production,
adapting each clone to local conditions, while improving wood quality and allowing the
identification of the most resistant to disease and the consequences of climate change.”
JOHN O´RYAN SURVEYORS. Uruguayan company committed to developing control systems that
enable their clients to improve their productive and logistic services as well as to facilitate a
transparent and sustainable relationship between these and their buyers. Among the different
integral quantity control systems available there are: humidity content, material compression
and material physical condition, traceability required to reach sustainability and efficiency
objectives, sustainable forest management certification (PEFC, FSC, among others) as well as
carbon footprint measurement and emission reduction plans.
2.9. Logistics
2.9.1. Strategic geographic location at the expanded region (Argentina, Bolivia, Brazil,
Chile, Paraguay and Uruguay)
There are seven ports in Uruguay, two of which have ocean access: Montevideo and
Nueva Palmira. Nueva Palmira specializes in bulk cargo, while Montevideo works mainly
with containers.
The seaway consisting of Paraná, Paraguay and Uruguay rivers enables river access for
products to and from Asunción (Paraguay), Rosario and Santa Fe (Argentina) and eastern
Bolivia (department of Santa Cruz). Both Nueva Palmira and Montevideo offer oceangoing access for this seaway.
24
An extensive highway network joins Montevideo to the region's major cities, facilitating
truck transportation. Three bridges on the Uruguay River connect the country to
Argentina at the cities of Salto, Paysandú and Fray Bentos. Connections to Brazil are
available at land border crossings at the cities of Bella Unión, Rivera, Río Branco and Chuy.
Approximately 57% of national highways are in very good condition and the Ministry of
Transport and Public Works (MTOP) intends to raise this figure to 80% over the next five
years. Likewise, MTOP plans to implement a monitoring and follow-up system for cargo
transport through GPS technology.
2.9.2. Upcoming investments in the industry
The departmental highway network is vital for forestry industry transport. As such, MTOP
will invest US$ 7.3 million in the coming years for forestry roadway maintenance
(construction, reconstruction and maintenance of departmental forestry corridors).
In 2013, Montevideo will have a modern terminal specializing in bulk cargo. Obrinel, a
company established by the Christophersen and Saceem companies, will construct a
terminal for bulk cargo in the port of Montevideo. The project will be destined for wood
chips and bulk cargo in general. The building will be ready to start operating by the
beginning of 2013 with an investment of over US$ 60 million. Shareholders will provide a
30% of the funding and banking entities will be resorted to for the remaining 70% needed.
The terminal will have a storage capacity for 120,000 tons but can take up to 200,000
tons. The terminal will have a shipping cargo capacity of 2,400 tons/hour.
The government’s objective is to turn Uruguay into a “Regional Logistics Pole” by 2030.
The following major projects will be carried out:
o Development of commercial ports: In La Paloma ocean port (in the department of
Rocha on the Atlantic coast), piers are to be rebuilt to enable 300,000 tons of
cargo movement per year. This will be of vital importance for wood exports from
the eastern region of the country. In accordance with this objective, the port of
Paysandú is already undergoing pier and dredging works to enable wood
transport via river.
o Complementary investments to the Port of Montevideo (Puntas de Sayago): The
Institutional Project includes the creation of a Logistics Port in a 103-hectare site
at Puntas de Sayago, a costal area near the Port of Montevideo. From April 2012
the first 10 hectares corresponding to “Puerto Logístico de Puntas de Sayago” will
25
be tendered. These lands located West of Montevideo will serve as warehouse for
goods and containers in transit from and to Montevideo.
o The government has stated its intention to refurbish railway infrastructure. 1,200
kilometers of railway will be repaired. It is expected that with the improvements,
railway lines will be able to transport 3.5 million tons of cargo per year. Some of
the railway lines will be:
-
West coast, Central region and Montevideo metropolitan area with La Paloma
port for the purposes of meeting the needs of forestry product transport as well
as containers, grains and other cargo. Estimated investment - which includes the
construction of a new siding and classification yard in the port, sums up to US$
49 million.
-
New international bridge with Argentina, towards the South of the existing
ones. It would connect Punta Chaparro, North of Nueva Palmira to Brazo Largo
in Argentina with a length of 12 km for highway and rail traffic, with an overall
investment of US$ 300 million.
-
In the railway network integration framework with Argentina and Brazil, the
connection with the Brazilian rail network will be developed in RiveraLivramento.
-
Overhaul of Pintado-Rivera section. The estimated investment for these works
total US$60 million which include US$37 million consisting of 21,200 Russian
rails of the type R50 with a length of 25 m supplied by AFE.
26
3. Industry perspectives
3.1. Global industry perspectives:
Main factors affecting long-term global demand for wood products:
o Demographic changes: The world's population is expected to increase from 6,400 million
in 2005 to 7,500 million by 2020 and 8,200 million by 2030.
o Regional changes: from 1970 to 2005, most of GDP corresponded to developed
economies. However, the rapid growth of developing economies, especially Asian
economies, will lead to notable changes over the next 25 years.
o Environmental policies and regulations: more forests will be excluded from wood
production.
o Power policies: the use of biomass, including wood, is rising rapidly.
Other important factors for the future of wood products include:
o The decline of natural forest harvesting, conversion of planted forests,
o Technological advances, increase in plantation productivity through improved genetics,
o Decline in wood required due to increases in recycling,
o The wider use of new compound products and production of cellulose biofuels.
Increase in global demand for environmental products and services.
o Policies related to energy and climate change are leading to an increase in wood used as
energy source. Greater attention to “green development” and commercial cellulose
biofuel production will have an unprecedented impact on the forestry industry.
o Greater attention to green development implies a new orientation for the development of
the forestry sector. “Planting trees, increasing investments in sustainable forestry
management, active promotion of wood in construction with environmental criteria and
renewable energy will be integral parts of green development.” 21
Increase in global demand for wood products:
o The world demand for round wood is expected to reach 2,164 million m3 per year22 by
2020. In 2005 it was 1,683 million m3.
21
22
27
FAO Publication “2009 State of the World's Forests - Rome, 2010”
Source: “2009 State of the World's Forests” - FAO.
Chart No. 11: Actual and forecasted consumption of forestry industry products by region millions of m3
Source: “2009 State of the World's Forests” - FAO.
3.1.1. At national level:
Montes del Plata pulp mill which is expected to be operating in 2013 -2014 will consume
more than 4 million tons of pulpable wood per year, it will export 1.3 million tons/year
(between 600 and 800 million dollars/year).
Likewise, between 2014 and 2020 production plantations for sawmill, plywood and
engineered wood will have reached harvest time. There will be a significant increasing
supply in quality wood which will be produced and supplied in a sustainable way in
volumes that range between 4 million m3/year for 2011-2016 period to over 10 million
m3/year for 2017-2021 period. This entails an opportunity for industrial investment, as
well as wood export with a higher added value and various sub-products. It does not
seem risky to foresee Uruguay exports over 3,000 million by 2014.
Future availability of greater forestry assets due to the fact that 80% of the soils
declared forestry priority still has no plantations.
28
APPENDICES
Appendix 1
Domestic and foreign investment promotion
Foreign investors in Uruguay enjoy the same benefits as domestic investors and do not need prior
authorization to set up in the country.
Law 16,906 (dated January 7, 1998) declares the promotion and protection of domestic and
foreign investment is of national interest. Decree 455/007 and its modification on January 9th of
2012 updated the regulations of this law.
By virtue thereof and for investment projects in any sector of activity submitted and promoted by
the Executive Branch, 50% to 100% of the amount invested may be computed as partial payment
of Corporate Income Tax (IRAE), depending on the type of project. Corporate income tax rate is
25%.
In addition, moveable fixed assets and civil works are exempt from wealth tax and VAT (Value
Added Tax) can be recovered for purchases of materials and services for the latter.
Trade agreements and investment protection
1. General trade agreements
Uruguay has been part of the World Trade Organization (WTO) since its creation in 1995 and is
part of the Latin American Integration Association (ALADI, 1980) along with nine other South
American countries, Cuba and Mexico.
In the framework of ALADI, the Southern Common Market (Mercosur) was formed in 1991 with
Argentina, Brazil and Paraguay. Mercosur became a customs union in 1995 with the free
movement of goods, the elimination of customs duties and non-tariff barriers between countries,
and a Common External Tariff for countries outside Mercosur. Venezuela is currently in the
process of joining Mercosur.
Moreover, in the framework of ALADI, Mercosur has signed trade agreements with other South
American countries: Chile (1996), Bolivia (1996), Colombia, Ecuador and Venezuela (2004), India
(2004) and Peru (2005), Israel (2007), all of which form respective Free Trade Areas with tariff
reduction schedules that should be completed no later than 2014/2019, according to the country.
Uruguay also signed a bilateral free trade agreement with Mexico (2003), which has enabled the
free movement of goods and services between both countries since June 2004, with certain
exceptions that end in 2014.
29
2. Investment protection agreements
Uruguay has signed investment protection and promotion agreements with 27 countries,
including Spain, the U.S., Finland, France and the U.K.
Institutions
A significant number of institutions bring together diverse players in the productive chain. These
have participated in varying degrees in the discussion and practice of tools and policies for the
industry, both in production as well as in environmental and social spheres. These institutions
include:
Forestry Bureau (DGF): www.mgap.gub.uy/Forestal/DGF.htm
Forestry Producers Society (Sociedad de Productores Forestales): www.spf.com.uy
Wood and Related Areas Industrial Association (Asociación de Industriales de la Madera y
Afines): www.adimau.com.uy
Forestry Producers of the East (Productores Forestales del Este - PROFODES):
www.profodes.com
Research entities (INIA www.inia.org.uy, LATU www.latu.org.uy, University of the
Republic, private universities, among others)
Environmental and social non-governmental organizations (NGOs)
Wood and Furniture Competitiveness Forum (Foro de Competitividad de Madera y
Muebles), which operates in the domestic and MERCOSUR spheres. It operates within the
scope of the Industry Bureau and the Ministries of Industry of other MERCOSUR
members.
Program to support competitiveness and export promotion for Small and Medium-sized
Enterprises (PACPYMES). It has a competitiveness promotion and business development
program for second and third degree transformation of wood (Promadera:
www.promadera.com.uy)
National Environment Bureau (DINAMA): www.dinama.gub.uy
Forestry Tripartite Sector Board - Wood (Productive Cabinet):
http://gp.gub.uy/es/node/188/6
30
Appendix 1
Table No. 7: Land sales for agriculture-livestock use. Number of sales, area sold and value
(per year).
Area sold
Total
Average
(thousands of
(hectare)
hectares)
846
295
Year
Number of
sales
2005
2,872
2006
3,245
859
2007
3,277
2008
Value
Total
(US$ millions)
Average
(US$/hectare)
613
725
265
972
1,132
676
206
968
1,432
2,959
684
231
1,260
1,844
2009
1,847
323
175
753
2,329
2010
2,093
336
160
885
2,633
Source: Ministry of Livestock, Agriculture and Fishing - Agriculture-Livestock Statistics Bureau based on information
from the General Registry Bureau.
Table No. 8: Land lease for forestry use. Number of contracts, leased area and value 2010.
Leased area
Use
Number of
contracts
Forestry
23
Value
Total
(hectares)
Average
(hectares)
Total (US$
thousands)
15,527
675
1,441
Average
(US$/hectare/
year)
93
Source: Ministry of Livestock, Agriculture and Fishing – Agriculture-Livestock Statistics Bureau based on information
from the General Registry Bureau
Table No. 9: Costs of activities linked to the forestry sector – October 2010 – in US$
1 - Transport
1.1 – By truck
Round wood: 251 to 450 km
Round wood: 51 to 250 km
Round wood: up to 50 km
Round wood: more than 450 km
1.2 – By rail
Wood
US$/ton
US$/ton
US$/ton
US$/ton
21
20
9
46
US$/ton/100km
7
US$
US$
US$
US$
US$
US$
US$
598
4
95
20
23
15
17
2 - Labor
2.2 – Minimal nominal wage with food and housing for forestry tasks
Foreman
Daily allowance for food and housing
Monthly allowance for food and housing
Machine operator (daily)
Specialized machine operator (daily)
Common laborer (daily)
Specialized laborer (daily)
Source: Pricing List. June 2011 - DIEA-MGAP.
31
Appendix 2
Forestry product certification
Forestry certification is an independent evaluation of the activities of an organization in
accordance with previously established external standards. The Forest Stewardship Council (FSC)
has developed an international standard for forestry management called Principles and Criteria
(P&C). FSC P&C requirements include environmental, social and economic impacts of forestry
management. Forestry certification generally acts as an incentive to improve forestry
management practices. There are certifying organizations that assess compliance with the
requirements. The following are two of the main companies involved in certifying forestry
plantations in accordance with FSC:
a) SGS (Societé Générale de Surveillance) is headquartered in Geneva, Switzerland, and has
offices around the world, including Uruguay (SGS URUGUAY Ltda.). The forestry
certification program is entitled “SGS QUALIFOR”. “SGS QUALIFOR is a program with more
than 1,000 chains of custody and more than 190 forestry stewardship certifications
worldwide. The program is currently active in more than 60 countries worldwide.”
b) SmartWood is a program from the Rainforest Alliance conservation organization, which is
headquartered in New York and has activities in several countries, including Uruguay.
With regard to plantation certification, SmartWood is defined as the “main non-profit
certifying body” that “certifies all types of forestry operations, including natural forests,
plantations, large scale commercial operations and small scale family and community
woodlands."
Map No. 2: FSC certified areas by region
Source: Forest Stewardship Council- “Global FSC certificates: Type and distribution”
32
Appendix 3
Uruguay wood quality
a) Destination of cellulose pulp
65% of all industrial wood extraction is used to produce cellulose pulp. Eucalyptus is the most
often used variety in the generation of short fiber. The following is the gross yield and basic
apparent density for the various species of the Eucalyptus genus.
Table No. 10: Gross yield and basic apparent density for Eucalyptus spp
Species
3 23
Gross yield at kappa 20 (%)*
Basic apparent density (g/cm )
Eucalyptus globulus
54.5%
0.423
Eucalyptus grandis
51.7%
0.499
Eucalyptus dunnii
51.1%
0.520
Eucalyptus maidenii
51.4%
0.559
Note (*): Laboratory Kraft process, variation parameter.
Source: Technology Laboratory of Uruguay (LATU). Research performed by Project Department.
b) Solid wood and derivative products
The species Pinus taeda, Pinus elliottii and Eucalyptus grandis are the most widely used in solid
sawn wood and derivative products. The following are average values of some of the mechanical
properties and density of each of the aforementioned species.
Table No. 11: Average values of elastic modulus, rupture modulus and apparent current
density.
Species
Elastic modulus
(Mpa)
24
Rupture modulus
(Mpa)
Apparent current density
25
3
(g/cm )
Pinus taeda
8,120
64.2
0.403
Pinus elliotti
8,034
77.7
0.403
Eucalyptus grandis
11,900
86.1
0.463
Source: Technology Laboratory of Uruguay (LATU). Research performed by Project Department.
23
24
Weight to volume ratio of wood sample, without accounting for hollow interior spaces.
Measure of resistance to a change in shape or size under the action of various forces. Defined as the coefficient
between the per unit force of the surface and the deformation per unit of length.
25
33
Measure of maximum force per surface unit that a sample can withstand without breaking.
Levels of quality wood in Uruguay measured through the mechanical properties of elastic
modulus (stiffness) and rupture modulus are higher than regional levels. In particular, Eucalyptus
grandis has higher values than the same species in Brazil and Argentina.
Chart No. 12: Comparative of Eucalyptus grandis wood from Uruguay, Australia, Argentina and
Brazil – Elastic and rupture modulus.
Source: Technology Laboratory of Uruguay (LATU). Research performed by Project Department.
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Investor Services
About us
Uruguay XXI is the Uruguayan investment and export promotion agency. Among other functions,
Uruguay XXI provides free support to foreign investors, both to those who are in the process of
assessing where to make their investments and those who have been operating in Uruguay for a
long time.
Our Investor Services
Uruguay XXI is the first point of contact for foreign investors. Our services include:
Macroeconomic and industry information. Uruguay XXI regularly prepares reports on
Uruguay and the various sectors of the economy.
Tailored information. We prepare customized information to answer specific questions,
such as macroeconomic data, labor market information, tax and legal aspects,
investment-promotion programs, localization and costs.
Contact with key players. We provide contacts with government agencies, industry
players, financial institutions, R&D centers and potential partners, among others.
Promotion. We promote investment opportunities at strategic events, business missions
and round tables.
Facilitation of foreign investor visits, including organization of meetings with public
authorities, suppliers, potential partners and business chambers.
Publication of investment opportunities. On our website, we periodically publish
information on investment projects by state entities and private companies.
www.uruguayxxi.gub.uy
invest@uruguayxxi.gub.uy
35
Uruguay at a glance (2010)26
Official name
Oriental Republic of Uruguay (República Oriental del Uruguay)
Location
South America, bordering Argentina and Brazil.
Capital city
Montevideo
2
Population (2010)
176,215 km . 95% of its territory is productive land fit for farming
exploitation
3.3 million
Population growth (2010)
0.35% (annual)
Per capita GDP (2010)
US$ 11,996.
Currency
Uruguayan peso ($)
Literacy index
98%
Life expectancy at birth
77 years
Form of government
Democratic republic with presidential system
Political division
19 departments
Time zone
GMT - 03:00
Official language
Spanish
Surface area
Main economic indicators 2005-2010
Indicators
2005
2006
2007
2008
2009
2010
7.5%
4.3%
7.3%
8.6%
2.6%
8.5%
17,398
19,823
23,902
31,177
31,322
40,265
Population (in millions of people)
3.31
3.31
3.32
3.33
3.34
3.36
GDP per capita (USD)
5,263
5,981
7,191
9,351
9,364
11,996
12.20%
10.90%
9.20%
7.70%
7.30%
6.80%
24.4
24.0
23.4
20.9
22.6
20.06
-1.56%
-2.50%
-10.65%
7.73%
-11,12%
GDP (Var % per year)
GDP (in millions of USD)
Unemployment rate – Annual Average (% labor
force)
Exchange Rate (UYU/USD, Annual Average)
Exchange Rate (Annual Average Variation)
Consumer Prices (Var % annually accumulated)
4.90%
6.38%
8.50%
9.19%
5.90%
6.93%
Exports (in millions of USD), goods and services (1)
5,085
5,787
6,933
9,372
8,647
10,666
Imports (in millions of USD), goods and services
4,693
5,877
6,775
10,333
7,957
9,875
Commercial Surplus/Deficit (in millions of USD)
393
-90
158
-961
690
791
Commercial Surplus/Deficit (% of GDP)
2.3%
-0.5%
0.7%
-3.1%
2.2%
2.0%
Global Fiscal Result (% of GDP)
-0.4%
-0.5%
0.0%
-1.5%
-1.7%
-1.1%
Capital gross formation (% of GDP)
17.7%
19.4%
19.6%
22.3%
17.2%
17.9%
Gross Debt (% of GDP)
80.2%
69.2%
68.3%
53.0%
69.9%
57.2%
Direct Foreign Investment (in millions of USD)
847.4
1,494
1,330
2,106
1,593
2,358
Direct Foreign Investment (% of GDP)
4.9%
7.5%
5.6%
6.8%
5.1%
5.9%
26
Sources: Data regarding GDP were taken from IMF; data regarding foreign trade, FDI, exchange rates, International
Reserves, External Debt were taken from BCU; population growth, literacy, unemployment and inflation rates were
taken from National Statistics Institute.
36